3.1.1 The purpose and nature of businesses

Question 1

State the reasons for starting a business. (6)

Answer 1

1. To produce goods (e.g. Coca-Cola and Cadbury).
2. To supply services (e.g. Premier Inn and TalkTalk).
3. To distribute products (e.g. Tesco and Asda).
4. To benefit society (e.g. charities and social enterprises).
5. To fill a gap in the market (e.g. opening a hair-salon in a village where there are no other hairdressers).
6. To fulfil a business opportunity.

Question 2

What are goods?

Answer 2

Goods: Tangible items that can be used and stored (e.g. computers, food, and clothes). Businesses make goods and sell them to customers, who then own them.

Question 3

What are services?

Answer 3

Services: Intangible actions that cannot be stored (e.g. hairdressing, train journeys, and internet access). Business provide services to customers, who then have access to it for a certain period of time.