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The document outlines key concepts related to consumer goods, services, and business activities, emphasizing the importance of identifying customer needs and adding value throughout production to achieve profit. It discusses resources required for business operations, the concept of adding value, and the basic economic problem of limited resources versus unlimited wants. Additionally, it highlights reasons for business failure, including changing environments, poor management, and cash flow issues, along with strategies to mitigate these challenges.

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aqsagkh
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2 views

Notes

The document outlines key concepts related to consumer goods, services, and business activities, emphasizing the importance of identifying customer needs and adding value throughout production to achieve profit. It discusses resources required for business operations, the concept of adding value, and the basic economic problem of limited resources versus unlimited wants. Additionally, it highlights reasons for business failure, including changing environments, poor management, and cash flow issues, along with strategies to mitigate these challenges.

Uploaded by

aqsagkh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Consumer-

Consumer goods-

Consumer services-

Customer

Entrepreneur

Business activity:

Identify customer needs

Purchase necessary resources

Add value in all stages of production

Aim-profit

Resources needed:

FOPs

Land

site for buildings, raw materials, renewable & non-renewable sources of nature
(coal, timber)

Labour

permanent & temporary, skilled & unskilled/manual

Capital

Finance, capital goods (physical, manufactured goods used by industry to aid in


production of other G&S (machines, offices, factory)

Enterprise

Action of showing initiative & coordination to take the risk to set up a business

Combine other FOPs into a producing unit

Manage & make decisions

Customers and suppliers

Government

Roads, rails, airports

Law & order

Schools & colleges

Concept of adding value

Necessary for survival-> pays others costs & is return to investors


Added value- diff b/w cost of bought-in inputs (materials) and selling price of
finished goods.

Adding value- increasing that difference

Profit vs added value

Profit= revenue – all costs not just bought-in materials (eg. labour)

Raising added value without increasing costs raises profit

How to add value?

Desgined shop display

Attractive shop fittings (jewellery, clothes)

Shop assitants- neat, trained, knowledgable

Packaging

Extensive advertising -> recognised brand name & identity

Selling through established shops than widely available vending machines (food,
sweets)

Branding- process of differentiating a product by developing a symbol, name, image


or trademark for it.

Basic economic problem- insufficient products to satisfy all needs and wants at any
time.

Limited resources + unlimited wants= choice (made based on benefit & value)

All economic agents face choice:

Government

Firms and charities

Workers/households/individuals

Central bank

Opportunity cost- cost of the next best alternative forgone when making a decision

e.g. biology-> opp cost of choosing business

Why do business fail?

Dynamic/constantly changing business environment coupled with the inflexibility to


deal with change

New competitors
Economic changes e.g. inflation lowering purchasing power

Technological progress (outdating firm’s product or process)

Legal changes e.g. new safety regulation, limit on who can buy the product

Poor record-keeping

Computer records e.g. hours worked, customer & supplier accounts

Paper records- evidence of receipts and payments as 1. backup incase of system


failure 2. for authorities (tax) incase of misunderstanding

Lack of cash

Working capital is needed for day-to-day operations (inventory,


offering credit to imp customers)

Cash flow problems can be reduced by:

Making and updating cash-flow forecast to asses monthly cash needs

Inject sufficient capital at start to make up for slow cash inflow

Good relations with bank for short-term cash issues e.g. overdraft extention

Poor managements skills

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