The role of business

• Businesses exist to meet customer needs by organising resources to provide goods and services that customers want.
• Adding value to goods and services helps a business to sell more.
• Businesses try to achieve this by carrying out activities such as producing goods or providing services with the aim of making a profit.
• Goods are items that can be physically held, for example, a book.
• Examples of goods include computers, food, clothes.
• Services are intangible actions that cannot be stored.
• Examples of services include hairdressing, train journeys, internet access.
• An entrepreneur is a calculated risk-taker who sets up a business in return for financial gain.
• An entrepreneur will do this by making decisions about what to produce or provide using the resources available to them.
• These resources will include land, labour and capital.
• Land refers to naturally occurring resources, such as land and water.
• Labour refers to human effort, skills and knowledge.
• A gym will need staff who can offer advice on health and fitness.
• Capital refers to equipment and money used to provide goods and services.
• A gym will need fitness equipment and money to pay staff.
• Enterprise is the willingness to take risks, make decisions and organise resources.
• All of these will be needed to open the gym.
• Businesses exist to meet customer needs by organising resources to provide goods and services that customers want
• Adding value to goods and services helps a business to sell more
• A business is more likely to survive and make a profit if it provides customers with what they want, whether that is specific product features, low prices, fast delivery, an easy-to-use website, or a pleasant shopping experience
• Knowing what customers need and want is an important part of running a business
• Needs are things required in order to survive, including clothing, food, shelter, warmth, and water
• Wants are things that people would like to have but can survive without, such as event tickets, designer accessories, holidays, laptops and mobile phones, and cars
• Businesses exist to meet customer needs by organizing resources to provide goods and services that customers want
• Adding value to goods and services helps a business to sell more, as customers are usually willing to pay more for products that are made more appealing
• Added value is the difference between the selling price and the cost price of a good or service
• In the example given, the crisp manufacturer added £100 of value to the potatoes by selling the crisps for £200 after buying the potatoes for £100
• Ways a business can add value to a good or service:

  • Convenience: saving customers time by making a product easier to use
  • Branding: brand awareness can encourage customers to pay more
  • Quality: customers are usually willing to pay more for higher-quality products
  • Design: the features or presentation of a product can add value
  • Unique selling point (USP): something that makes a product stand out from the competition