IGCSE Business Studies Unit 1 – Business Activity Chapter 1: The Purpose of Business Activity

In this unit you will learn……. The economic problem of unlimited wants and limited resources The factors of production The development of economic activity and the use of specialization What is meant by a business The most common aims of business The different groups involved in business activity.

Classify these. Needs Wants

Needs and Wants Wants Needs Non-essential goods and services that people would like to have. Interests & Tastes Needs Essential goods or services necessary for living. Satisfy the basic things for life.

Limit your wants to no more than 25 items please! Make your list Needs Wants Limit your wants to no more than 25 items please!

Why? Why? Why?

Why? Why? Why?

Is this the answer?

The Economic Problem Factors of Production The shortage of goods & services TOO FEW FACTORS OF PRODUCTION! Land Labour Factors of Production Enterprise Capital

All of the natural resources provided by nature Land All of the natural resources provided by nature

All people’s efforts to make products Labour All people’s efforts to make products

All finance, machinery & equipment in manufacturing products Capital All finance, machinery & equipment in manufacturing products

Enterprise All people that have skills & have risk-taking ability  factors of production  produce good or service

Limited in Supply Economic Problem Factors of Production Labour Land Enterprise Capital Limited in Supply

Real Economic Problem + = Unlimited Wants Limited Resources Scarcity

Limited Resources: Choice Individual Business Government Opportunity Cost

Summary – Economic Problem

Limited Resources Production 200 years ago 1 2 3 4 Joe cuts the wood He assembles the table Joe polishes the table Joe delivers the table on a horse and cart

Limited Resources Modern Day Production 1 2 The wood for 20 tables is cut with a specialist machine Carpenters assemble the tables 4 3 A transport company collects the tables to deliver them to furniture retailers The tables are finished in the polishing department

Making the best use of limited resources Specialization / Division of Labour Production Process Different tasks split up Workers performs a task

Specialization Division of Labour Advantages Specialised task training Increases efficiency Increases output Save time Disadvantages Bored workers Possible drops in efficiency Production stopped due to absence

Why business activity is needed? Unlimited wants 4 factors of production Resources in limited supply to make goods and services Scarcity Limited resources – unlimited wants Choice Opportunity Cost Specialisation Improves efficient use of resources

Aim of Businesses Combine factors of production Produce products satisfy peoples wants

Classification of Products Goods Physical items Tangible Touch and see Services Intangible

Business Activity Combines scarce factors of production in order to produce good and services Produces those goods and services which are needed to satisfy the needs and wants of the population Employs people as worker and pays them wages to allow them to consume products made by other people

Business Objectives Aim / Target to work towards Make a Profit To increase added value To expand the business To achieve business survival To provide a service

Profit

- = Value Added Value Added Selling Price Cost of materials/ Components

Growth

Survival

Providing a service

Business Objectives Activity Get into groups and look at the text and prepare to explain to the rest of the class what your objective means. Group 1 – Profit and Growth Group 2 – Added Value Group 3 – Survival and providing a service Prepare to give a presentation on your findings

Activity

Conflict in Business

Summary – Business Objectives

Groups involved in Business Owners Workers Managers Consumers Government Community

Summary of Stakeholders

Explain and provide examples for the following……. The difference between wants and needs, with examples Scarce resources Principle of opportunity costs Importance of specialization in production Purpose of business activity Importance of different groups in business activities.

Assignment 1 IGSCE Business Studies The purpose of Business Activity Revision Questions