chapter 1 - the purpose of business activity wiki
DESCRIPTION
business objectiveTRANSCRIPT
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IGCSE BUSINESS STUDIES
Unit 1 – Business ActivityChapter 1: The Purpose of Business Activity
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In this unit you will learn…….
The economic problem of unlimited wants and limited resources
The factors of production The development of economic activity
and the use of specialization What is meant by a business The most common aims of business The different groups involved in
business activity.
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Classify these.
Needs Wants
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Needs and Wants
Needs› Essential goods or
services necessary for living.
› Satisfy the basic things for life.
Wants › Non-essential
goods and services that people would like to have.
› Interests & Tastes
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Make your list
Needs Wants
Limit your wants to no more than 25 items please!
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The Economic Problem
The shortage of goods & services TOO FEW FACTORS OF PRODUCTION!
Land Labour
Capital Enterprise
Factors of Production
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Land
All of the natural resources provided by nature
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Labour
All people’s efforts to make products
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Capital
All finance, machinery & equipment in manufacturing products
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Enterprise
All people that have skills & have risk-taking ability factors of production produce good or service
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Economic Problem
Limited in Supply
Land Labour
Capital Enterprise
Factors of Production
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18/04/23© easilyinteractive.com 2006-9
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Factors of Productionrewards for the factors of production
Each of these factors of production is paid by business e.g. The payment for land is rent
Can you think what we call the payments for the other factors? Labour Capital Entrepreneurs
*
wage/salary
interest
profit
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Real Economic Problem
Unlimited Wants
Limited Resources
Scarcity+ =
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Limited Resources: ChoiceIndividual Business Government
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Summary – Economic Problem
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Limited ResourcesProduction 200 years ago
Joe cuts the wood
He assembles the table
Joe polishes the table
Joe delivers the table on a horse and cart
1 432
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Limited ResourcesModern Day Production
The wood for 20 tables is cut with a specialist machine
Carpenters assemble the tables
The tables are finished in the polishing department
A transport company collects the tables to deliver them to furniture retailers
1
43
2
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Making the best use of limited resources
Specialization / Division of Labour
Production Process
Different tasks split up
Workers performs a task
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SpecializationDivision of Labour
Advantages Specialised task training Increases efficiency Increases output Save time
Disadvantages Bored workers Possible drops in efficiency Production stopped due to
absence
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Why business activity is needed?
Unlimited wants 4 factors of production
Resources in limited supply to make goods and services
Scarcity Limited resources – unlimited wants
Choice Opportunity Cost
Specialisation Improves efficient use of resources
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Business Activity
Combines s_____ f_____of p_______ in order to produce g_____ and s_______.
Produces those goods and services which are needed to s______ the n______ and w_____ of the p___________
E_______ people as worker and pays them w____ / s______ to allow them to consume p_______ made by other p________.
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Aim of Businesses
Combine factors of production Produce products satisfy peoples wants
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Classification of Products
Goods Physical items Tangible Touch and see
Services Intangible
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Business Objectives
Aim / Target to work towards Make a Profit To increase added value To expand the business To achieve business survival To provide a service
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Profit
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Value Added
Selling Price
Cost of materials/
Components
Value Added
- =
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Growth
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Survival
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Providing a service
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Conflict in Business
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Conflict in Business
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Groups involved in Business
Business Stakeholders
owners managers workers
consumers community government
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Explain and provide examples for the following…….
The difference between wants and needs, with examples
Scarce resources Principle of opportunity costs Importance of specialization in
production Purpose of business activity Importance of different groups in
business activities.