What is business Activity? Unit (1) What is business Activity? Any business activity has many features as follows: Business activity produces an output – a good or service . Goods and services are consumed . Resources are used up such as money, food, furniture and fuel . A number of functions are carried out, administration, decisions a bout finance and decisions a bout production . Businesses can be affected by external factors, recession caused a decline in production .

Business resources : Business resources can be divided into four groups : Land : land is not just a plot of land, it also includes natural resources . Business activity uses both renewable and non-renewable resources. Renewable resources reffers to those which nature replaces. Non-renewable resources includes resources which once used are never replaced. The owner of land receive rent from those who use it.

Labour : labour is the workforce of business includes manual workers, skilled workers and management. They are paid wages or salaries for their services. It is possible the quality of human resources through training and education. Capital : capital is described as the artificial resource, Because it is made by labour . Capital refers to the tools, machinery and equipment which businesses use . Owners of capital receive interest if other borrow it . Entrepreneur : The enterpreneur refers to the person who develops the business idea, and then hires and organises the other three factors of production to carry out the activity . If the business is successful, any money left over will belong to the entrepreneur. This is called profit .

Business Functions : A business is a “system”, it has parts that work together to achieve an objective. The functions are all parts of the system. A business is also part of other systems such as economic and political systems. What functions does a business carry out ? Business have a number of functions : Production : Involves changing natural resources into a product. Most resources are used up in the production process . Marketing : has become very important in recent years due to an increase in competition a round the glob. Marketing is concerned with identifying consumer needs and satisfying them .

Finance : The financial department is responsible for managing, investing, and controlling money. And it has a number of important duties such as, recording transactions, and producing documents to illustrate the performance of the business and its financial position. Dealing with enquiries : communicating messages and producing documents for the workforce. The personnel Function : It looks after the welfare of the work force and responsible for recruitment, selection training, a appraisal, health, equal opportunities, payment systems and worker disputes. Research and development (R.D) : Involves technical research, for example “research into a new medicine or e new production technique .

What does business activity produces ? Businesses produce goods or services consumer goods are those which are sold to the general public. They fall into two categories : Durable goods, it refers to things can be used repeatedly for a long period of time . Non-durable goods, are used very soon after they are purchased. Capital goods, are those goods purchased by businesses and used to produce other goods.

External Factors : Business Activity is affected by a number of external factors, In some cases these factors constrain a firm’s decisions, and may prevent it’s growth and development : Government, has a great deal of influence over business Activity. Legal framework, where all individuals abide by the law and offenders will be punished. Infrastructure, It refers to those items which are often provided by the state, such as roads, railways telecommunication and ect.

Economic climate, can have a tremendous impact on business activity, recession . World affairs, such as the Gulf war in 1990 affect business activity . Pressure groups, This concept refers to those people who have a great impact on the decision of business. Competition, Competitors behavior can influence a firm’s activity. Consumer’s tastes, Companies are forced to update and modify their products in order to satisfy consumer’s needs .

Satisfying needs and wants : The success of a business activity depends on many factors . The Most important factors is to supply a product that consumers want to buy. Business must satisfy consumer’s want's and needs to be successful .

Markets : A market exists when buyer and sellers communicate each other in order to exchange goods and services. In some cases buyers and sellers might meet each other in an a greed place to carry out the exchange process. In many cases buying and selling processes can by carried out over the telephone, newspapers, magazines, mail order, and through television .

A business may be interested in some of the following markets : Consumers good’s markets, where products like food are sold in large quantities . Markets for services, Includes financial services for both individual and industrial purposes. Capital goods markets, where items used by other businesses are bought and sold. Housing markets, where people buy and sell properties. Money markets, where people and companies borrow and lend money. Commodity markets – where raw materials are bought mainly by businesses.

Specialization : This is the production on of a limited range of goods by individual, firm, region or country. Specialization within a firm is an important part of production, . Department specialize in different activities, such as marketing, purchasing, personnel and finance. people specialize in different tasks and skills, this allows people to concentrate on the taske or skill which they are best at .

Advantages of specialization : There are a number of reasons for specialization : workers can concentrate o tasks that they do best people skills will be improved by carrying out tasks over a long period of time. Time is saved, because workers will carry out their mission as fast as can. Organizing the production process will be much easier and more effective.

Work can become tedious and boring . Disadvantages of specialization : Work can become tedious and boring . If one stage of production breakdown, production might be stopped. If people are only competent in one skill, they may have to retrain, causing delays in production, some are not able to retrain and become unemployed.

The importance of money : MONEY is anything which is generally accepted as a means of exchange. with out money goods have to be exchanged using a Barter system. Barter system involves swapping goods directly. Its necessary for the wants of individuals to be perfectly mached . Searching for the perfect mach in a barter deal can be very time consuming. It is difficult to value different goods without money .

Money has a number of functions : Functions of money : Money has a number of functions : Allows Individuals to save some of their income, and buy goods and services at a later date. Enables all goods and services to be valued in common units. Allows payments to be deferred/delayed.

Levels of business activity : Business activity can be classified into three levels: Primary : production includes taking natural resources from the earth “extraction, fishing, mining, farming and foresty. Secondary : production involves manufacturing, processing and construction which transform raw materials into goods. Car production, distilling, baking . Tertiary : production includes the provision of services hairdressing, distribution, security, banking theatre and tourism. Other methods of classifying business include by : size – geographical area – sector – ownership.

Changes in business activity : The UK has experienced some radical changes in the structure of the economy. Before the industrial revolution most resources in the UK were employed in primary production. During the nineteenth century secondary production expanded rapidly. Since around 1960 tertiary production has grown continually. The decline in manufacturing is after called De-industrialization means, a lack of investments, un- helpful government economic polay and restrictive trade unions.