✅ 1.1 - Purpose & Nature of Businesses Flashcards
What is the purpose of starting a business?
Explain them
- To produce goods OR To supply services that they think customers will pay for
- To distribute products by buying them from a manufacturer and then selling the goods to other businesses and customers
- To fulfill a business opportunity
- To benefit others in society
What is the difference between a good or service?
A good is a tangible or physical product whereas a service is an intangible action or non-physical action
What is the difference between a need and a want?
Needs are necessities that people cannot live without whereas a want is something that people don’t need but would like to have
What is the primary sector?
The primary sector is the sector that produces raw materials
Give 3 examples of primary sector businesses
Mining
Farming
Fishing
What is the secondary sector?
The secondary sector is the sector that manufactures goods by turning raw materials into finished goods
Give 3 examples of secondary sector businesses
- Chocolate factory
- Building and construction industries
- Paper manufacturers
What is the tertiary sector?
The tertiary sector is the sector that provides services for other businesses or consumers
Give 3 examples of tertiary sector businesses?
Restaurants
Hairdressers
Insurance
What are the two meanings of enterprise?
- An enterprise is a business or organisation
- An enterprise is also the qualities an entrepreneur has that allow them to take advantage of business opportunities
What could enterprising involve?
- It could involve identifying new business opportunities and taking advantage of them
- It could involve starting a new business or expanding an existing one
What is an entrepreneur?
A person who is willing to take a risk to make business ideas happen
What are the characteristics of an entrepreneur?
- Hard working
- Innovative
- Organised
- Willingness to take a risk
What are the objectives of an entrepreneur?
What are the reasons for becoming an entrepreneur?
- To be their own boss
- Flexible working hours
- To pursue an interest
- To earn more money
- Identify a gap in the market
- Dissatisfaction with current job
What types of changes can the business environment experience?
- Technological change
- Economic Change
- Change in legislation
- (+ Change in environmental expectations)
What are the four factors of production?
Land, labour capital, enterprise
What is the meaning of “land” in the factors of production?
“Land” refers to the physical land where a business is located as well as the natural resources available for a business
What is the meaning of “labour” in the factors of production?
Labour refers to the staff and the work they they have done to contribute to the production process
It also refers to the different levels of education, experience
What is the meaning of “capital” in the factors of production?
Capital refers to the equipment, factories and offices needed by the business to help produce the goods or provide the services
What is the meaning of “enterprise” in the factors of production?
Enterprise refers to the entrepreneurs who take risks and create a business using the other 3 factors of production
Define Opportunity Cost
Opportunity cost is the benefit that is given up at the expense of something else
- Businesses must choose where to use their limited resources (even time is a limited resource)
