Unit 1 - Business activity and sectors

Business sectors                                                                                                            

Private sector: business activity owned financed and controlled by private individuals (e.g. a restaurant)

·      Self-employed traders (e.g. construction, trades)

·      Professional firms (e.g. consulting finance, laws)

·      Small or large businesses

·      International companies

Public sectors: business activity owned financed and controlled by the state through government or local authorities

·      Government – sets policy

·      Local authorities – county Councils

·      Hospitals – NHS (in UK you can treated for free)

·      Public libraries

·      Public corporations –BBC (1460 RMB)

·      Transport

Non-profit making: a third type of enterprise, including charities and voluntary organisations. These art set up to fulfill a perceived social need or to provide help to a specific section of the community.

Deciding on what to produce:

Resources found on earth are finite or in limited supplies (e.g. crude oil, aluminate)

Managing scarce resources

Choice must be made.

Furniture & houses can be made from timber so a decision needs to be made. If they decide to build furniture instead of houses, then HOUSES are the opportunity cost.

(Opportunity cost - the next best alternative given up by choosing another item)

Factors of production                                                                                                  

Land – includes all resources that occur naturally (crops, fish, coal)

Labour – effect of work provided by people

Capital – includes items used in the production of goods and services made by people.

Enterprise – the ability, skill and enthusiasm to take risks involved in developing a business idea and gathering appropriate resources.               

·      Labour-intensive production can often be found in many developing countries. Labour-intensive production means labour is plentiful and relatively cheap compared with the technology available to do the job. (farming, manufacturing etc.) <China and India>

·       Capital includes, buildings, machinery, equipment, finance required to purchase these items

*Capital-intensive is production uses a high proportion of capital compared to labour. It is cheaper and more efficient production using the latest technology than by hand (labour-intensive).

Adding value can be done by:

·      Building a brand

·      Delivering excellent service

·      Product features and benefits