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Chapter 1: What Is Business Activity?

Business activity involves the production of goods and services to satisfy human wants and needs. Businesses aim to make a profit but are also influenced by external factors outside their control. There are different types of businesses with varying objectives, including private enterprises which aim to make a profit, public enterprises which provide public services, and non-profit organizations which meet member needs. Key business stakeholders are owners, customers, employees, managers, financiers, suppliers, the local community, and the government. A business operates within a changing environment and must adapt to factors such as competition, economic conditions, legislation, and social trends in order to survive.

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112 views

Chapter 1: What Is Business Activity?

Business activity involves the production of goods and services to satisfy human wants and needs. Businesses aim to make a profit but are also influenced by external factors outside their control. There are different types of businesses with varying objectives, including private enterprises which aim to make a profit, public enterprises which provide public services, and non-profit organizations which meet member needs. Key business stakeholders are owners, customers, employees, managers, financiers, suppliers, the local community, and the government. A business operates within a changing environment and must adapt to factors such as competition, economic conditions, legislation, and social trends in order to survive.

Uploaded by

knko786
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 1: What is Business Activity?

Business Activity: Business activity produces an output that is a good or service. A number of business functions will be carried out in a business such as; production, marketing, human resources and financial control. Business can be influenced by external factors which they cant control such as government laws, changes in consumer taste and competition. Businesses are often set up with the aim of making a profit in mind by people who aim to make money for themselves. The purpose of business activity: Businesses are in existence to provide goods and services. There are different types of businesses which provide different types of goods and services for different reasons. Private Enterprise: Most businesses are owned privately by individuals or groups of individuals. These are known as private sector businesses, and their objective is to make a profit. Public Enterprise: Public sector organisations that are owned by the central or local government. They often provide health care, education, postal services, protection and environmental services. They often aim to produce good quality services which private enterprises do not provide. Non Profit Making Organisations: These are organisations in the private sector which are non-profit making, for example, charities, pressure groups, clubs and societies. They are run like businesses, therefore they: Need to raise money Try to minimise costs Market themselves Employ staff

Non profit making organisations aim to meet the needs and wants of their members or those which they support.

Business Stakeholders 1. Owners A business belongs to its owners. Many small businesses are owned by individuals, families or small groups of people known as entrepreneurs. Large businesses are owned by shareholders who invest money in a business and get a share of the profit called a dividend. 2. Customers Customers are often consumers who consume goods and services. The customers buy the goods and services that businesses sell, so sometimes the customers could be other businesses. They often want quality goods at a fair price. 3. EmployeesThey work for businesses and depend on them for their livelihood. They require training so they can do their jobs well and will want fair pay, benefits, good working conditions and job security. 4. Managers They help with the running of a business. They are employed to run various departments such as marketing, production, finance and human resources. They must show leadership, solve problems, make decisions, settle disputes and motivate workers. They have to control resources such as finance, equipment, time and people. 5. Financiers They lend money to a business so they will want the business to do well in order to get a return on the money invested. They could be banks or individuals such as venture capitalists or private investors. 6. Suppliers These are businesses that provide raw materials, components, commercial services and utilities to other businesses. Relations between suppliers and businesses should be good because they rely on each other as businesses want good quality resources at reasonable prices, and in return, suppliers would like prompt payments and regular orders. 7. The Local Community These are stakeholders as they are affected by business activity. A business could create jobs, and increase living standards

in a community, or it could create noise and disruption if it is too noisy or loud. 8. The Government They are stakeholders because they provide employment, generate wealth and pay taxes. Taxes from businesses and their employees are used to fund government spending.

The changing business environment This means that because all businesses operate in a changing environment, they could be affected by external factors that change over time. Such factors include: strength of competition, the economic climate, government legislation, population trends, demand patterns, world affairs and social factors. In order to survive, businesses must satisfy peoples needs and wants and to do this, they must have clear objectives and recognise that the changing environment can bring new opportunities and impose new constraints.

KEY TERMS: Business- A Business is an organisation that provides goods and services. Consumer Goods- Goods and Services sold to ordinary people rather than businesses. Producer Goods- Goods and Services produced by one business for another. Needs- Basic requirements for Human Survival. Wants- Peoples desires for goods and services.

KEY TERMS: Services- Non Physical products like banking, car washing and waste disposal. Scarce Resources- The amount of resources available is limited. Good- Physical products like a mobile phone, packet of crisps or a pair of shoes.

The Economic Problem- Peoples wants are unlimited and


resources to provide these wants are finite. This often leads to scarcity. Entrepreneurs- People who take risk and set up businesses. Stakeholder-An individual or group with an interest in the operation of a business. Private Sector- Business organisations owned by central or local Government.

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