Comprehensive Business Studies Notes

Business Definition: A decision-making organization that uses inputs to produce goods and services, usually for profit.
Inputs: Resources that a business uses in the production process, such as labor and raw materials.
Products: Refers collectively to both goods and services.
- Goods: Physical products (e.g., books, phones).
- Services: Intangible products (e.g., haircuts, education).
Company: A commercial business that sells goods and services to meet the wants and needs of its customers, ideally for profit.
Customer vs. Consumer:
- Customer: Buys products.
- Consumer: Uses products.
Needs vs. Wants:
- Needs: Basic necessities to survive (e.g., food, shelter).
- Wants: Luxuries desired (e.g., airports, Wi-Fi).
How Businesses Meet Needs and Wants:
1. Extracting raw materials.
2. Creating products.
3. Providing services.
Factors of Production:
- Labor: Uses human effort.
- Land: Uses natural resources.
- Capital: Uses machinery, tools, and money.
- Enterprise: The business idea, the risk-taker, and the strategy.

Entrepreneur Characteristics: An entrepreneur must be innovative, strategic, enthusiastic, and resilient.
Entrepreneurial Roles:
- An entrepreneur starts their own business.
- An individual working inside an existing business to innovate is an intrapreneur (referred to in practice as an entrepreneur working within an existing business).
Types of Value-Adding Production Processes:
- Capital-Intensive: Involves heavy use of machines and equipment.
- Labor-Intensive: Involves heavy use of human work.
Production: The process of turning inputs into something that can be sold to customers.
Added Value:
- Definition: Measures how much more value the finished product has compared with the cost of the inputs used to make it.
- Example: Buying ingredients such as eggs, flour, and sugar for $CHF\,5$ and turning them into a cake sold for $CHF\,20$ . The $CHF\,20$ represents the added value.
The Four Business Functions:
1. Human Resources: Handles hiring, training, and firing.
2. Finance and Accounts: Tracks money flowing in and out of the business and prepares budgets.
3. Marketing: Understands consumer wants and promotes products.
4. Operations Management: Transforms raw materials into finished products.

The Four Ps of Marketing:
- Product: What is being sold.
- Price: How much the product costs.
- Place: Where or how the customer obtains the product.
- Promotion: How the product is advertised.
The Four Main Economic Sectors:
- Primary Sector: Businesses extract raw materials or resources directly from the earth (e.g., mining, fishing, farming).
- Secondary Sector: Businesses manufacture goods by processing raw materials (e.g., turning flour into a cake).
- Tertiary Sector: Businesses provide services to consumers or other businesses (e.g., restaurants, hotels).
- Quaternary Sector: Businesses involved in knowledge, information, research, and technology (e.g., research and development / R&D).

G - Growth: Building something that appreciates in value over time.
E - Earnings: Potential to earn significantly more money than working a regular job.
T - Transference: The business can be passed down to family members.
C - Challenge: Fills an identified gap in the market.
A - Autonomy: Gives the opportunity to be your own boss.
S - Security: Provides job security with no fear of being fired.
H - Hobbies: Allows an individual to turn their personal passion into profit.

M - Marketing Problems: Inability to find or reach the right target audience.
H - High Production Costs: Inability to achieve economies of scale due to small initial scale, meaning the business does not produce enough volume yet to gain cost advantages.
E - External Influences: Uncontrollable factors such as natural resource availability, population dynamics, and technological shifts.
L - Legalities: Issues regarding business registrations, acquiring insurance, and complying with government regulations.
L - Lack of Finance: Difficulty raising initial capital or securing loans.
C - Cash Flow Problems: Financial strain caused by late customer payments or holding excessive stock.
U - Unestablished Customer Base: Lack of brand recognition and absence of loyal clients.
P - Production Problems: Operational issues such as overproducing or underproducing goods.
P - Poor Location: Disadvantages caused by high rental costs or low foot traffic/few potential customers.

Primary Cause of Business Failure: A lack of finance is the number one cause of new business failure.
Case Study (IRL App):
- Product: Messaging and event application named IRL.
- Reason for Failure: Discovered that $95\%$ of its active user base consisted of non-human bots rather than actual human users.