Business knowledge

• Types of utility


  • Utility of Form
  • Utility of Place
  • Utility of Time
  • Provision of services
• Production


  • Creation of goods and services
  • Goods are tangible things
  • Services are intangible tasks
• Production facilities


  • Land
  • Labour
  • Capital
  • Entrepreneur
• Types of industries/producers


  • Primary industries/producers
  • Secondary industries/producers
  • Tertiary industries/producers
• Primary industries/producers


  • Extractive industry
  • Manufacturing industry
  • Constructive industry
• Secondary industries/producers


  Commerce/Commercial services
• Tertiary industries/producers


  Provides social structure to enable production
• Direct production


  A person produces everything they need to satisfy their own needs
• Indirect production


  Each producer specialises in one product and exchanges excess for other products
• Outsourcing


  Contracting a task, operation, job or process to a third party for a significant period of time
• Advantages of outsourcing


  • Allows concentration on core business
  • Brings better management skills
  • Staffing flexibility
  • Risk-sharing
  • Lower cost of operation and labour
• Outsourcing


  Any task, operation, job or process that could be performed by employees within an organisation, but is instead contracted to a third party for a significant period of time
• Advantages of outsourcing


  • Allows an institution to concentrate on core business
  • An outsourcing institution can bring better management skills
  • Staffing flexibility
  • Risk-sharing
  • Lower cost of operation and labour
• Disadvantages of outsourcing


  • Risk of exposing confidential data to a third party
  • Losing management control of business functions
  • Outsourcing institution motivated by profit may compromise on quality
  • Lack of customer-focus
• Types of industry


  • Primary (Extractive)
  • Secondary (Manufacturing)
  • Tertiary (Services)
• Types of trade


  • Home trade
  • Foreign trade
  • Aids to trade (Transport, Insurance, Banking, Warehousing, E-Commerce, Advertising)
• Specialisation


  Concentration of resources in production of narrow range of products (or one product) rather than a wide range of products
• Types of specialisation


  • Specialisation by individuals
  • Specialisation by regions
  • Specialisation in countries
• Specialisation by individuals


  • An individual concentrates on one activity or occupation
  • Exceptions: job not available, individual may not wish to do the job, individual may be a bad judge of what they are best at
• Specialisation by regions


  • Concentration of industry in a particular area due to trained labour force, raw materials, sources of power, and access to market
• Specialisation in countries


  • Countries concentrate effort on producing goods and services they can produce more cheaply than other countries due to suitability of climate, availability of raw materials, readiness of market, and skill of labour force
• Merits of specialisation


  • Increases and sharpens skills
  • Saves time in training
  • Saves skill
  • Enables greater use of machinery
• Demerits of specialisation


  • Monotony
  • Loss of craftsmanship
  • Increases risk of unemployment
  • Increases interdependence between sectors
• Retail trade


  Selling goods in smaller quantities to the final consumer
• Functions of a retailer

  • Anticipation of consumer's demand
  • Buying large and selling small
  • Making goods immediately available
  • Grading, packing and sorting
  • Storage
• Possible personal services of a retailer

  • Advice and information
  • Delivery service
  • After-sales service
  • Credit facilities
• Types of retailers


  • Sell in shops vs other methods
  • Small scale vs large scale
  • Solely retailers vs combined with manufacturing/wholesaling
• Small scale retailing

  • Limited variety and quantity of goods sold within a local area
  • Examples: unit shops, mobile shops, roadside traders
• Advantages of small scale retailing

  • Provides personal service
  • Provides convenient source of supply
  • Can sell in very small quantities
  • Trade for long and irregular hours
• Disadvantages of small scale retailing

  • Holds small stock and limited variety
  • High costs and prices
  • Short of capital
• Large scale retailing


  • Developed due to cheap and adequate transport, and people moving further from work/home areas
  • Examples: multiple shops, departmental stores, supermarkets, superstores, hyperstores, mail order firms
• Advantages of large scale retailing

  • Economies of scale
  • Specialisation
  • Time saving
  • Quick turnover
• Disadvantages of large scale retailing

  • Only standard goods are stocked
• Recent trends in retailing

  • Rising affluence
  • High labour costs
  • Increasing use of branded/pre-packed goods
  • New advertising and sales promotion techniques
  • New materials for display and monitoring shoplifting
  • Greater mobility
• Wholesale trade


  Business of selling things in large amounts to other businesses rather than to individual customers
• Functions of a wholesaler

  • Warehousing
  • Buying in advance of demand
  • Preparation (grading, sorting, packing)
  • Finance
  • Information
  • Delivery
• Types of wholesalers


  • Primary wholesalers
  • Secondary wholesalers
  • General wholesalers
  • Specialist wholesalers
  • National, regional, local wholesalers
• Wholesalers


  • Retailer gets almost everything he/she needs in one place, and near to him
  • Pattern of wholesaling depends on number and size of production units, types of retail outlets and nature of commodity concerned
• Primary Wholesaling


  Specialise in collecting together fairly small quantities from suppliers and will sell in bulk to secondary wholesalers
• Secondary Wholesaling


  Wholesalers sell to retailers