Business Activity Resources ~ the inputs that are used in the production process to produce goods end services. These: are also called Factors of Production: — Capital -the finance needed to set up @ business and pay for its continuing operation 2s well as allthe man-made resources used in production — Enterprise — the driving force, provided by risk-taking individuals known as entrepreneurs, that combines the other fectors of production into unit that is capable of producing goods and services. It provides a managing, decision making and co-ordinating role. — Labour ~ manual and stilled labour make up the workforce of the business — Land — the general term not only includes land itself but al of the renewable and non-renewable resources of nature ‘Self Sufficient - depending on one’s own goods that were personally made or grown by oneself ‘The Economic Problem’ ~ there are insufficient goods to satisfy all of our needs and wants at any one time ‘Opportunity Cost - the benefit of the next most desired option which is given up e.g. ifa consumer were to chocse to purchase salad over fries, fries would be the opportunity cost for this consumer Consumer Goods - these are physical and tangible goods sold to the general public. Consumer Services —non-tangible products that are sold to the general public e.g. hotel ‘eccommodation, insurance services, train journeys Capital Goods ~ physical goods thatare used by industry to aid in the production of other goods and services e.g. machines, commercial vehicles Primary Sector ~ those firms engaged In the extraction of natural resources so that they can be used ‘and processed by other firms ‘Secondary Sector ~ those firms that manufacture and process products from natural resources Tertiary Sector ~ those tirms that provide services to consumers and other businesses Public Sector — comprises of organization accountable to and controlled ky central orllecal government (the state) Private Sector - comprises of businesses owned and controlled by individuals or groups of. individualsEnterprise Entrepreneur —someone who takes the financial risk of starting and managing a new business venture. The characteristics of an entrepreneur include: — Innovative —creates original ideas and an ability to do things differently — Committed and Self-Motivated having 2 willingness to work hard, keen ambition to succeed and energy and focus — Multi-sklled— able to take on multiole rolesiin the firm through their multiple qualities and knowledge — Leadership skills ~able to lead by example and has a personality thet encourages people in ‘the business to follow them and be motivated by them — Self-Confidence — able to ‘tounce back’ and not be discouraged from any ‘ailures or satbacks — Risk Taking ~ must be willing to sacrifice in order to see results e.g. investnig own savings in new business Challenges of an entrepreneur include: ‘+ Identifying successful business opportunities ‘¢ Sourcing capital ‘+ Determining location ‘+ Competition ‘© Building a customer base Why do new businesses often fail? — Lack of record keeping - they need to ensure they keep up-to-date records (e.g. customer orders, deliveries) especially financial records to ensure they are making a profit. Without record keeping, the organisation of the business will be poor, causing poor relationships with suppliers and customers, as well as making decisions more time consuming and possibly affecting staff morale — Lack of cash and working capital - they need to ensure they have enough funds for the day ‘to day running of the business, This can be done through establishing a relationship with the bank to ensure short term and long term solutions or by using effective credit control for ‘customers. Cash flows should be constructed so that the liquidity and worcing capital needs of the business can be assessed month by month. — Poor management skills — there may be poor leadership skills, cash handing and cash ‘management, planning end coordinating, decision meking skills, communication skills, or ‘marketing, promction and selling skills. Without such skills, there may be Bsvesin several departments of the new firm. — Changes in the business environment — new competitors, legal changes (¢.g. safety regulations), economic changes (e.g. during a recession) and technological changes may cause a loss in profitsImpacts of E-terprise on the Economy ‘¢ Employment creation © Employing workers into business © Ifbusiness expands, possibly causes suppliers to employee more workers © Moreincome for workers to spend; greater circulation of money in the economy * Economic Growth © Increase in product output meensa growth in Gross Domestic Product © Increased living standards for the population, through larger choice of products (© Increased output and consumption leads to increased tax revenues for government ‘¢ Firms survival and growth © Expansion leads to important businesses in the business world © Enhancing the customers, e:onorries and countries needs © Takes place of declining businesses ‘¢ Innovation and Technological change © Dynamism added to econonyy through innovative businesses (© Businesses become more competitive with more creative products and services (© Increased use of technology in firms, helps to advance businesses and makes more higher quality products for consumers © Exports © Through expansion abroad, businesses can bring more international competitiveness © Increase the value of the exoort market ‘+ Personal Development © Starting and managing a business aids in developing the skills of the nation © Will encourage others to setup tohelp then further benefit the economy (© Successful start-ups will help an individual reach self-actualisation ‘¢ Increased Social Coh © Unemployment leads to serious social problems © Enterprises bring jobs and income to achieve social cohesion Enterprises provide a good example for athers to fellow Industrialisation Industrialisation — a growing importance of the secondary sector manufacturing industries in developing countries. Advantages Disadvantages ‘Total national output (GDP) increases end this raises standards of living Tnoreasing output of goods can result in lower imports and higher exports of such products “The chance of work in manufacturing can encourage a huge movement of people from the Countryside to the towns, which leads to housing and social problems Value is added to the countries” output of rew materials, rather than just exporting thase as basic, unprocessed products Imports of raw materials and components are often much needed, which can increase the country’s import costs Expanding and profitable firms will pay more tax tothe government ‘Much of the growth of manufacturing industry is due to the expansion of multinational companies Expanding manufacturing businesses will result inmore jobs being created