1.1 understanding business activity

• what is business activity?

  the process of producing goods and services to satisfy consumer demand by transforming resource input
• what is a need?

  a good or service which is essential to living
• what is a want?

  a good or service which is not essential to living but a customer may want
• what is land (FOP)?

  all of the natural resources found on the planet to help make goods or provide services
• what is labor (FOP)?

  the physical effort we put into making goods or providing services
• what is capital (FOP)?

  is any human created resource that is used to produce other goods and services
• what is human capital (FOP)?

  knowledge a person gains through education and experience
• what is physical capital (FOP)?

  any human made thing that produces other things or aids in the production of other things
• what is enterprise (FOP)?

  is the process of launching and running a business in order to make money
• what is scarcity?

  the economic problem whereby there are not enough goods and services to meet the wants of the population
• what is opportunity costs?

  the benefit that could've been gained from an alternative use of the same resource
• what is specialization?

  when people and businesses concentrate on what they do best, to make use of scarce resources
• what is division of labor?

  invented by Adam smith. this is when production is split up into separate tasks and each employee does just one of these tasks
• what are the advantages of specialization(division of Labor)?

   

  ·       Increase in efficiency and productivity meaning more output leading to greater profit

  ·       Less need for training and employees become more confident in their work

  ·       Specialization allows businesses to produce more at a lower cost per unit, reducing expenses which can lead to finding better, more efficient ways to perform specific tasks, leading to technological advancements or improved methods.
• what are the disadvantages of specialization (division of labor)?

  ·       Worker absenteeism disrupts production

  ·       Performing the same tasks repeatedly can lead to boredom and a lack of job satisfaction, this can lead to a decrease in motivation and production

  ·       Over reliance, If demand for a specialized product or service decreases, the business may struggle to pivot to other areas
• what is a gap in the market?

  a market that no other businesses are selling in
• a new business can exploit in the gap market as there is an unlikelyhood of competition
• why do entrepreneurs set up new businesses?

  to make profit, family businesses, for social causes and to be independent
• what are the types of goods entrepreneurs sell?

   

  ·       Consumer goods

  ·       Consumer services

  ·       Capital goods
• what are consumer goods?

  anything a consumer buys
• what are consumer services?

  any service a consumer uses
• what are capital goods?

  anything that is used to help production
• what is the process of adding value?

  selling a product for more than it cost to produce it
• how do you calculate profit?

  selling price - cost of production
• what is a USP?

  (unique selling point) is a special feature of a product that sets it apart from the competitors products
• what are the advantages of a USP?

  ·  Helps a business stand out from its competitors, this differentiation is crucial in crowded markets where many products or services are similar

  · Emphasizes the unique benefits of a product or service, which can justify a higher price point. This leads to an increase in profitability
• what is branding?

  the process of creating a unique identity for a product or business through a name, symbol, logo, design, or combination of these elements.
• what are advantages of branding?

  · Strong branding helps create recognition and awareness among customers. A distinctive brand name, logo and consistent messaging makes it easier for customers to identify and remember their products

  · Strong brands can command higher prices because they’re often associated with higher quality and reliability. Customers are willing to pay premium for branded products
• what are the disadvantages of branding?

  · Developing and maintaining a strong brand can be expensive. This includes costs for logo designs, advertising, brand research and continuous promotion activities. It is also time consuming, as building a strong brand takes time, it requires consistent effort and a long period to establish brand recognition, loyalty and trust

  · Maintaining brand consistency across all platforms and markets can be challenging. Any deviation from the established brand image can confuse customers and weaken the brands impact
• what is customer service?

  refers to the assistance and support a business provides to its customers throughout their buying experience
• what are the advantages of customer service?

  · Excellent customer service ensures that customers have a positive experience with a business, leading to higher levels of satisfaction. Satisfied customers that feel valued are more likely to return and stay loyal to the business and continue doing business with it

  · Satisfied customers are more likely to recommend a business. Positive word-of-mouth can lead to new customers to enhance brand image
• what are the advantages of customer service?

  · Excellent customer service ensures that customers have a positive experience with a business, leading to higher levels of satisfaction. Satisfied customers that feel valued are more likely to return and stay loyal to the business and continue doing business with it

  · Satisfied customers are more likely to recommend a business. Positive word-of-mouth can lead to new customers to enhance brand image
• what are the disadvantages of customer service?

  · Exceptional customer service often requires significant financial investment. Includes costs associated with hiring, training, adding customer tech services and maintaining customer service operations

  · Maintaining consistent service quality across all channels can be challenging. Inconsistent customer experiences can damage a company’s reputation and customer trust. Customer service roles can be stressful leading to burn out. High stress environments can result in high turnover rates
• what is adding features?

  by making a basic product do something that other similar products will not do
• what are the advantages of adding features?

  ·       Improving a product with new features can keep existing customers. Customers are likely to stick with a brand that evolves and meets their changing needs. Introducing features can extend the lifecycle of a product. This can delay the need for complete redesigns and new product launches

  ·       Adding in response to trends and tech in the market ensures that a product remains relevant. This can help a business stay competitive in a changing market
• what are the disadvantages of adding features?

  ·       Adding to many features can make a product more complex and difficult to use. This can use to higher user frustration

  ·       Developing new features requires significant investment and resources. This can strain companys budget and impact profitability, especially if they do not generate return on investment. Plus more features mean more to maintain and support, this can increase the work load for service and tech support and raise maintenance costs
• what is convenience?

  the ease and efficiency which customers can access and use a company's products or services
• what are the advantages of convenience?

  ·       Close locations means customers are willing to pay more

  ·       Convenient products and services save time for consumers, allowing them to focus on other important tasks and activities.
• what are the disadvantages of covinience?

  puts up costs