BUSINESS ACTIVITY

The purpose and nature of business activity:

 Concepts of needs, wants, scarcity and opportunity cost

 Importance of specialization

 Purpose of business activity

 The concept of adding value and how added value can be increased

Needs and Wants

• In Business Studies we talk about basic human n________ and w_______ .

• Human needs are un____________ . A basic want is the desire to consume goods
and services. Wants are unlimited because there is no limit to the amount of goods and
services people would like to consume.

Key points:
• Human needs :

• Human wants :

Economic Problems

• We cannot have everything we want: We have to make c . This is because

resources are s : there are not enough for all the things we would like to do.
Therefore, we have to decide which wants we will satisfy and those which we will not.
All choices involve giving something up and this is called o____________
c__________ .

• The real cause of the economic problem is because un wants, but limited
resources.

Key points:

• Scarcity :

• Opportunity cost :
Factors of Production

• Factors of production are to be categorized into 4 main groups:

a) Land

b) Labour

c) Capital

d) Enterprise

Specialisation/ Division of Labour

• It is important to use resources in the most efficient ways.
• Machinery is now more widely used.
• Larger firms aften employ workers skilled in particular tasks.

Key points:

• Division of labour :

Adding value and how it can be increased

What is added value?

The i__________worth that a business creates for a product. It is the difference
between what a business p___________for the product and the price that is able to
charge for the product/service.

How can we increase added value?

1.
2.
3.
4.
5.
6.

Group work
• 5 students in a group
• Design one of the following with a unique selling proposition
- Mobile phone
- Car
- Football boots

Why value added is important for a business? [4]

Reason 1: ………………………………………………………………………………
Explanation: …………………………………………………………………………...........

…………………………………………………………………………………

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…………………………………………………………………………...........

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Reason 2:

………………………………………………………………………………

Explanation: …………………………………………………………………………………

…………………………………………………………………………...........

…………………………………………………………………………………

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Classification of Business Activity Learning outcomes:

• To describe and classify business activity in terms of primary, secondary and tertiary

sectors.

• To identify reasons for the changing of business classification.

• Classify business enterprises between private sector and public sector in mixed

economy.

Primary sector:

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

________________________

Secondary sector:

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

________________________________
Tertiaty sector:

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

____________________________

Discuss with your partners: 1) List 4 examples of industries or markets in the primary

sector: a)________________________

b) _______________________

c) _______________________

2) List 4 examples of industries or markets in the secondary sector:

a)________________________

b) _______________________

c) _______________________

3) List 4 examples of industries or markets in the tertiary sector:

a)________________________
b) _______________________

c) _______________________

Key points:

• De-industrialisation:

_________________________________________________________

• Mixed economy:

___________________________________________________________

• Capital: _____________________________________

ENTERPRISE, BUSINESS GROWTH AND SIZE

Enterprise, Business Growth and Size Enterprise and entrepreneurship

Learning outcomes:

• Identify characteristics of successful entrepreneurs.

• Explain contents of a business plan and how business plans assist entrepreneurs.

• Explain why and how government support business start-ups.

• Identify methods of measuring size, eg. number of people employed, value of output,

capital employed.
• Identify the limitations of methods of measuring business size.

• Identify reasons why the owners of a business may want to expand the business.

• Identify different ways in which businesses can grow.

• Identify problems linked to business growth and how these might be overcome.

• Identify reasons why businesses remain small.

• Identify and explain causes of business failure, eg. lack of management skills,

changes in the business environment.

• Identify reasons why new businesses are at a greater risk of failing

Advantages of being entrepreneur Disadvantages of being Entrepreneur

Draw a mind-map for the characteristics of successful entrepreneurs:
Business Plan

Definition: Business Plan

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Elements in the business plan:

1)____________________

2) ____________________

3) ____________________

4) ____________________

5) ____________________

6) ____________________

7) ____________________
8) ____________________

9) ____________________

10) ___________________

Why governments support business start-up?

Reason 1: ______________________________________________________

Explanation: _____________________________________________________

_______________________________________________________________

Reason 2: ______________________________________________________

Explanation: _____________________________________________________

_______________________________________________________________

Reason 3: ______________________________________________________

Explanation: _____________________________________________________

_______________________________________________________________

Reason 4: ______________________________________________________

Explanation: ____________________________________________________

_______________________________________________________________
Reason 5: ______________________________________________________

Explanation: ____________________________________________________

______________________________________________________________

Examples of support given by government to new business owners:

• Business _________

• P ____________

• Fi____________

• L____________

• R____________

Why Do Owners Often Want Their Businesses To Grow?

• To get higher profits.

• To have higher status and prestige for the owners and managers.

• To achieve lower average costs.

• To achieve larger share market.

How Can Businesses Grow?

a) I____________ growth

b) E___________ growth

Examples of External Growth:

a) Horizontal Integration:

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Benefit 1:

______________________________________________________________________

Benefit 2:

______________________________________________________________________

b) i)Forward Vertical Integration:

______________________________________________________________________

______________________________________________________________________
______________________________________________________________________

______________________________________________________________________

Benefit 1:

______________________________________________________________________

Benefit 2:

____________________________________________________________________

ii) Backward Vertical Integration:

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Benefit 1:

______________________________________________________________________

Benefit 2:

______________________________________________________________________

c) Conglomerate Integration:

______________________________________________________________________
______________________________________________________________________

______________________________________________________________________

______________________________________________________________________

Benefit 1:

______________________________________________________________________

Benefit 2:

______________________________________________________________________

Problems Of Business Growth and How To Overcome Them

Activity: Give some possible ways to overcome expansion problems

Problems Resulting From Expansion Possible Ways To Overcome Problem

Difficult to control

Poor Communication

Costly

Different management style when

integration

Why Do Some Businesses Stay Small?

a) Type of i____________________
b) Market s ____________

c) O______________ objectives

Why Some Businesses Fail?

a) Poor m_______________

b) Failure to p___________ for c ______________

c) Poor f____________ management

d) O__________ expansion

e) R________ of new business s_________ up