1.1 What is a Business?

What are the factors of production

What are the factors of production

Land, Labour, Capital, Entrepreneurship

Describe each factor of production

Land: the physical resources like land, raw materials

Labour: all the employees and managers

Capital: this includes the machinery and equipment needed by the business to make the products. and also includes the finance

Entrepreneurship: this is the entrepreneur who takes the risk in starting the business using these three other factors

Transformation processes can be…

capital intensive or labour intensive

what is the difference between capital and labour intensive?

Capital intensive refers to the high reliance of machinery and labour intensive refers to the high reliance on human labour.

Outline the Transformations of a business

Inputs → processes → Outputs

Inputs (factors of production)

processes (added value)

Outputs (the good or service)

What is added value?

this is the extra price charged on a product (to make profit).

added value features can differentiate products from competitors and create a usp.

B2B and B2C

B2B is selling business to business

B2C is selling from business to consumers directly

What are the 4 business functions?

Finance, Marketing, Human resources, Operations

Describe each business function

Finance: management of financial resources and costs. ensures stability by budgeting. makes annual accounts and collect and makes payments.

Marketing: promotes the product and increases brand awareness. Does market research into finding the correct target customer and develops the marketing mix (4P’s like place, price, product..)

Operations: efficient processes are used to provide the service or good. Control stock levels and deals with waste. Transportation and logistics and also with involved in health and safety.

Human Resource: involves in organising, managing, coordinating, and planning human labour. These include salaries and contract terms. Also recruitment processes and training, career development.

What could larger firms have in addition to these 4 business functions?

IT support, administration, Legal services

List the economic sectors and describe/give examples of each of them.

Primary sector: extraction of raw materials (mining, fishing, farming)

Secondary sector: turning raw materials into finished goods (any product good)

Tertiary sector: provides services (education, banking, retail, cinemas)

Quaternary sector: the newest sector that focuses on knowledge-based industries and high-tech industries of ICT. Involves in research (developing video games)

What is chain of production?

series of steps taking to turn raw materials into finished consumer products.

List reasons for starting a business

Financial rewards, identifying a gap in the market (they have identified a customer need that has not been fulfilled), Independence (to have more freedom and be your own boss), Personal Interest (perusing their hobbies), Social entrepreneurship (to benefit society)

What are the processes of starting a business?

1) Identifying essential elements like name, logo, location, aim, form of ownership, entity type, needs like equipment or staff

2) Conduct market research like determining customer needs

3) Construct a business plan on how the business will run with all the other functions

4) Check legal restrictions and make sure all legal requirements are met

5) Raise finance including sources of own capital or external finances

6) Launch the product (service or good)

What is a business plan?

a document that outlines the business idea and the 4 business functions that are interdependent to each other.

What are some problems with start-ups? (6)

Lack of funding, High competition, Lack of brand awareness, Lack of market demand, Operational issues (as it requires a range of skills which can be hard to do with few people to cover all functions), Hiring and retaining talent (finding skilled workers can be challenging because start-ups often cannot offer competitive salaries and benefits), Legal issues (can be complex, time consuming and sometimes expensive)

Define the term Intrapreneurship

Intrapreneurship refers to the practice of promoting entrepreneurial thinking and behavior within a business

List the skills and characteristics an entrepreneurship has

Skills: great communication, team working skills, excellent problem solver, IT and numeracy, having good organisation skills.

Characteristics: innovativeness, creativity, hard working, resilience, self-confidence, risk taker