Chapter 1 Flashcards
What does businesses do to thrive?
meet customers needs & wants
What are needs?
essential for living [shelter,food]
What are wants?
not essential for living [nike trainers]
What causes a basic economic problem?
scarcity
What does scarcity mean?
a limited availibility of resources,products or opportunities
What are resources?
are known as factors of production
What are the 4 factors of production?
- land [natural sources]
- labour [human effort]
- capital [tools & equipment]
- enterprise [organizing & taking risks]
What is opportunity cost?
the loss of the next best alternative when decision making
What does specialisation mean?
when workers focus on 1 particular role or task
What are the 5 different levels specialisation occurs?
1.individual level[by division of labour]
2.business level[firm only specialise in manufactoring 1 thing]
3.regional level
4.global level[exporting goods]
What does division of labour mean?
separation of work processes into tasks that are completed by separate people
What results in specialisation?
- higher output per worker
- increases productivity
What is the purpose of business activity?
produce goods & services that meets customers needs while adding value
What are the primary purpose of business activity?
produce a good or service that satisfy a need or demand
What are goods?
physical products [t-shirts]
What are services?
non physical items [hairdressing]
What happens by meeting the customers needs?
- businesses build customer loyalty
- increase brand awerness
- generate revenue
What are the 3 purposes of business activtity?
1 to produce goods & services
2. meetings customer needs
3. to add value
What can added value features do to the business?
-differentiate products from competitots
- create unique selling point
- increase customer satisfaction
What does added value mean?
the process of taking raw materials & using them that the end product created is worth more than its cost
What does greater added value cause?
the more succsesful the business are likely to be & higher the profits
What are the 5 ways of adding value?
- conveinience
- branding
- quality
- design
- usp’s
