Business Activity

 Objectives

- Needs , Wants , Scarcity , Opportunity Cost

- The importance specialization to business and consumers
- The purpose of business activity
- What is meant by added value
- How a business adds value.
Business Activity
 Business Activity
The process of production goods and services to satisfy
consumer demand.

 Need
A good or service which is essential to living

 Want
A good or service which people would like but is not
essential for living.
Business Activity
 `Economic problems
Unlimited wants can not be met because there are limited factors of
production. This create scarcity.

 Factors of Productions
The resources needed to produce goods and services- land, labour, capital
and enterprise.
 .
Business Activity
 Land
It is all natural resources such as minerals, ores, fields,oil and forest.

 Labour
This is the number of people available to work.

 Capital
This is machinery, equipment and finance needed for production of goods and
services.

 Enterprise.
This is people prepared to take the risk of setting up business-thety are known as
enterprise.
Business Activity

 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 aiternative use of the same
resource.
Mixed Economy

 Private Sector
 Public Sector

Mixed economy means an economy where the resources are owned and
controlled by both private and public Sector.

Private Sector
The part of the economy that is owned and controlled by individuals and
companies for profit.
- Soe Trader, Partnerships, Limited companies, Franchises, Joint venture,
Social enterprise.
 Public Sector

The part of the economy that is owned and controlled by the state of
government.
- Government departments, Public coperations , Nationalised industries
Reasons for business failure

 Poor Planing
 Economics influences
 Competition
 Poor Marketing
 Poor choice of location
 Lack of Finance
 Failure to invest in new technologies
 Lack of objectives
 Poor Management Skills
 Poor cash flow managements
Why some business remains small

 Owner’s choice
 Market Size
 Access and Availability
 Market Domination
Why owner want to expand their business

 Increase in profits
 Increase in market share
 Economics of scale
 Greater power to control the market\
 Protection from the risk of takeover
 Differents ways business can grow

 Internal growth
 External growth

Internal growth
 Increasing numbers of goods it can produce, for eg- by buying more or
better machinery
 Developing new products
 Finding new markets for their products
External growth
 External growth

Takes place when a business merges with or take over another business in
the same or different industry.. The process is known as integration.

 Horizontal integration.
 Forward Vertical integration
 Backward Vertical integration
 Conglomerate integration
 Horizontal integration.
 Primary Business + Primary Business
 Secondary Business + Secondary Business
 Teritary Business + Teritary Business

 Forward Vertical integration

Manufacturer - Retailer

 Backward Vertical integration

Producer – Supplier

 Conglomerate integration
Business in Industy A + Business in Industy B
Charactertistics of successful Entrepreneur

 Innovative
 Self confident
 Self motivated and determined
 Multi- skill
 Leadership qualities
 Initiative
 Results driven
 Risk taker
 Good at networking
Contents of Business plan

 Objectives of business
 Financial forecasts
 The market research
 Business opportunity
 Financial forecasts
Measuring Business Size

 Captial Employed
 Market Share
 Numbers of employees
 Value of output
Definition
 Business Activity
The process of producing goods and services to satisfy consumer demand.

 Business Environment
The combination of internal & external factors that influence The operation of
a business.

 Business Plan
A detailed written documents outlining the purpose and aims of a business
which is often used to persuade lenders or investors to finance a business
proposal.

 Business Start-up
A newly formed business. They usually start small, but some might grow to
become might bigger.
 Capital goods
Physical goods used by other business to help produce other goods and service
such as machinery or buildings.

 Consumer goods
Products which are sold to the final consumer.

 Consumer
The final user of a product.

 Customer
An individual or business that buys goods and services from business

 Demand
The quantity of goods and services consumers are willing and able to buy.
 Division of labour
Production is divided into separate tasks and each worker does just one of those tasks

 Economic Problem
Unlimited wants cannot be met because there are limited factors of production. This
creates scarcity.

 Economic of scale
The reduction in average cost as a result of increasing the scale of operations

 Entrepreneur
An individual who takes the financial risk of starting and managing a new business.

 Expenses
Day to day operating expenses of a business.
 Factors of Production
The resources needed to produce goods and services
–land, labour , capital, enterprise.

 Market
All customers and consumers who are interesting in buying product and have
the financial resources to do so.

 Market research
The process of collecting , recording, and analyzing data about the customers
competitors ,and the market of a product.

 Market share
The revenue of a business expressed as a percentage of total market revenue.
 Marketing strategy
A plan to achieve the marketing objectives using given level of resources.

 Need
A good or service which is essential to living.

 Objectives
A statement of a specific target to be achieved. They should be smart.

Price
The amount paid by the customer to the supplier when buying a good or
service.

Revenue
The amount of a business earns from the sale of its product.