AS Business

• Business


  Any organisation that uses resources to meet the

  needs of customers by providing a product or

  service they demand
• Demand


  Particular good or service
• Effective Demand


  Being able and willing to

  pay for the product or service
• What do Businesses do?

  • Identify needs of consumers (firms

  are also consumers)

  • The purchase resources (factors of

  production)

  • Produce goods and services to

  satisfy wants and needs
• Classifying goods and services

  • Consumer goods:
  • Durable: Cars, equipment, machines
  • Non-Durable goods: Food, drinks, sweets
  • Consumer services:
  • Capital goods:
• Factors of Production


  • LAND
  • LABOUR
  • CAPITAL
  • ENTERPRISE
• ADDED VALUE


  The difference between the cost of purchasing

  raw materials and the price the finished goods

  are sold for
• VALUE ADDING

  SELLING PRICE COST OF SALES = PROFIT

  SELLING PRICE COST of RAW

  MATERIALS = VALUE ADDED
• Purpose = Value Added

  Value is added to product in each stage

  Value makes the product more desirable

  Changes natural resources to different

  product

  Without businesses you will still have the

  original product

  Increases standard of living
• SELLING PRICE COST of RAW

  MATERIALS=

  ADDED VALUE.

  How can added value be increased?

  Do you increase SP?

  Do you decrease Cost of Raw Materials?
• Building a brand

  Product features and benefits

  Added value is equivalent to the increase in value that

  a business creates by undertaking the production

  process

  • Delivering excellent service
  • Offering convenience
• Local, National and international

  Businesses

  • Local
  • National
  • International
  • Multinational
• Entrepreneur


  Someone who takes the financial risk of starting

  and managing a new venture
• Characteristics of a successful

  Entrepreneur

  • Innovation
  • Commitment

  and self motivation

  • Multi-skilled
  • Leadership skills
  • Self confidence

  ability to bounce back

  • Risk Taking
• Challenges Entrepreneurs face


  • Lack of a business opportunity
  • Obtaining sufficient capital (finance)
  • Cost of a good location
  • Competition
  • Lack of a customer base
• Risk


  All business decisions involve risk

  You could reduce the risk through market research to

  avoid errors made by failed businesses

  Business planning reduces risk
• Uncertainty


  Cannot be foreseen, measured or calculated

  Plans made for the future will always be unforeseen and

  impossible to predict (covid is an excellent example)
• Impact of entrepreneurs on

  Economy

  • Employment Creation
  • Economic Growth
  • Productivity
  • Innovation and technological change
  • Exports
  • Personal development
  • Increased Social Cohesion
• Intrapreneurship


  Term given to people who have some of the same qualities as

  entrepreneurs and are encouraged to demonstrate the same skills as

  entrepreneurs within an existing business
• Differences between Entrepreneur and Intrapreneur

  • Main Activity
  • Risk
  • Rewards
• Benefits to existing business:

  • Injecting creativity and innovation into the

  business

  • Developing new ways of doing business
  • Driving innovation and change within the

  business

  • Creating a competitive advantage
  • Encouraging original thinkers and innovators

  to stay in the business
• Business plan


  Written document

  that describes a business,

  its

  objectives, its strategies, the market it is in and its financial forecasts
• Includes:


  • Executive summary (overview of strategies)
  • Description of business opportunity (nature of product, target market

  and

  skills and experience)

  • Marketing and sales strategy
  • Management team and personnel
  • Operations
  • Financial forecasts
• Business Plans

  Benefits

  • Forces owner to think

  about proposal

  strengths and

  weaknesses

  • Gives owners and

  managers a clear plan
• Business Plans

  Limitations


  • Does not guarantee

  success gives false

  sense of certainty

  • Must be supported by

  research
• Industrial Sector Business Examples
• Industrial Sectors


  • Primary
  • Secondary
  • Tertiary
  • Quarternary
• Types of Entrepreneurial

  businesses

  • Primary sector:
  • Secondary sector:
  • Tertiary Sector:
• Industrialisation

  Benefits

  • GDP Increases with

  living standards

  • Less importing and

  more exporting

  • Job creation
  • More tax payers for

  government

  • Value added
• Industrialisation

  Problems

  • Urbanisation
  • Imports of raw

  material needed

  • Multinational

  companies are needed
• Deindustrialisation

  Causes

  • Rising incomes with higher

  standard of living results in

  spending on services not on goods

  • Manufacturing businesses in

  developed countries face much

  more competition due to increase

  in global industrialisation
• Deindustrialisation

  Consequences

  • Job losses in agriculture and

  manufacturing industries

  • Movement towards cities and

  towns

  • Job opportunities in service

  industries

  • Increased need for retraining
• 3 Main economic Systems

  • Planned Economy (Centrally Planned,

  command or collectivist economy)

  • Market Economy (Free enterprise Economy)
  • Mixed Economy
• Types of Economic Systems

  • Mixed Economy
  • Market Economy
  • Centrally Planned

  Economy
• 3 Business Sectors


  • Public Sector
  • Private Sector
  • Non Profit Organisations
• Public corporations


  • Advantages
  • Disadvantages
• Legal structures of Businesses

  • Sole Traders
  • Partnerships
  • Limited Companies: Private and Public
  • Cooperatives
  • Franchises
  • Joint Ventures
  • Holding Companies
• Unlimited Liability


  Business owners have full legal responsibility for the

  debts of the business
• Limited Liability


  Only potential loss a shareholder has, if the company

  fails, is the amount invested in the company, not total wealth of

  shareholder
• Share


  a certificate confirming part ownership of a company and entitling

  the shareholder owner to dividends and certain rights