Unit 1.1 - The purpose and nature of business

Unit 1.1 - The purpose and nature of business

1.1.2 - The purpose of business

What is a business?

• A business is an organization that produces a good or supplies a service.

• A business is successful if it meets the needs and wants of customers.

• A need is a basic human requirement.

• A want is a desire for a particular product.

Why start a business?

• Be their own boss.

• Keep all the profits.

• It’s their interest or hobby.

• Unhappy with their current job.

• See a business opportunity.

Key Terms

• A good is a physical product. E.g. a car.

• A service in an intangible product (can’t touch it), such as financial advice.

• A customer is someone who BUYS a product.

• A consumer is someone who USES a product.

1.1.3 - Reasons for starting a business

Factors of production

• LAND - the physical land and the site on which the business is located, and other natural resources a business might use,

• LABOUR - the skills and numbers of employees employed by a business,

• CAPITAL - the equipment used to provide the goods or services, such as machinery and equipment,

• ENTERPRISE - the skills of the people involved in the business to identify business opportunities and…