Business

• Needs


  Things that are essential for us to be able to live
• Wants

  Things we would like to have but can live without
• Examples of wants

  Car, mobile phone, holiday, new clothes
• Examples of needs

  food, water, clothing, shelter
• Goods


  Things you can see and touch
• Durable

  Goods we can use again and afain
• Non-durable


  Goods we normally use only once
• Services


  Services are things we can't see, touch or pick up but are done for you. This means they are intangible
• Examples of services

  For example, receiving an education, being entertained at the cinema
• The business cycle

  1) Businesses produces goods and services to meet the never ending wants of consumers

  2)Consumers buy goods and services to obtain the things they want

  3)Wealth is created for businesses and their employees

  4)Consumers have money from their wages to spend on other goods and services
• What are the four factors of production

  Land, Labour, Capital and Enterprise
• Land + examples

  The natural resources used to provide a good or service such as, coal, water, oil, sun, the land the business is built on
• Labour + examples


  The workforce used to produce a product or provide a service such as

  • cleaners

  • accountants

  • deliverydrivers

  • machinists
• Capital + examples


  the man made resources that are needed to make a product for example

  • factory

  • tools

  • equipment

  • machinery

  • vehicles
• Enterprise + examples


  The idea the owner had to create the business. How the land, labour and capital is used to make a good or provide a service.
• Sectors of economy

  Public, private and third
• Public


  owned by the government on behalf of the people. Public does not want to make a profit.
• Private


  owned by shareholders / individuals. Private organisations aim to make a profit.
• Third

  voluntary organisations, charities and social enterprises. They exist to bring people together and use any money to help a good cause.
• Sectors of industry

  primary, secondary, tertiary
• Primary

  Businesses involved in extracting natural resources

  - forestry

  - farming

  - mining

  - oil extraction
• Secondary


  Businesses involved in manufacturing and construction by taking natural resources and changing them into things we can use

  - clothing manufacturing

  - ship building

  - car manufacturing
• Tertiary


  is concerned with providing a service.

  Services are activities that are done by people or businesses for consumers

  -Banking

  -Barbers

  -Hotel
• How are customers important to a business


  Customers are important to a business as they are the people who buy the goods or services it provides. If customers are not satisfied the business will not be able to sell its goods or services, therefore no profit will be made and the company may go out of business
• Consequences of poor customer service

  • decrease in profits

  • bad reputation

  • loss of market share

  • loss of competitive edge

  • low staff morale
• Methods to ensure customer satisfaction

  • recruiting suitable staff

  • provide staff training - so they are knowledgeable and can answer customer queries

  • providing prompt service

  • keeping a customer informed

  • getting feedback from customers

  • operating a customer care policy
• What can good customer service lead to

  • Customer loyalty

  • A good reputation

  • New customers

  • An edge over the competition

  • Fewer complaints / returns

  • Increased sales

  • Increased profits

  • Increase in its market share

  • Attract high quality staff
• How do businesses measure customer service

  • Increase in customers

  • Increase in sales

  •Positive feedback online e.g.TripAdvisor

  • Decrease in customer complaints
• Sole trader


  A business which is owned and run by one person (a sole trader can employ staff).
• What are sole traders financed by

  By government grants, a small bank loan, borrowing from family & friends
• Advantages of being a sole trader

  -Easy to set up; do not need to complete lots of legal documents.

  - All of the profits are kept by the owner.

  - The owner can choose when to work and when to take holidays.

  - All the decisions are made by the owner
• Disadvantages of being a sole trader

  - There is nobody to share the workload and responsibility

  with.

  - Unlimited liability

  - There is nobody to cover if the sole trader is ill.

  - Difficult to get a bank loan from a bank due to risk.
• Unlimited liability


  If a sole trader business falls into debt, the owner is held personally responsible for the money owed.

  This means that the sole trader may have to sell his/her personal possessions in order to pay off the business debts
• Partnership


  • A partnership is a business between 2 to 20 people.
• What are partnerships financed by

  small bank loan, inviting a new partner and putting profits back in to the business.
• Advantages of a partnership

  - Workload, responsibility and decision making can be shared amongst the partners.

  - Different partners often bring different experiences and skills.

  - Financial information is kept private

  - Finance can be raised more easily compared to a sole trader.
• Disadvantages of a partner ship

  - Any profit that the business makes is split between the partners.

  - Unlimited liability for each partner.

  - Arguments between partners might happen.

  - A legal document known as a partnership agreement needs to be created
• Private limited company (Ltd)


  To be an owner of a ltd company you have to buy shares. Youcanonlybuy shares if you are invited by an existing shareholders
• What's a dividend

  • Shareholders receive a return on the money they have invested in the business
• Who has day to day control of a private limited company

  Board of directors