Unit (1)

?What is business Activity

Any business activity has many features as
follows:
- Business activity produces an output – a good or service .
- Goods and services are consumed .
- Resources are used up such as money, food, furniture and
fuel .
- A number of functions are carried out, administration,
decisions a bout finance and decisions a bout production .
- Businesses can be affected by external factors, recession
caused a decline in production .
: Business resources
Business resources can be divided into four
groups :

- Land : land is not just a plot of land, it also includes

natural resources .
Business activity uses both renewable and non-renewable
resources.
Renewable resources reffers to those which nature replaces.
Non-renewable resources includes resources which once
used are never replaced.
The owner of land receive rent from those who use it.
Labour : labour is the workforce of business includes manual
workers, skilled workers and management.
They are paid wages or salaries for their services.
It is possible the quality of human resources through training and
education.
Capital : capital is described as the artificial resource, Because it
is made by labour .
Capital refers to the tools, machinery and equipment which
businesses use .
Owners of capital receive interest if other borrow it .
Entrepreneur : The enterpreneur refers to the person who
develops the business idea, and then hires and organises the
other three factors of production to carry out the activity .
If the business is successful, any money left over will belong to the
entrepreneur. This is called profit .
 : Business Functions
A business is a “system”, it has parts that work
together to achieve an objective. The functions are all
parts of the system. A business is also part of other
systems such as economic and political systems. What
functions does a business carry out ?
Business have a number of functions :

- Production : Involves changing natural resources into a

product. Most resources are used up in the production process .

- Marketing : has become very important in recent years due to

an increase in competition a round the glob.
Marketing is concerned with identifying consumer needs and
satisfying them .
Finance : The financial department is responsible for managing,
investing, and controlling money. And it has a number of important
duties such as, recording transactions, and producing documents
to illustrate the performance of the business and its financial
position.
Dealing with enquiries : communicating messages and
producing documents for the workforce.
The personnel Function : It looks after the welfare of the work
force and responsible for recruitment, selection training, a
appraisal, health, equal opportunities, payment systems and
worker disputes.
Research and development (R.D) : Involves technical research,
for example “research into a new medicine or e new production
technique .
? What does business activity produces

Businesses produce goods or services

consumer goods are those which are sold
to the general public. They fall into two
categories :

- Durable goods, it refers to things can be used

repeatedly for a long period of time .
- Non-durable goods, are used very soon after they
are purchased.
- Capital goods, are those goods purchased by
businesses and used to produce other goods.
: External Factors

Business Activity is affected by a number of

external factors, In some cases these
factors constrain a firm’s decisions, and may
prevent it’s growth and development :
- Government, has a great deal of influence over
business Activity.
- Legal framework, where all individuals abide by the
law and offenders will be punished.
- Infrastructure, It refers to those items which are often
provided by the state, such as roads, railways
telecommunication and ect.
Economic climate, can have a tremendous impact on
business activity, recession .
- World affairs, such as the Gulf war in 1990 affect
business activity .
- Pressure groups, This concept refers to those
people who have a great impact on the decision of
business.
- Competition, Competitors behavior can influence a
firm’s activity.
- Consumer’s tastes, Companies are forced to update
and modify their products in order to satisfy consumer’s
needs .
Satisfying needs and wants :
- The success of a business activity
depends on many factors .
- The Most important factors is to
supply a product that consumers want
to buy. Business must satisfy
consumer’s want's and needs to be
successful .
Markets :
A market exists when buyer and sellers
communicate each other in order to
exchange goods and services.
In some cases buyers and sellers might
meet each other in an a greed place to carry
out the exchange process. In many cases
buying and selling processes can by carried
out over the telephone, newspapers,
magazines, mail order, and through
television .
A business may be interested in some of the
following markets :
- Consumers good’s markets, where products like food
are sold in large quantities .
- Markets for services, Includes financial services for both
individual and industrial purposes.
- Capital goods markets, where items used by other
businesses are bought and sold.
- Housing markets, where people buy and sell properties.
- Money markets, where people and companies borrow
and lend money.
- Commodity markets – where raw materials are bought
mainly by businesses.
: Specialization

This is the production on of a limited range

of goods by individual, firm, region or
country. Specialization within a firm is an
important part of production, .
Department specialize in different activities,
such as marketing, purchasing, personnel
and finance. people specialize in different
tasks and skills, this allows people to
concentrate on the taske or skill which they
are best at .
: Advantages of specialization

There are a number of reasons for

specialization :
- workers can concentrate o tasks that they do best
people skills will be improved by carrying out tasks
over a long period of time.
- Time is saved, because workers will carry out
their mission as fast as can.
- Organizing the production process will be much
easier and more effective.
: Disadvantages of specialization
-Work can become tedious and boring .
- If one stage of production breakdown,
production might be stopped.
- If people are only competent in one
skill, they may have to retrain, causing
delays in production, some are not able
to retrain and become unemployed.
: The importance of money
- MONEY is anything which is generally accepted
as a means of exchange.
- with out money goods have to be exchanged
using a Barter system.
- Barter system involves swapping goods directly.
- Its necessary for the wants of individuals to be
perfectly mached .
- Searching for the perfect mach in a barter deal
can be very time consuming.
- It is difficult to value different goods without
money .
: Functions of money

Money has a number of functions :

- Allows Individuals to save some of their
income, and buy goods and services at a
later date.
- Enables all goods and services to be
valued in common units.
- Allows payments to be deferred/delayed.
: Levels of business activity

Business activity can be classified into three

levels:
- Primary : production includes taking natural resources
from the earth “extraction, fishing, mining, farming and
foresty.
- Secondary : production involves manufacturing,
processing and construction which transform raw materials
into goods. Car production, distilling, baking .
-Tertiary : production includes the provision of services
hairdressing, distribution, security, banking theatre and
tourism.
- Other methods of classifying business include by :
size – geographical area – sector – ownership.
: Changes in business activity

-The UK has experienced some radical changes in the

structure of the economy.
- Before the industrial revolution most resources in
the UK were employed in primary production.
- During the nineteenth century secondary production
expanded rapidly.
- Since around 1960 tertiary production has grown
continually.
- The decline in manufacturing is after called De-
industrialization means, a lack of investments, un-
helpful government economic polay and restrictive
trade unions.