© Cambridge University Press 2012 CHAPTER ONE THE ROLE OF BUSINESS Topic 1 Nature of business

© Cambridge University Press 2012 Syllabus the nature of a business – producing goods and services – profit, employment, incomes, choice, innovation, entrepreneurship and risk, wealth and quality of life

© Cambridge University Press 2012 Key Understandings –Globalisation has changed the ways in which contemporary businesses operate –External influences have contributed to the growth of the tertiary, quaternary and quinary industries in Australia –Businesses experience growth and decline through a variety of stages in a business life cycle. –identify actual businesses at different stages in the business life cycle –outline possible business strategies appropriate for different stages in the business life cycle

© Cambridge University Press 2012 Essential Questions What is the role that businesses play in Australia today? Must businesses’ always end in decline? What are the critical success factors for business growth?

© Cambridge University Press 2012 Nature of a business A business is an organisation that attempts to satisfy the needs and wants of the community by providing goods and/or services.

© Cambridge University Press 2012 Nature of a business (cont.) To provide goods and services to the community, businesses make use of inputs or raw materials. By combining inputs with equipment and human skill, businesses add value.

© Cambridge University Press 2012 The roles of business Profit Profit is essential if a business is to meet day-to-day expenses (such as production costs, wages, insurance, electricity and rent) and provide a return on the owners’ financial investment.

© Cambridge University Press 2012 The roles of business (cont.) Wealth creation By increasing sales and developing strategies to promote brand awareness and sales, the management of a business hopes to increase the value of the organisation. This, in turn, will increase the value of the funds that owners have invested in the business.

© Cambridge University Press 2012 The roles of business (cont.) Employment With this labour, businesses are able to offer the community a diverse range of goods and services. In return for their services, a business will pay a form of income to their workforce. This allows the workforce to spend part of its income on satisfying its needs and wants.

© Cambridge University Press 2012 The roles of business (cont.) Innovation This is the process of improving the features of a product. Quality of life Business research and development has also contributed to a significant improvement in our quality of life.

© Cambridge University Press 2012 The roles of business (cont.) Choice A primary function of business is to produce goods and services for consumers to satisfy their needs and wants. This, in turn, provides consumers with choice. Entrepreneurship and risks Entrepreneurs take risks by developing strategies for their ideas to come to fruition.