The purpose and nature of businesses

• What is one reason an entrepreneur may start a business?

  To produce a good
• What is another reason an entrepreneur may start a business?


  To provide a service
• Name a business that provides a service.

  Premier Inn
• What is a third reason an entrepreneur may start a business?

  To distribute products
• What is one reason an entrepreneur may start a business related to societal benefit?

  To benefit society
• Name a type of organization that benefits society.

  Charities
• What is a reason for starting a business that involves market needs?


  To fill a gap in the market
• What does it mean to fill a gap in the market?


  It means to open a business in an area where there is no existing service or product
• Give an example of filling a gap in the market.


  Opening a hair salon in a village with no other hairdresser
• What does it mean to fulfil a business opportunity?

  It means to take advantage of a favorable situation to start a business
• What are goods?


  Tangible items that can be used and stored
• How do businesses interact with goods?

  Businesses make goods and sell them to customers, who then own them
• Can you give examples of goods?

  Computers, food, and clothes
• What are wants in the context of economics?

  Wants are things that people would like to have but can survive without.
• How do wants differ from needs?

  Wants are unlimited and not essential for survival, while needs are essential for survival.
• Can you give examples of wants?

  Examples of wants include event tickets, designer accessories, holidays, laptops, mobile phones, and cars.
• What are services?

  Intangible actions that cannot be stored
• What are needs in the context of survival?

  Needs are things required in order to survive.
• What are the life-essential things included in needs?

  • Clothing
  • Food
  • Shelter
  • Warmth
  • Water
• How do businesses provide services to customers?


  Businesses provide services to customers, who have access to them for a period of time
• Can you give examples of services?

  Hairdressing, train journeys, and internet access
• What are the key differences between goods and services?

  • Goods:
  • Tangible items
  • Can be used and stored
  • Examples: computers, food, clothes
  • Services:
  • Intangible actions
  • Cannot be stored
  • Examples: hairdressing, train journeys, internet access
• What are the four factors of production?

  Land, labour, capital, and enterprise
• What does the factor of production 'land' include?

  • Physical land where the business is located
  • Natural resources needed by the business
  • Non-renewable resources (e.g., gas, oil)
  • Renewable resources (e.g., wind power)
  • Often considered scarce resources
• What does the factor of production 'labour' encompass?

  • Staff needed by the business
  • Skills and qualifications of the staff
• What is included in the factor of production 'capital'?

  • Machinery needed by the business
  • Equipment needed to make products or provide services
• What role does 'enterprise' play in the factors of production?

  • Refers to the entrepreneur
  • Takes risks to create the business
  • Utilizes the other three factors of production
• What is the definition of opportunity cost?

  An opportunity cost is something that is given up in order to do something else.
• How does opportunity cost apply to a business choosing between two office locations?

  A business faces opportunity costs for the location they do not choose.
• If a business has £5,000 and must choose between an advertising campaign or staff training, what must they consider?

  They must weigh up the opportunity costs of picking one option over the other.
• What are some examples of opportunity costs in business decisions?

  • Choosing between two different office locations
  • Deciding between spending £5,000 on an advertising campaign or staff training
• What is the primary sector composed of?


  Businesses that produce or extract raw materials
• What activities are included in the primary sector?

  Fishing, farming, and mining
• What is the secondary sector responsible for?

  Making or manufacturing goods
• How does the secondary sector relate to the primary sector?

  It takes raw materials from the primary sector and turns them into finished goods
• Where does the manufacturing process in the secondary sector often take place?

  In factories
• Can you name two examples of businesses in the secondary sector?

  Heinz and BMW
• What is the tertiary sector focused on?

  Providing services
• What are some examples of services provided by the tertiary sector?

  Estate agents, hairdressers, and restaurants
• What are the four main business functions that contribute to a successful business?

  • Marketing
  • Operations
  • Human Resources
  • Finance