Business 9606

AS Level
 Hello there!
My name is Nguyen Thi Phuong Anh, your instructor at Business 9606.
Contact me via: phuonganhnt.vh@gmail.com/ 0972.653.456
 Quick Reminders

Turn off your phone Be on time Feel free to ask questions during
the class
 Cambridge International AS Level

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 What are your
expectations from
this course?
Course objectives
The aim of Business is enable students to:
ü Understand and appreciate the role of enterprise and the contribution of business to society – locally,
nationally and internationally

ü Develop critical understanding of business organisations, the markets they serve and the process of
adding value

ü Evaluate business behaviour from the perspective of a range of stakeholders and consider their relative
influence on business organisations

ü Develop an awareness of the political, economic, social, technological, legal, environmental and ethical
issues that influence or may be influenced by business activity

ü Apply quantitative, problem-solving, decision-making and communication skills

ü Develop skills and knowledge needed for further study or employment in business.
 Why should he do to
set up his own Why does Sami
want to set up his What does
business?
own business? Sami do?

Sami lives in a low-income country with few job

opportunities. He is bored with his job in a petrol
service station where he has worked since leaving
school. He feels that he is being watched over all
the time by his manager. He plans to set up a
business by making ceramic pots to sell to tourists.
 Every business is different, the
Business course help students to
understand what happens within a
business.
To set up Sami’s own business, he needs to:
§ Borrow money from relatives
§ Attend an Art class
§ Learn how to ‘fire’ the pots
§ Find a place to work as pottery can be very dusty work
§ Find suppliers of clay and paint
§ Learn how to keep records of all of the transactions.
§ Consider should him employ someone to help him with
the selling of the pots
Focus 1: Enterprise
Unit 1: Business and its environment
 Chapter objectives
On completing this chapter, you will be able to:

1. Understand what business activity involves

2. Recognise that making choices as a result of the ‘economic problem’ always results in
opportunity cost

3. Analyse the meaning and importance of creating value

4. Recognise the key characteristics of successful entrepreneurs

5. Assess the importance of enterprise and entrepreneurs to a country’s economy

6. Understand the meaning of social enterprise and the difference with other businesses.
 DULIP STARTS HIS BUSINESS

o Dulip lives in a large country with many natural resources. He plans to start a business
growing and cutting trees to sell as timber.
o As Dulip is concerned about environment, he will plant two new trees for each one he cuts
down. He visited a bank to arrange a loan. He contacted suppliers of saws and other
equipment to check on prices. He also visited several furniture companies to see if they would
be interested in buying wood from the forest.
o Dulip is prepared to take risks and will invest his own savings, as well as using the bank loan,
to set up the business. He plans to employ three workers to help him to start with.
o If the business is a success, then he will also try to sell the timber abroad. He knows that
timber prices are high in some foreign markets.
 DULIP STARTS HIS BUSINESS

Points to think about:

1. Why does Dulip decided to own and run his own business rather than work for another firm?

2. Why was it important to Dulip to do so much planning before starting his business?

3. Do you think Dulip will make a successful entrepreneur?

4. Are new businesses such as Dulip’s good for a country’s economy?

 Unit 1 - Focus 1

What is a business?
§ A business is any organisation that uses resources to satisfy customers' need by providing
a product/ service to earn profit
§ What do businesses do?
ü Identify the needs of consumers or other firms
ü Purchase resources – or factors of production
ü Produce consumer goods or consumer services that meet the needs of customers

“Consumer goods” are the physical and tangible

“Consumer services” are the non-tangible products
goods sold to the general public – they include
sold to the general public - they include hotel
durable consumer goods, such as cars and washing
accommodation, insurance services and train
machines, and non-durable consumer goods, such as
journeys.
food, drinks and sweets that can be used only once
Unit 1 - Focus 1

Scarce Resources (Factors of production)

• Land: All the natural resources (renewable and non-renewable)

• Labour: Human effort (manual and skilled)
• Capital: all the man made resources (finance, computers, machines, factories, vehicles)
• Entrepreneur/ Enterprise: risk taking ability and who combines all other factors of production
and provides a managing, decision-making and coordinating role.
Unit 1 - Focus 1

Scarce Resources (Factors of production)

Unit 1 - Focus 1
What businesses need
 Unit 1 - Focus 1

Business activity
§ Business activity uses scarce resources to produce goods/services that allow us to have
higher standard of living rather than remained entirely self-sufficient.
§ Input ---Production process (adding value) --- Output (good/service)
Unit 1 - Focus 1

Added Value
• Added value = Selling Price – Cost of Bought in Material
• How can you achieve Added Value?
Unit 1 - Focus 1

How added value can be achieved?

• By building a brand image
• By providing better customer service
• By adding more/ new features in product
• By effective distribution
• By effective promotion
• By targeting an environmental issue and resolving it through your product
• By adding a unique selling point (USP)
Unit 1 - Focus 1

How added value can be achieved?

Unit 1 - Focus 1

Benefits of adding value

• Business might be able to charge high price for its products
• It might be able to increase its market share
• It might be able to increase profitability
• It might be able to get a competitive advantage over its competitors
• It might be able to create brand loyalty
Unit 1 - Focus 1

Economic activity and the problem of choice

• Needs: essential for survival

• Wants: Desires but not essential for survival
• Wants are Unlimited but the resources to fulfill these wants are limited creating a problem
called Basic Economic Problem.
• The only solution to basic economic problem is choice and whenever you choose one
thing you let go another i.e. Opportunity Cost
Unit 1 - Focus 1

Economic activity and the problem of choice

Unit 1 - Focus 1

Dynamic business environment

• New competitors
• Legal changes
• Economic changes
• Technological changes
 Unit 1 - Focus 1

What a business needs to be successful?

• Must have a competent entrepreneur
• Must have strong financial resources
• Must have highly qualified and competent management
• Must have a well trained and highly skilled workforce
• Must be able to design appropriate business plan after considering both internal and external
environmental factors
• Must be flexible in its approach and willing to adapt according to changing market trends
• Must be able to analyze competitor’s strategies effectively and respond to them strongly
 Unit 1 - Focus 1

What a business needs to be successful? (cont.)

• Must have qualified financial and management accountants to manage business’s financial
resources
• Must be innovative
• Must offer a large variety of goods which will suit requirements of different consumer
segments
• Must target multiple markets, in order to spread risk factor
• Must be able to identify market gap and exploit it profitably
Unit 1 - Focus 1
Entrepreneur

• Has a totally new idea or a new way of offering a service

• Risk taking abilities and be able to combine all other factors of production
• Reward – profit
Unit 1 - Focus 1
Characteristics of successful entrepreneurs
• Innovation
• Commitment and self-motivation
• Multiskilled
• Leadership skills
• Self-confidence and an ability to bounce back
• Risk taking
 Bangalore enterprise blossoms

o Rama had the idea for rose-growing business in Bangalore - the city of rose-free.

o He opened two greenhouses growing just roses.

o He used his own savings, so took a considerable risk, but his confidence in the
growth of flower-giving at festivals encouraged other investors.

o Rama worked long hours to make his business a success. The business has grown
at a tremendous rate, helped by Rama’s all-round business skills.

1. Rama is an example of a ‘business entrepreneur’. Explain what is meant by this term.

2. Outline any three characteristics of Rama’s personality that led to the success of his enterprise.
Unit 1 - Focus 1

Challenges faced by entrepreneurs

• Identifying successful business opportunities
• Sourcing capital (finance)
• Determining a location
• Competition
• Building a customer base
Unit 1 - Focus 1

Why do new businesses often fail?

• Lack of record keeping
• Lack of cash and working capital
• Poor management skills
• Changes in the business environment
 Farah branches out on her own

o Farah was a well-qualified dressmaker. She had worked for the biggest dress shops in town.

o Now Farah wanted to set up her own business. Her father invested $5,000, but she needed
about $10,000, so she took from her own savings and a bank loan.

o She wanted to find a shop premises but the city-centre locations were very expensive.

o She wanted to hire an accountant an accountant, but they cost $2,000 a year. Farah wondered
if she could learn to do the accounts herself by taking evening classes at the local college.

o She wants to make her shop very different from competitors in the city, she came up with an
idea. She'd teach dress-making along with selling dresses because customers often asked,
“How did you do that?” when they liked her designs.

o But she didn't realize she had lots of paperwork to do before her business could start.
 Farah branches out on her own

Points to think about:

1. Outline three problems that Farah had to deal with in setting up this new business.

2. Which of these problems do you think was the most important one for Farah to find a good
solution to? Explain your answer.

3. Do you think Farah had some of the right qualities to be a successful entrepreneur? Justify
your answer.
Unit 1 - Focus 1
Impact of an enterprise on a country’s economy
• Employment creation
• Economic growth
• Firms’ survival and growth
• Innovation and technological change
• Exports
• Personal development
Unit 1 - Focus 1

Social enterprise’s – objectives

Social enterprises are not charities, but they do have objectives that are often
different from those of an entrepreneur who is only profit motivated.
• Economic – make a profit to reinvest back into the business and provide some return
to owners
• Social – provide jobs or support for local, often disadvantaged, communities
• Environmental – to protect the environment and to manage the business in an
environmentally sustainable way
SUMMARY POINTS
• Business activity uses resources to try to satisfy customers’ needs.
• Most businesses always look for creating value.
• Entrepreneurship is about taking risks to set up new business ventures.
• Successful entrepreneurs share common characteristics.
• An economy can obtain many benefits from entrepreneurship.
• Entrepreneurs face many challenges.
• Social enterprises have three objectives, not just ‘to make a profit’
AS Level exam practice questions
AS Level exam practice questions
AS Level exam practice questions
AS Level exam practice questions
AS Level exam practice questions
It's so lovely to meet
all of you!
Thank you for listening.