business activity Flashcards
needs
essential goods required for human survival
wants
human desires which are not essential and are not required for survival
production
the making of goods and services to satisfy human wants
factors of production
land
labour
capital
enterprise
land
any natural resource used in the production of a good or rendering of a service.
reward: rent
labour
any human effort used in the production of a good or rendering of a service. can be mentally or physically. types of labour: skilled- requires training semi-skilled - requires little training unskilled- does not require training reward: wage
capital
any human-made resources used in the production of a good or rendering of a service.
reward: interest
enterprise
the ability to take risks, start and run a business venture. this is done by an entrepreneur. an entrepreneur also does the decision making and organizes the other factors of production for a business.
they also organise the use of all the other factors of production.
reward: profit/loss
primary production
firms that extract raw materials from the Earth
examples: mining, quarrying, farming etc
secondary production
firms that manufacture (change raw materials into consumable goods) and construct buildings and roads
tertiary production
firms that produce goods or render services to the general public and other firms.
examples: lawyers, doctors, retailers
added value
the difference between what the business pays the suppliers and the price it charges its consumers.
sources of added value
- branding (e.g packaging jewellery in a very attractive box)
- quality (an increase in quality)
- speed (speed of service)
- convenience
- usp (unique selling point)
- design (changing or altering the design)
how can businesses add value
by altering the product with raw materials and proving something ‘different’
importance of added value
- increases the profit.
- differentiates a business from its competitors.
- adding value enables businesses to survive and be successful (in a competitive market)
- enables businesses to save money for advertisement and other promotional acts.
private sector
consists of businesses being run by an individual or a group of individuals where their only aim is making profit. consumers are free to buy certain goods and services and businesses decide the best way of producing their products.
public sector
business activity is owned, controlled and financed by the government and their aim is to provide for society.
features of public goods
- non-rivalry: the consumption of these goods by one person doesn’t affect the amount available for the rest.
- non-excludable: it is impossible for people to be excluded from benefiting from these goods
merit goods
goods that are under-consumed but are still financed by the government because society needs them.
range of businesses offered by the public sector
roads social services schools cemeteries street lights
industrialization
the growing importance of the secondary sector and the reduced importance of the primary sector
countries: china and India
de-industrialization
the growing importance of the tertiary sector and the reduced importance of the secondary sector. in this scenario, machines would operate in the secondary sector which means humans are not needed.
countries: UK and USA
expectations of industrialized countries
- higher income
- a variety of choices for consumers
- better quality of products
change in businesses due to industrialization
- require finance for expansion
- need for internal and external communication
- need to provide better services for employees
private sector businesses
sole trader/ proprietorship partnership joint venture franchise limited companies social enterprise
public sector businesses
government departments
public corporations
national industries
