Wants and needs
Candidates should be able to explain that business activity is the production of goods and services to satisfy people's wants and needs
Needs are things which people need in order to survive. Needs are a necessity.
Such as: Warmth, Water, Food, Shelter.
Want is something you wish to have but do not need.
Such as: PSP, Pizza, A Car, Computer.
Factors of production-Land, Labour, Capital and En
Land is any natural resource that is needed to produce something.
Such as: An actual place to build a shop on, cows to produce milk for yoghurt or cheese.
Labour is the skills of people needed to produce the goods. This usually is referred to everyone a business employs.
Such as: Chef, Counter assistants, buyers ordering supplies, a marketing team for promotion of their product
Capital is the machinery and equipment the business needs to produce the products.
Such as: Tills, Computers, Ovens, Vehicles for deliveries.
Enterprise is the person or people who came up with the idea. They risk their own assets in businesses and organise the other factors of production.
Such as: Basically anyone who thought to make the business and who used their assets
Candidates should be able to show an understanding that production and consumption decisions involve an opportunity cost
Whenever we make a choice we choose to give something up.
Consumption decisions are decisions about what people choose to buy.
Production decisions are decisions organisations make about how to use the factors of production. Examples of opportunity cost:
If you spend an evening on Facebook, you can't spend that time doing business studies coursework.
If you spend £10 in I-tunes, you can't spend that £10 on clothes.
If Domino's decide to invest £100,000 on a new ICT system, they can't invest that £100,000 on new ovens for their takeaways.
Private and Public Sector
Candidates should be able to show an understanding that the UK has a mixed economy, i.e has both a private and a public sector
In the UK some services are produced by the government. Organisations which are controlled by the government are paid for by all of us through taxes, are known as the public sector.
Such as: Schools, hospitals, roads, the armed forces, libraries, the BBC
Most goods and services are provided by private individuals, or businesses owned by shareholders. they usually exist to make a profit. Organisations which are owned by private individuals are known as the private sector.
Such as: McDonald's, Pizza Hut, Apple, Nintendo
To make a profit - meaning to bring more money into the business by selling than producing.
To grow in size - meaning to expand by opening more shops/ restaurants or whatever the business is in other areas or producing different products. Growing in size often makes businesses more profitable, as they benefit from economies of scale
To increase market share - Market share means the percentage of the total sales in a market made by one company
To increase turnover - Turnover is the amount of money a company receives for selling its goods.
To gain a good reputation and to maximise customer satisfaction - Businesses need to build up a good reputation and satisfy their customers. If they build up a reputation for good quality products then their customers will be more loyal and will be prepared to pay a higher price for the product.
Conflicts between objectives
Candidates should be able to show an understanding of links, and possible conflicts between objectives
If a business gains a reputation then this should help them to increase turnover and market share.
If they make a profit, then they will find it easier to grow in size.
If they increase market share, they will find it easier to make a profit.
If a business reduce costs, in order to increase profits, but as a result of using cheaper ingredients, their reputation could suffer, and so turnover could fall.
A business employ more staff, to speed up their service, and improve customer satisfaction, but this could lead to a fall in profit as costs increase.
Candidates should be able to explain the influence of stakeholders in the setting and pursuit of business objectives
Stakeholders include employees, shareholders, suppliers, customers, the local community and the government. All of these groups are affected by the decisions a company makes.
Employees - Employees performance can dictate whether or not the company survives. Employees make sure the customers are happy.
Shareholders - Should be kept well informed of financial states of organisation.
Suppliers - Have to deliver products on time and be as efficient as possible.
The Government - Companies are affected by laws and legislations. The government has an interest in businesses doing well as this helps to keep employment high and contribute to the gross national product.
Candidates should be able to appreciate the effects of possible conflicts of interest (conflicts between stakeholders)
Sometimes, there will be a conflict between the expectations of stakeholders.
Suppliers wanting prompt payment may clash with the need of shareholders for maximum profits.
The employees may want good pay and job security, but shareholders may object to this, it reduces profits.
The government (or local councils) may want a takeaway to make sure there is no litter outside of their takeaway, but the employees may not want to clean up rubbish dropped by others.