Purpose and Nature of Businesses

• define the term business


  an organisation that provides goods or services
• reasons for starting a business


  producing goods or supplying services

  provide a good or service to benefit others

  fill a gap in the market (business opportunity)
• define goods


  tangible items that can be physically used or stored
• define services


  intangible actions performed by other people to aid the customer
• example of goods


  computers, food, clothes
• examples of services


  healthcare, hairdressing, plumbers
• define needs


  things required in order to survive
• examples of needs


  food, water, shelter, clothing
• define wants


  desires of things people would like to have but can survive without
• examples of wants


  holidays, jewellery
• define factors of production


  the resources/inputs used to produce a good or service
• what are the 4 factors of production?


  land, labour, capital, enterprise
• what is land?


  the physical land the business is located and also the natural resources a business might need
• examples of land

  non renewable resources, renewable resources, materials extracted by mining, water, animals found in the area
• what is labour?


  the staff needed by a business and the skills and qualifications that they have
• what is capital?


  the machinery, equipment and factories needed by the business to make the goods or provide the service
• deine enterprise


  the business/ organisation; the actions of someone who shows some initiative by taking a risk by setting up, investing in and running a business
• define opportunity cost


  next best alternative; something that is given up in order to do something else
• what are the 3 sectors of economy?


  primary sector, secondary sector, tertiary sector
• define primary sector


  businesses that product or extract raw materials; first stage of production process
• examples of businesses that operate in primary sector


  farmer, miner, fisher
• define secondary sector


  makes/manufactures goods; turn raw materials from primary sector into finished products
• examples of businesses that operate in the secondary sector


  food production, car manufacturer, construction industry
• define tertiary sector


  provides services
• examples of businesses that operate in the tertiary sector


  restaurants, hairdressers, shops, estate agents
• define entrepreneur

  someone who takes the risk of enterprising activity
• characteristics of an entrepreneur


  hardworking, innovative, organised, willing to take a risk
• objectives of an entrepreneur


  be their own boss and have independence and freedom, purse an interest or hobby, earn more money and improve quality of life
• 4 main functional areas of a business


  marketing, operations, human resources, finance
• changes that lead to a constantly changing business environment


  changes in technology, economic situation, legislation, environmental expectations