copyright © 2002 by harcourt, inc. all rights reserved. topic 1 : business activity (1) lecturer:...

Copyright © 2002 by Harcourt, Inc. All rights reserved.

Topic 1 :Topic 1 :

Business Activity (1)Business Activity (1)

Lecturer: Zhu Wenzhong Lecturer: Zhu Wenzhong


• Key Learning goals: Key Learning goals: This topic discusses the nature of business This topic discusses the nature of business

activity, particularly those factors of input, activity, particularly those factors of input, function and output involved in business function and output involved in business activity.activity.

LEARNING GOALSLEARNING GOALSLEARNING GOALSLEARNING GOALS


What is business activity? What is business activity? What is business activity? What is business activity?

• Business activity refers to the specific Business activity refers to the specific things done by a business in order to things done by a business in order to produce an output – a good or a service. produce an output – a good or a service.

• The nature of business activity is The nature of business activity is illustrated in the following figure:illustrated in the following figure:

© PhotoDisc


Reference Figure 1-1 The nature of business activity

External influences: Government, Economic climate, world events, population trends, legislation and regulation, competition, consumers, environmental factors, pressure groups

Input:Land,labor, Capital,Entrepreneurship

Function:Production, Marketing, Finance, Administration, HR , R & D

Output:Goods,Services,Waste

Business Activity


• Business resources are factors of production used by a business.

• Businesses must use resources or factors of production in business activity. Otherwise, nothing can be produced through business function.

• Generally, there are four basic factors of production for a business to carry out the business activity.

Business Activity (1)Business Activity (1)-Business Resources (input)-Business Resources (input)

Business Activity (1)Business Activity (1)-Business Resources (input)-Business Resources (input)


Business resourcesBusiness resourcesBusiness resourcesBusiness resources

• Land or natural resources• Human resources • Capital • EntrepreneurshipEntrepreneurship• Information?Information?


Business Activity (1)Business Activity (1)-Types of Business Resources (input)-Types of Business Resources (input)Business Activity (1)Business Activity (1)-Types of Business Resources (input)-Types of Business Resources (input)

• LandLand here is not just the here is not just the ‘land’ for factory or ‘land’ for factory or company buildings. It may company buildings. It may include other natural include other natural resources, such as coal, resources, such as coal, diamonds, forests, rivers, diamonds, forests, rivers, lakes, and soil.lakes, and soil.

• Natural Resources:Natural Resources: productive inputs that are productive inputs that are useful in their natural states.useful in their natural states.

• Natural resources may be Natural resources may be renewable or non-renewable renewable or non-renewable resources. resources.

Land or natural resources



Table 1-2 Examples of renewable and non-renewable resources

Renewable resources: Non-renewable resources:

Forest Coal

Fish Diamonds

Water Oil

Solar energy Gold

Oxygen Silver

… …



• Definition: Definition: Labor is the workforce of Labor is the workforce of

business. They are paid business. They are paid wages or salaries for their wages or salaries for their services. Or anyone who services. Or anyone who works.works.

• Types: Types: There are three major members of There are three major members of

the workforce in a business: the workforce in a business:

(1) Manual workers

(2) Skilled workers (3) Management



Labor or human resources




• Definition: Definition: CapitalCapital is sometimes called is sometimes called

artificial or man-made resources, artificial or man-made resources, such as tools, machinery, and such as tools, machinery, and equipment. They are called equipment. They are called capital because they are wealth or capital because they are wealth or money used to start a business or money used to start a business or to create more wealth.to create more wealth.

• CapitalCapital includes technology, includes technology, tools, information and physical tools, information and physical facilities.facilities.



Capital Capital





• Definition: Definition: Entrepreneurship:Entrepreneurship:

willingness to take risks to willingness to take risks to create and operate a create and operate a business.business.

• Entrepreneurs:Entrepreneurs: risk takers risk takers in the private enterprise in the private enterprise system or market economy. system or market economy.



Capital Capital



Entrepreneurship Entrepreneurship


• Business functions are parts of a business’s operation system., which work together to achieve an objective. Major six functions a business carries out may be seen as the following table:

Business Activity (1)Business Activity (1)-Business Functions -Business Functions

Business Activity (1)Business Activity (1)-Business Functions -Business Functions


Business Activity (1)Business Activity (1)-Business Functions-Business Functions

Table 1-4 Six types of business functions

Business functions Brief explanation

Production Changing natural resources into products such as producing coal in a coal mine, constructing a house in a building site, etc.

Marketing Marketing activities, such as market research, advertising, promotion, distribution, etc.

FinanceControl of money in a business, recoding financial transactions, controlling the flow of money, etc.

Administration Communication, producing documents for meeting, dealing with enquiries, arranging visits, etc.

HR (Human resources)

Management of people, such as recruitment, training, health and safety, payment system and performance assessment, etc.

R&D (research and development)

Research on new products, research on new technology, etc.


Business Activity (1)Business Activity (1)-Business Functions-Business FunctionsBusiness Activity (1)Business Activity (1)-Business Functions-Business Functions

• Attention: Attention: Business functions should be highly integrated Business functions should be highly integrated

(fitting well with each other). For instance, (fitting well with each other). For instance, production is influenced by marketing; marketing production is influenced by marketing; marketing is influenced by human resource and finance is influenced by human resource and finance departments in a company. All parts must departments in a company. All parts must corporate and work together to produce a product corporate and work together to produce a product or service.or service.

© PhotoDisc


Business Activity (1)Business Activity (1)-Business Input-Business Input

Business Activity (1)Business Activity (1)-Business Input-Business Input

• All businesses will produce a good or service All businesses will produce a good or service as well as some waste materials.as well as some waste materials.

1.1. Goods –consumer goods or capital goodsGoods –consumer goods or capital goods2.2. Services –such as banking, insurance, Services –such as banking, insurance,

transportation , gardening, haircutting, car transportation , gardening, haircutting, car repairing, etc. repairing, etc.

3.3. Waste materials – useless or even dangerous Waste materials – useless or even dangerous thingsthings

© PhotoDisc


-Business Input-Business Input-Business Input-Business Input

• Difference between consumer goods and capital Difference between consumer goods and capital goods: goods:

Consumer goods are goods which are sold to the Consumer goods are goods which are sold to the general public, while capital goods are goods general public, while capital goods are goods purchased by businesses and used to produce other purchased by businesses and used to produce other goods, such as: tools, equipment, machinery, etc. goods, such as: tools, equipment, machinery, etc. Computers, however, may be consumer goods or Computers, however, may be consumer goods or capital goods at the same time. capital goods at the same time.

Consumer goods may fall into two types: durable Consumer goods may fall into two types: durable goods (usually lasting for a long time) and non-goods (usually lasting for a long time) and non-durable goods (usually lasting for a short time). See durable goods (usually lasting for a short time). See some examples for them in the following table.some examples for them in the following table.

© PhotoDisc


Table 1-5 Examples of durable and Table 1-5 Examples of durable and non-durable goods non-durable goods

Table 1-5 Examples of durable and Table 1-5 Examples of durable and non-durable goods non-durable goods

• Durable goods: • Television• Books • cars• furniture • …

• Non-durable goods:• food• newspapers • drinks • soaps• …


Questions for revision

•Questions: 1)State the definition of business activity.2) State the definition for factors of production and the three factors of production.3) Explain the 6 functions involved in the business and the reason why they must be highly integrated.4) Explain the difference between capital goods and consumer goods.•Case Study (see textbook). Read and answer the three questions there.

Business Activity (1)Business Activity (1)

copyright © 2002 by harcourt, inc. all rights reserved. topic 1 : business activity (1) lecturer:...

Documents