Understanding Business

Understanding Business

1. The Business Environment

   • The Role of Business
     • Identify Needs and Wants
       • Businesses identify customers' needs and wants by conducting market research.
       • Needs
         • Needs are essential for us to be able to live and include food, water, clothing, and shelter.
       • Wants
         • Wants are things that we would like to have, but can live without. Examples: a mobile phone, TV, ipod, holidays.
     • Provide Products
       • Businesses produce goods and services to help us satisfy our needs and wants.
       • We satisfy our needs and wants by consuming (using up) the different goods and services that businesses produce.
       • Types of Products
         • Goods
           • Goods are tangible - things we can see, touch and pick up. Examples: DVDs, chocolate bar, clothes, and newspaper
           • Durable
             • Durable goods are goods that can be used more than once. Example: washing machine, TV, mobile phone.
           • Non-durable
             • Non-durable goods are goods that can NOT be used more than once. Example: toilet paper, plaster, food
         • Services
           • Services are intangible - things we can NOT see, touch, or pick up. Examples: getting a haircut, getting a mechanic to fix car.
       • Factors of Production
         • Capital
           • The man-made resources that are needed to make a product. Examples: machines, tools, and money.
         • Enterprise
           • Enterprise is combining all factors of production by the entrepreneur.
           • Entrepreneur
             • Entrepreneur is the person who combines the factors of production together and who is willing to take the risk to see whether or not his or her idea will work.
             • Some skills and qualities of Entrepreneurs: have confidence, problem-solving skills, motivation, people skills, and determination.
         • Land
           • Land - the natural resources of the world. Example: water, air, and plants
         • Labour
           • Labour - The people employed by a business (the workforce) to make the product.
       • Wealth Creation
         • Wealth is created by a business by adding value to a product as it goes through the production process.
     • Sectors of Industry
       • Businesses belong to different sectors of industry.
       • Primary
         • Businesses in this sector take raw materials from the ground. Example: agriculture and farming, fishing, mining
       • Secondary
         • Businesses in this sector use raw materials and make something with them. Examples: a car manufacturer, a builder, a cake baker.
       • Tertiary
         • Businesses in this sector provide a service. Examples: A fitness instructor, a hotel, a supermarket.
   • Types of Business Organisations
     • Sectors of the Economy
       • Private
         • Sole traders
         • Partnerships
         • Private Limited Companies
       • Public
         • National Government
         • Local government organisations
       • Third
         • Non-profit making organisations
         • Social Enterprises
   • Customer Satisfaction
     • Ways (How?)
       • High quality good/service
       • Train employees
       • Customer care strategy
       • Complaints procedure
       • After-sale service
     • Why it's Important
       • customer loyalty
       • good reputation
       • maximise sales/profit
       • increase market share
   • Objectives
     • Survival
     • Profit
     • Provision of a service
     • Customer Satisfaction
     • Enterprise
     • Social Responsibility
     • Market share

2. Business Influences

   • External Factors (PESTEC)
     • Political
       • UK Parliament
       • Scottish Government
       • Local government orgs
     • Economic
       • Levels of Employment
       • Recession
       • Interest Rates
     • Social
       • Opinions
       • values / beliefs
       • tastes / trends
     • Technological
       • Tablet computers
       • Wireless technology
       • Web 2.0
       • Cloud computing
     • Environmental
       • Weather / climate
       • Environmentally friendly
     • Competitive
       • more choice
       • cheaper price
       • more special offers
       • higher quality
   • Internal Factors
     • Financial
     • Human Resources
     • Current Technology
   • Stakeholders
     • Owners
     • Shareholders
     • Employees
     • Banks
     • Customers
     • Suppliers
     • Local Community
     • Pressure Groups
     • Local government
     • National Government