unit 1.1

Nature of a business

A business aims to meet the needs and wants of customers through these activities and practices:

• extraction of raw materials

• Creating goods

• Providing a service

Input

The materials or any resources that are put into making a good or service or producing an output

Output

A quantity of goods and services that are sold In a specific period of time

Adding value the process of turning an input into a output is adding value to your inputs and generating revenue

Want

A desire that’s not necessarily needed for survival

Need

Something that’s needed for survival such as water, food, clothing, and shelter

Resources of input and their categories

• Human input: the right quantity and quality of humans that are needed to run a business to create and sell goods and services.

• Financial input: the right amount of money put into a business to run and make and provide a product and service

• Physical input:the right a quantity and quality of materials, machinery and land needed to provide a good and service

• Enterprise input:least tangible, it is the business idea and determination to turn an idea into a functioning and ideally thriving business

Capital intensive production process

A capital intensive production process is a process that requires large amounts of capital for machinery and land relative to other outputs. It is usually common industries that require large amounts of capital to provide their goods and service

Labour intensive production process

A labour intensive production process is a process that requires large amounts large amount of human input and labour relative to another input. Common in healthcare, teachers, sometimes factories. They can either require extremely skilled workers or low skilled workers

Business functions

There are 4 business function:

• HR (Human resources)

• Marketing

• Finance

• Operation management or production

Business sectors

• Primary sector: responsible for the extraction and harvesting or raw materials, acquiring raw materials.

• Secondary sector: responsible for the manufacturing of goods and raw materials.

• Tertiary sector: known as the service sector, as all services are in this sector, such as banking, insurance, transportation, retail, wholesalers.

• Quaternary sector: this sector is responsible to collecting information and focus on knowledge.

Sectoral change

The size of the sector changes depending on the economy of the country and the amount of people that are employed in the by the industry in that sector

Opportunities for starting up a business

• rewards: working for someone else does not mean you take all the rewards, whereas being the ceo means that you can take a bigger amount of the rewards.

• Independence: being you own boss

• Necessity: business are sometime started due to individuals being in positions where they can’t find jobs

• Challenge: the desire for a challenge

• interest

• Finding a gap

• Sharing an idea

Steps to start a business

1. Organizing the basics

2. Researching the market

3. Planning the business

4. Establishing legal requirements

5. Raising finance

6. Testing the market