Chapter 1: Business Activity and Influences On Business

Learning objectives: understand the nature of business activities and why businesses exist. 2. Understand the role played by different stakeholders. 3. Understand that businesses operate in a changing business environment.

Vocab

  • Tool: a piece of equipment that is useful for your job
  • Premises: buildings and land used by a shop or business.
  • Business: organisation that produces goods and services
  • Organisation: group, such as a club or business that has formed for a particular purpose.
  • Goods: physical products such as a mobile phone
  • Services: a non physical products such as banking or waste disposal
  • Output: amount of goods or work produced by a person, machine or factory.
  • Human resources: in some business the department that deals with employing, training and helping people.
  • Consumer goods: goods and services to business rather than consumers
  • Producer goods: goods and services produced by a one business for another
  • Needs: basic requirements for human survival
  • Wants: people's desires for goods and services
  • Infinite: without limits inn space or time
  • Finite: having an end or limit
  • Scarce: resources with limited availability.
  • Private sector: businesses organizations owned by individuals or groups of individual
  • Public sector: business organizations owned by central or local government.
  • Stakeholders: an individual or group w an interest in the operation of business.
  • Entrepreneur: person who takes risks and sets up businesses. Individual who organise other factors of production and risks their own money in business ventures.
  • Dispute: serious argument or disagreement.
  • Motivate: encourage someone to do something.
  • EBITDA: Earinngs before interest, tax, depreciation and amortisation.

Case study: bicycle shop

  1. I think that Tharanga opened up a second hand bicycle shop because he had always wanted to be his own boss. Opening up this shop was also convenient because he was already fixing cycles and was passionate about it, turning his hobby into an income.
  2. He used money from his grandmother, a reliable suplier and equipment.
  3. I think businesses exist to fulfill a demand for a product or service and to make profit.

Features of business activity

Business activity produces an output.

Goods and services are consumed

Resources are used

Producing,marketing, human resources and financial control

Government laws, changes in consumer tastes and competitors

Profit

Businesses have to satisfy people's needs and wants.

The purpose of business activity: to provide goods and services.

==Many goods and services provided by the public sector are free at the point of use. They are paid for through tax revenue==

Private enterprise: owned by individuals, the objective is often to make money, a profit for the owners.

Social enterprise: ngo, non profit, charity, pressure groups and societies. They exist for reasons other than profit. For example UNICEF exists to raise money for ‘good causes’.

Public enterprise: to provide goods and services that private sector fails to produce. Policing, healthcare, mail service.

Case study: gulf

  1. Yes
  2. This means that it is owned by individuals or groups of individuals who are trying to make a profit for themselves.

Stakeholders

Owners have a financial stake in the business. Employees rely on the business for their income to meet their needs and wants

Types of stakeholders

  1. Owners: a business belongs to its owners . Shareholders invest money and get a share of the profit known as a dividend.
  2. Customers: they buy what the business produce aka goods and services. Some may be other businesses. They want good quality products at a fair price or else they will spend their money elsewhere.
  3. Employees: they work for businesses. They depend on the business for their income. They do have needs such as training, fair pay and benefits,good working conditions, job security and opportunities for promotions.
  4. Managers: help to run most businesses. They are often employed to run department such as marketing, production, finance and human resources. They have to lead teams, solve problems, make decisions, settle disputes and motivate workers. Likely to help plan the direction of the businesses with their owners. They also have to control finance, equipment, time, space and people. This means they have to take responsibility when things go wrong.
  5. Financiers: lend money to businesses. They may be bank, individuals, family members or private investors.
  6. Suppliers: businesses that provide raw materials, parts, commercial services and utilities such as water and electricity.
  7. The local community: businesses have an impact on the nearby residents. They could be employing people and creating jobs or could be disturbing them with noisy factories .
  8. The government: businesses provide employment, generate wealth and oay taxes. Taxes from businesses and their employment are used to finance govt spending so the govt has an interest in all business.

The changing business environment

Strength of competition, economic climate, govt legislation, population trends, demand patterns, world affairs and social factors.

Case study: stakeholders

  1. Someone who has an interest in business and has invested in one.

  2. Customers and employees.

  3. Prompt pay and regular orders

  4. Ac

  5. C

  6. B

  7. Tractor

1 proceeds goods means goodsand services that are made for businesses that rpovide consumer goods and services.

  1. Businesses that are owned by individuals or groups of individuals
  2. Financiers and owners
  3. Managers would have to make sure supplies are ordered, finances are sufficient and that the business is still growing.
  4. It means that the businesses is affected by a lot of outwars input such as difference in the taste of customers, actions of competitors that affect the company
  5. They are still making a big profit off of their company so yes I think they would still be happy