national 5 business management 1.1 business activity

1.1 Business ActivityN5 Business Management

What is a Business?

A business is an organisation that exists to satisfy needs and wants.

Some Key Terms

CustomerConsumerSupplierTurnoverCostsProfit

Needs and Wants

A Need is a basic thing humans have to have in order to survive. I.e. Food, water, shelter and clothes are all needs.

A Want is something extra we would like to have. They can be luxuries or time saving devices. Cars, mobile phones, computers and CDs are all wants

Goods and ServicesA Good is something

you can touch and feel.Goods can be non-

durable, durable or industrial

A Service is provided by someone else. A service is non-physical.

Hairdryer is a good. A Hairdresser is a service.

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TASK

Question Bank

1-7

Production Stages

INPUTS PROCESS OUTPUT

Factors of ProductionLand – all natural resources used in

production

Labour – all people used in production

Capital - all items used to make other things in production

Enterprise – the art of bringing together the other factors of production and being successful

TASK

Question Bank

8-20

ICT Task

Create a poster outlining Inputs, Process & Outputs of a product you like

Include suitable images & text

Why do businesses exist?

To satisfy customer needs and wants

To satisfy consumption

Balancing Costs and Benefits

A new airport is to be built near Blantyre. David Livingstone International Airport!

Do you think the people who live in Hamilton, Motherwell & East Kilbride would be happy?

Think of some good points and bad points about this development

Key TermsSocial Costs – bad or negative effects

businesses have on the community

Social Benefits - good or positive effects businesses have on the community

Economic Costs – the cost of the business alternative given up

Economic Benefits – the positive, long term changes to an area

Social costs and benefitsCostsAir/noise/water pollutionTraffic congestionLifestyle changeLocal services unable to cope

BenefitsHappier customersCreation of jobs by businessContribution to local communityCreation of jobs within other local

businesses

Economic costs and benefitsCostsHospital v leisure centreShopping centre v Football

stadiumPub v Fast Food restaurantPacket of crisps v chocolate bar

BenefitsPeople employedWages receivedRise in standard of livingBoost to local firms

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Question Bank

21-34

The Business Cycle

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Question Bank

35-38

Customer SatisfactionCustomers are vital for a

business as they buy the goods and services.

Firms try to make customers happy by:

Having a quality productEffective employeesAfter sales service (including

warranties)

Customer SatisfactionFirms may also have:

Customer Care PolicyCustomer Complaints Process

TASK

Question Bank

39-43

Extension Task:Create Organisation Charts for:The SchoolA Local Business of Your Choice

Are all Businesses the same?Organisations differ due to many

characteristics.

Business SizeBusiness ObjectivesType of OwnershipProduct/Service

Mission StatementsAn organisation usually

outlines it vision or values in a mission statement.

For example, Manchester United – the world’s richest sports team, valued at £2 billion – has a simple one:

“To be the best football club in the world on and off the pitch.”

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Question Bank

44-45

Business SizeSmall Business Medium-Sized

BusinessLarge Business

Owned by sole trader or partnership

Owned by a group of people

Owned by shareholders; run by directors

Sells goods locally

Reaches locally and/or nationally

Sells locally, nationally and internationally

Employees: <= 50

Employees: 50-250

Employees: 250 +

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Question Bank

44-49

Sectors of Economy

Private Sector

Public Sector

Third Sector

Private SectorBusinesses driven by profit.

That profit only benefits the owners and investors.

Financed by private money from shareholders and bank loans

Private Sector Examples

Sole TraderPartnershipPrivate Limited

Company

Ltd & Plc

TASK

Question Bank

50-58

Public Sector

Provide goods and services for the benefit of the community

Run by the Government.

Public money from taxes

Public Sector Examples

Devolved Services Local Services

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Question Bank

59-89

Third SectorNot driven by profit but by need

to help parts of the community

Money from donations and gifts

Can be a Social Enterprise

Third Sector Examples

CharitySocial Enterprise Local Sports Club

TASK

Question Bank

90-101

ICT Task

Create a PowerPoint presentation comparing an organisation from each of the 3 different sectors of ownership:

Private (examples, advantages & disadvantages)Public (examples, advantages &

disadvantages)Third (Voluntary) (examples, advantages &

disadvantages)

Include suitable images & text

Business Objectives

SurvivalProfit MaximisationGrowthProvide a ServiceCustomer ServiceSales MaximisationSocial Responsibility

TASK

Question Bank

102-109

Sectors of Industry

Primary Sector

Secondary Sector

Tertiary Sector

Primary Sector

This covers raw materials which are straight from land, sea and air

MiningFarming FishingOil and gasForestry

Secondary Sector

This uses the raw materials and turns them into finished goods

Car manufacturingEngineeringShipbuildingElectronics

Tertiary Sector

This covers all services:

InsuranceEducationFire ServiceHealth ServiceLeisure IndustryTravel & TourismDistribution

Production ChainProduction is the transformation

of raw materials into the finished product

IPO or Input – Process - Output

INPUTS PROCESS OUTPUT

Creating WealthWealth is created by adding

value to each stage of the production process

Selling Price = Cost of materials + Value

TASK

Question Bank

110-115