Purpose of a business

• Goods


  Tangible items that can be used and stored, such as computers, food and clothes
• Services


  Intangible actions that cannot be stored, such as hairdressing, train journeys and internet access
• Wants


  Things that people would like to have but can survive without, such as event tickets, designer accessories, holidays, laptops, mobile phones and cars
• Needs


  Things required in order to survive, such as clothing, food, shelter, warmth and water
• Entrepreneurs may choose to set up a business for a number of reasons and there are a number of business sectors that it can be in
• To be successful, entrepreneurs need to have a number of characteristics
• Factors of production


  The resources a business needs to produce its products or provide its services
• Factors of production


  • Land
  • Labour
  • Capital
  • Enterprise
• Land


  The physical land where the business is located and the natural resources the business needs, including non-renewable resources like gas and oil and renewable resources like wind power
• Labour


  The staff needed by the business and the skills and qualifications they have
• Capital


  The machinery and equipment needed by the business to make the products or provide the service
• Enterprise


  The entrepreneur who takes a risk and creates the business using the other three factors of production
• Opportunity cost


  Something that is given up in order to do something else
• Opportunity cost examples


  • Choosing between two different office locations
  • Choosing between using money for a new advertising campaign or more staff training
• Primary sector


  Businesses that produce or extract raw materials
• Secondary sector


  Businesses that make or manufacture goods, taking raw materials from the primary sector and turning them into finished goods
• Tertiary sector


  Businesses that provide services
• Dynamic nature of business

  Businesses operate in constantly changing environments impacted by national and international factors
• Entrepreneurs


  • Need to have a number of characteristics to be successful
• Changes in the business environment

  • Technological change
  • Economic change
  • Legal change
  • Environmental expectations
• Technological change


  Businesses need to keep up with rapid changes in technology, including advertising methods, production, e-commerce and m-commerce
• Economic change


  Economic factors like interest rates, inflation and GDP can have a big impact on business success
• Legal change


  Businesses will be affected by new legislation, such as changes to minimum wage which may increase costs or affect demand
• Environmental expectations


  Businesses have to be aware of how strongly customers feel about environmental and other ethical issues, which will affect how they produce, package and transport products, as well as the resources they use