Copyright © 2002 by Harcourt, Inc. All rights reserved. Topic 1 : Business Activity (1) Lecturer: Zhu Wenzhong

Copyright © 2002 by Harcourt, Inc. All rights reserved. Key Learning goals: Key Learning goals: This topic discusses the nature of business activity, particularly those factors of input, function and output involved in business activity. This topic discusses the nature of business activity, particularly those factors of input, function and output involved in business activity. LEARNING GOALS

Copyright © 2002 by Harcourt, Inc. All rights reserved. What is business activity? Business activity refers to the specific things done by a business in order to produce an output – a good or a service. Business activity refers to the specific things done by a business in order to produce an output – a good or a service. The nature of business activity is illustrated in the following figure: The nature of business activity is illustrated in the following figure: © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Reference Figure 1-1 The nature of business activity External influences: Government, Economic climate, world events, population trends, legislation and regulation, competition, consumers, environmental factors, pressure groups Input: Land, labor, Capital, Entrepreneurship Function: Production, Marketing, Finance, Administration, HR, R & D Output: Goods, Services, Waste Business Activity

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business resources are factors of production used by a business. Businesses must use resources or factors of production in business activity. Otherwise, nothing can be produced through business function. Generally, there are four basic factors of production for a business to carry out the business activity. Business Activity (1) -Business Resources (input)

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business resources Land or natural resources Human resources Capital Entrepreneurship Entrepreneurship Information? Information?

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Types of Business Resources (input) Land here is not just the ‘land’ for factory or company buildings. It may include other natural resources, such as coal, diamonds, forests, rivers, lakes, and soil. Land here is not just the ‘land’ for factory or company buildings. It may include other natural resources, such as coal, diamonds, forests, rivers, lakes, and soil. Natural Resources: productive inputs that are useful in their natural states. Natural Resources: productive inputs that are useful in their natural states. Natural resources may be renewable or non-renewable resources. Natural resources may be renewable or non-renewable resources. Land or natural resources Land or natural resources

Copyright © 2002 by Harcourt, Inc. All rights reserved. Table 1-2 Examples of renewable and non-renewable resources Renewable resources:Non-renewable resources: ForestCoal FishDiamonds WaterOil Solar energyGold OxygenSilver ……

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Types of Business Resources (input) Definition: Definition: Labor is the workforce of business. They are paid wages or salaries for their services. Or anyone who works. Labor is the workforce of business. They are paid wages or salaries for their services. Or anyone who works. Types: Types: There are three major members of the workforce in a business: There are three major members of the workforce in a business: (1) Manual workers (2) Skilled workers (3) Management Land or natural resources Land or natural resources Labor or human resources Labor or human resources

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Types of Business Resources (input) Definition: Definition: Capital is sometimes called artificial or man-made resources, such as tools, machinery, and equipment. They are called capital because they are wealth or money used to start a business or to create more wealth. Capital is sometimes called artificial or man-made resources, such as tools, machinery, and equipment. They are called capital because they are wealth or money used to start a business or to create more wealth. Capital includes technology, tools, information and physical facilities. Capital includes technology, tools, information and physical facilities. Land or natural resources Land or natural resources Capital Labor or human resources Labor or human resources

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Types of Business Resources (input) Definition: Definition: Entrepreneurship: willingness to take risks to create and operate a business. Entrepreneurship: willingness to take risks to create and operate a business. Entrepreneurs: risk takers in the private enterprise system or market economy. Entrepreneurs: risk takers in the private enterprise system or market economy. Land or natural resources Land or natural resources Capital Labor or human resources Labor or human resources Entrepreneurship

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business functions are parts of a business’s operation system., which work together to achieve an objective. Major six functions a business carries out may be seen as the following table: Business Activity (1) -Business Functions

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Business Functions Table 1-4 Six types of business functions Business functionsBrief explanation Production Changing natural resources into products such as producing coal in a coal mine, constructing a house in a building site, etc. Marketing Marketing activities, such as market research, advertising, promotion, distribution, etc. Finance Control of money in a business, recoding financial transactions, controlling the flow of money, etc. Administration Communication, producing documents for meeting, dealing with enquiries, arranging visits, etc. HR (Human resources) Management of people, such as recruitment, training, health and safety, payment system and performance assessment, etc. R&D (research and development) Research on new products, research on new technology, etc.

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Business Functions Attention: Attention: Business functions should be highly integrated (fitting well with each other). For instance, production is influenced by marketing; marketing is influenced by human resource and finance departments in a company. All parts must corporate and work together to produce a product or service. Business functions should be highly integrated (fitting well with each other). For instance, production is influenced by marketing; marketing is influenced by human resource and finance departments in a company. All parts must corporate and work together to produce a product or service. © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Business Activity (1) -Business Input All businesses will produce a good or service as well as some waste materials. All businesses will produce a good or service as well as some waste materials. 1. Goods –consumer goods or capital goods 2. Services –such as banking, insurance, transportation, gardening, haircutting, car repairing, etc. 3. Waste materials – useless or even dangerous things © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. -Business Input Difference between consumer goods and capital goods: Difference between consumer goods and capital goods: Consumer goods are goods which are sold to the general public, while capital goods are goods purchased by businesses and used to produce other goods, such as: tools, equipment, machinery, etc. Computers, however, may be consumer goods or capital goods at the same time. Consumer goods are goods which are sold to the general public, while capital goods are goods purchased by businesses and used to produce other goods, such as: tools, equipment, machinery, etc. Computers, however, may be consumer goods or capital goods at the same time. Consumer goods may fall into two types: durable goods (usually lasting for a long time) and non- durable goods (usually lasting for a short time). See some examples for them in the following table. Consumer goods may fall into two types: durable goods (usually lasting for a long time) and non- durable goods (usually lasting for a short time). See some examples for them in the following table. © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Table 1-5 Examples of durable and non-durable goods Durable goods: Television Books cars furniture … Non-durable goods: food newspapers drinks soaps …

Copyright © 2002 by Harcourt, Inc. All rights reserved. Questions for revision Questions: 1)State the definition of business activity. 2) State the definition for factors of production and the three factors of production. 3) Explain the 6 functions involved in the business and the reason why they must be highly integrated. 4) Explain the difference between capital goods and consumer goods. Case Study (see textbook). Read and answer the three questions there. Business Activity (1)