business studies

• Needs


  Goods or services essential for living like shelter, food, clothing, and oxygen
• Wants


  Goods or services which people would like to have but are not essential to live
• People don't have all their needs and wants
• Reasons why people don't have all their wants

  • Lack of opportunities
  • Lack of money
  • Lack of property
  • Lack of time
  • Lack of freedom
• Money is not the only problem, the economic problem is about the four factors of production: land, enterprise, labor, and capital
• Printing more money and doubling everyone's incomes does not solve the economic problem if there are no more goods for people to buy
• Four factors of production

  • Land
  • Enterprise
  • Labor
  • Capital
• Scarcity


  Unlimited wants and limited resources
• Opportunity cost


  The thing that is given up when a choice is made between two alternatives
• Opportunity cost examples


  • Individual choosing holiday over car
  • Business choosing machine A over machine B
  • Government choosing new road over new school
• Specialization


  1. Carpenter 250 years ago making tables by hand

  2. Carpenter today with employees specializing in different steps of table production
• Advantages of specialization


  • Quicker at job
  • Division of labour
  • Stay in one place in factory
  • Only need one set of training sessions
• Disadvantages of specialization


  • Boring doing one thing all day
  • Production stops when specialist is absent
  • Health issues from not moving around
• Purpose of business activity

  • Combine scarce factors of production
  • Produce goods and services to satisfy needs and wants
  • Employ people as workers and pay them wages
• Added value


  Difference between selling price of a product and the cost of bought in materials
• Ways businesses can increase added value

  • Dry cleaning business: express one-hour service, home delivery
  • Exclusive hairdressers: personal consultations, prime location
  • Health food supermarket: in-store cafe, home delivery, advice
• Organization structure


  Levels of management and division of responsibilities within an organization
• Bill's business has a simple organization structure as he is a sole trader with no employees
• Delegation


  Giving a subordinate the authority to perform particular tasks
• Leadership styles


  • Autocratic
  • Democratic
  • Laissez-faire
• Trade union


  A group of employees who've joined together to ensure their interests are protected