business

• Business


  An organization that uses its resources to trade goods and services in order to make a profit
• Businesses


  • Have limited resources
  • Face the concept of opportunity cost
• factors of production

  • Land
  • Labor
  • Capital
  • Enterprise
• Outputs produced by businesses

  • Goods
  • Services
• Sectors of production


  • Primary (extracting raw materials)
  • Secondary (manufacturing to final goods)
  • Tertiary (selling to consumers)
• Factors determining business location

  • where the market is located
  • Labor availability
  • suppliers
  • Competition
  • Costs
• Unlimited liability

  the business owner or owners are personally responsible for all of the debts of the business, no matter what the value.
• Limited liability

  the business owner or owners are only responsible for business debts up to the value of their financial investment in the business
• Types of business ownership

  • Sole trader
  • Partnership
  • Private limited company
  • Public limited company
  • Not-for-profit organization
• Stakeholders in a business

  • Shareholders
  • Employees
  • Customers
  • Suppliers
  • Local community
• Business plan


  Helps a business raise finance, set objectives, and achieve its aims
• Business objectives

  • Survival
  • Break-even
  • Growth
  • Increase market share
  • Internationalization
  • Profit maximization
• Revenue

  The money a business earns from selling products
• Fixed costs

  Costs that do not change with output
• Variable costs


  Costs that change with output
• Profit

  Revenue minus total costs
• Ways businesses can grow

  • Organic growth (self-funded expansion)
  • External growth (mergers and takeovers)
• Economies of scale


  As a business grows, its average costs fall due to factors like bulk buying
• Diseconomies of scale


  As a business grows, its average costs rise due to factors like communication and control difficulties