Business Activity Flashcards
What is business activity?
The process of producing goods and services to satisfy customer demand.
define the needs of the customer.
a good or service which is essential to living
define the wants of the customer.
a good or service which people would like, but is not essential for living.
define economic problem.
unlimited wants cannot be met because there are limited factors of production and this leads to scarcity.
what is the factors of production
The resources needed to produce goods and services
land
is all natural resources such as minerals, ores, fields, oil and forests
labour
is the number of people available to work
capital
is machinery, equipment and finance needed for the production of goods and services.
enterprise
is the people prepared to take risks of setting up the businesses (they are also called entrepreneurs.
scarcity
there are not enough goods and services to meet the wants of the population
opportunity cost
the benefit that could have been gained from an alternative use of the same resources.
specification
people and businesses concentrate on what they are best at
division of labour
production process is being divided into separate tasks and each employee does just one of those tasks
consumer goods
products that are sold to the final consumer. they can be seen, touched and held
consumer services
products which are sold to the public, but they cannot be seen nor touched. they are therefore, intangible
capital goods
products that are sold to other companies to help them with their production process.
what is the process of adding value?
taking in raw materials and turning them into a good or service which is then sold to consumers at a price greater than the cost of the raw materials used in their production
how do businesses increases added value?
added value isnt the same as profits. if the increase in added value is greater than the cost of achieving it. That’s when profits will rise.
the types of methods used to increase added value.
-Branding
-Excellent service quality
-Product features
-Convenience
how does branding increase added value?
Branding increases added value because people want to or feel they should buy the item from this particular company.
how does excellent service quality increases added value?
The cost of the materials will be very similar, but the personalised service increases the added value.
how does product features increases added value?
Products that have more features and functions than similar products on the market will allow the producer to charge a higher price.
how does convenience increase added value?
many consumers lead busy lives and they are often prepared to pay higher price for goods and services which they can have immediately or which can save their time.
