business studies

• Business activity involves the production of goods or services to satisfy people's wants, which are not essential for living.
• People's wants are unlimited but the resources available to produce them are limited, leading to the basic economic problem of scarcity.
• Scarcity means there are not enough products to fulfill the wants of the population.
• Resources, also known as factors of production, include land, labour, capital & enterprise.
• Land refers to any natural resource used in production.
• Labour refers to the mental and physical efforts of a human.
• Capital refers to man-made goods used in production.
• Enterprise refers to the risk-taking ability of an entrepreneur.
• As there are limited resources, people are always forced to make a choice, which is known as opportunity cost.
• Specialisation is when people and businesses focus on what they are best at.
• Division of labour is when production is split into different tasks and each worker performs one of these tasks.
• Methods to overcome the problems of entering a new market include joint-ventures, franchising, licensing, and localizing existing brands.
• Marketing strategy is a plan to combine the right combination of the 4 elements of the marketing mix for a product or service to achieve a particular marketing objective.
• The globalization of businesses has been increasing over the years, with opportunities and problems such as growth potential in other countries, lack of knowledge of competitors or consumer habits, cultural differences, exchange rates, trade barriers, and transport costs.
• Marketing strategy developed depends on the size of market, number and size of competitors, marketing objectives, target market, finance available.
• Complying with all legal controls can raise total costs of a business by requiring changes to goods/ services, ads, packaging, prices, and may increase employment.
• Legal controls in marketing include weights and measures, sale of goods, supply of goods and services act, distance selling regulations, trade descriptions.
• Advantages of specialisation include workers specialized in certain tasks, increased efficiency, and less time wasted from one workbench to another.
• Marketing objectives may include increasing sales, improving the existing product, increasing sales of a new product, maintaining/ increasing market share, increasing sales in a niche market.
• Disadvantages of specialisation include workers becoming bored of doing the same job, efficiency might fall, and if a worker is absent, no other worker can do the job.
• The purpose of business activity is for businesses to combine scarce factors of production to produce goods or services to satisfy people's wants.
• Advertising includes informative advertisements where the promotion of a product focuses on giving information about a product.
• Agents know the most profitable places and prices to sell in other markets that manufacturers may not know, but manufacturers lose lots of control on the way the product is sold to customers.
• Wholesalers buy in bulk and divide their stock into smaller quantities to sell to retailers, reducing storage costs for small retailers but making it more expensive to buy from a wholesaler.
• The aims of promotion are to raise awareness about a company's products, encourage customers to make a purchase, increase sales, inform people about particular issues, and introduce new products in the market.
• Promotion is essential when trying to increase or create brand loyalty, and it includes advertisements such as TV, newspaper, and internet ads, as well as sales promotion like free gifts, coupons, and samples, which are used for short periods.
• E-commerce, or selling of goods and services through the internet, has benefits such as cheaper customers encouraged to buy in bulk, but it also has problems like higher distribution costs, no direct contact, and returns are more expensive.
• Direct contact with customers is a disadvantage of the manufacturer selling to retailers as it makes it hard to create customer loyalty, but it is cheaper due to lower transportation costs.
• Car components are sold to a car factory, which is advantageous as it is very simple but impractical because consumers don't usually live near factories.
• Added value is the difference between the selling price and the cost of bought-in raw materials and components.
• Businesses can be put into three sectors: primary sector (extraction of natural resources), secondary sector (manufacturing and production of goods), and tertiary sector (provides services).
• The relative importance of these sectors in an economy depends on the number of workers employed and the value of output produced.
• Markets change due to consumer spending patterns, trends and fashions, advancement in technology, unemployment/wages, an ageing population, and changing customer needs.
• There are two types of market: mass market and niche market.
• The benefits of market segmentation include business aiming all of its marketing efforts to the specific segment, making marketing costs efficient, and identifying a market segment whose needs are not being fully met and filling the gap.
• Niche market is a small (usually specialized) segment of a mass market, with advantages of avoiding competition with big businesses, focusing on specific needs of customers, and having an advantage over mass market, but disadvantages of limited number of sales and high costs of advertisement.
• Globalization, transportation, and the internet have made markets more competitive, requiring businesses to maintain good customer relationships, keep improving existing products, bring out new products to keep customer’s interest, and keep costs low.
• Businesses must identify these changes and respond in order to stay successful.
• The market is the total number of customers, potential customers and other sellers of a product/service.
• Customer needs are always satisfied to maintain customer loyalty.