1: What is Business Activity?

A business is an organisation that provides goods and services.

  1. Business activity produces an output - a good or service.
  2. Goods and services are consumed.
  3. Resources are used
  4. A number of business functions are carried out. Production, marketing, human resources and financial control are examples of these functions.
  5. External factors affect businesses. Things that they cannot control have an impact on businesses, such as government laws, change in consumer tastes and actions of competitors.
  6. Businesses aim to make profit.

Consumer goods: 

Goods and services sold to ordinary people (consumers) rather than businesses.

Producer goods:

Goods and services produced by one business for another.

Needs are the requirements for human survival. Some are physical such as water, food, warmth, shelter and clothing. If these needs cannot be satisfied, humans will die.

Humans also have desires. These are called wants and include holidays, a better house, a bigger car, a better education and a cleaner environment. These wants are infinite however the resources available are finite.

Private Enterprise:

Most businesses are owned privately by individuals or groups of individuals. They are private sector businesses. The objective of a private enterprise is often to make profit for the owners.

Social Enterprise:

Some organisations in the private sector are non-profit making. Organisations, such as charities, pressure groups, clubs and societies exist for reasons other than profit like to raise money for good causes or provide opportunities and facilities.

Public Enterprise:

Some goods and services are provided by organisations owned by the central or local government. These are public sector organisations. In many countries public sector organisations provide health care, education, mail delivery, policing, the fire and environmental services.

Stakeholder:

Any individual or group that has interest in the operation of a business.

Owners:

Many small businesses are owned by individuals, families or small groups of people. They are called entrepreneurs. They are responsible for setting up and running the business. Larger businesses are owned by shareholders that invest the money in the business and gain dividend.

Customers:

Customers buy the goods and services the business sells. Customers want a good quality product at a fair price.

Employees: 

Employees work businesses. They depend on businesses for their salary. They want good working conditions, fair pay and benefits, job security, and opportunities for promotion.

Managers:

Managers are employed to run different departments in businesses. Managers have to lead teams, solve problems, make decisions, settle disputes and motivate workers. Managers are likely to help plan the direction of the business and they are accountable to owners. They also have to control resources such as finance, time and people.

Financiers:

Financiers lend money to the businesses. They could be a bank or individuals such as family members or private investors such as venture capitalists.

Suppliers:

Businesses that provide raw materials, parts, commercial services, and utilities, such as electricity and water to other businesses.Businesses want good quality resources at reasonable prices. In return suppliers will require prompt payment and regular orders.

The Local Community:

Most businesses are likely to have an impact on the local community. If the business does well the local community may benefit. There may be more jobs, more overtime and possibly higher pay. In contrast a business may be criticised by the local community.

The Government:

The government has an interest in all businesses. They provide employment, generate wealth and pay taxes. Taxes from businesses and their employers are used to finance government spending.

Business may be affected by external factors like strength of competition, the economic climate, government legislation, population trends, demand patterns, world affairs and social factors.

To survive, businesses must produce goods and services that satisfy people’s needs and wants. They must have clear objectives and be aware that the changing environment can bring new opportunities and impose new limitations.