higher business management understanding business
TRANSCRIPT
Higher Business Management
Understanding Business
Sectors of Industry
Success criteria:
Introduce pupils to Business Activity, goods and services and factors of production.
Learning Intentions:
You should be able to:
• identify, describe and
•Give examples of goods and services and the factors of production.
What is a business?
A business is an organisation that exists to satisfy needs and wants for a profit.
Any activity which results in the provision of goods/services which satisfy human wants
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Business Activity
Wants Needs
Durable Non-Durable
Goods & Services
Consumer Goods
Capital
Goods
Needs and wants Needs – a need is something essential
to our lives: food, water, shelter, clothing.
Wants – a want is an additional luxury that makes life pleasurable.
Goods
Goods are tangible, physical products we can see and touch, such as cars, plasma TVs, MP3 players and iPads.
Goods can be durable or non-durable.
Services Services are things that are done for
us. They are intangible.
The police, your hairdresser and travel are examples of services.
IPO
Input Process Output
Raw materials Workers Finished Natural resources Machinery goods
Business cycle
Business cycle
Business provides goods/services
Consumers buy goods/services
Wealth for companies and employees
Consumers have money to spend from wages
Needs and wants
TASK TIMENo 1 and 2
Success criteria:
Learning Intentions:•To introduce pupils to Wealth creation for both individuals and Society•To define assets both personal and social•To look into the world’s richest and poorest economies•To introduce pupils to Input, Process and Output (IPO) and Adding Value
You should be able to:
• identify and explain how wealth is created for both individuals and society
• identify and explain what assets are• understand how wealth is created and give example• explain adding value
Wealth creation A country’s wealth is measured by how
many goods and services the country can produce.
GDP (gross domestic product) = the number of goods and services produced in a territory over a specific period (usually annually).
The more goods/services sold, the more likelihood of more jobs for the population, and therefore the more tax raised for the government.
This in turn should be invested in services for the nation.
Creating Wealth
Wealth is created at each stage of productionwhere value is added.
Adding Value – a definition
Adding value = the difference between the price
of the finished product/service and the cost
of the inputs involved in making it.
Adding Value – a worked example
Sales revenue
1000 units sold for £20,000 revenue
Costs
To make 1,000 units:
Raw materials - £7,500
Labour – £5,000
Other production costs - £2,500
Total costs = £15,000
Added Value£20,000 less £15,000
= £5,000
Adding Value – Other ways that it is gained
• Build a brand
• Deliver excellent customer service
• Add product features and benefits that customers want
• Operate efficiently
Adding Value – Benefits
• Charge a higher price
• Create a point of difference with competitors
• Protection against competitors offering lowering
prices
• Focus business on its target market segment
Adding Value – a real life example
Tyrells Potato Chips
Will Chase had been farming potatoes for 20 years (loss-making)
Wanted to produce something with more added value
Came up with the idea to make hand-fried chips with distinctive flavours and packaging
Successfully created a premium product and turned Tyrells into a profitable business
www.tyrellspotatochips.co.uk
Success criteria:
.
Learning Intentions:
To introduce pupils to Factors of Production – Land, Labour, Capital and Entrepreneur
You should be able:• To be able to identify the factors of
production and be able to describe them• To explain how the 4 factors of production
link with one another• To give examples of the 4 factors in a real-
life context
Factors of productionIn order to produce goods and services, businesses need to use resources: land labour capital enterprise/entrepreneur/ship
Factors of production Land – natural resources extracted from
Earth. Can be renewable or non-renewable. Labour – physical and mental effort of
people in organisations. Capital – synthetic resources, such as
buildings, machines and tools. Enterprise – bringing together the other
three factors of production.
TASK TIMENo 3
Success criteria:
.
Learning Intentions:
To introduce pupils to the sectors of industry – primary, secondary, tertiary/service and quaternary
You should be able:• To be able to identify the 4 sectors
of industry • To give examples of the sectors of
industry• To link the 4 sectors of industry to
IPO and Adding value
Sectors of Industry: Primary
These are extractive industrieswhich use the earth’s natural resources.
Fishermen – fish/shellfish Farmers – wheat, beef, lamb,
oranges, berries Refineries – oil, gas Coal miners – coal either finished or semi-
finished products
Sectors of Industry: Secondary
These types of businessesare involved with makingthings, which go throughseveral different stages.They use raw materials, semi-finished goods
Sectors of Industry: Secondary
Stages of Production:
Input Process Output
This involves taking raw materials or semi-finished goods and putting them through processes to make finished goods.
Sectors of Industry: Tertiary
These are service the industries and
the following are some examples:
. Banking
. Deliveries
. Nursing
. Mail deliveries
. Hair dressing/barber
. Insurance
Sectors of Industry: Quaternary
These are the industries such as .com companies andthose which are heavily involved in research and development.The following are some examples:
.Moneysupermarket.com
.Comparethemarket.com
.Skyscanner.net
Sectors of Industry(SUMMARY)
PRIMARY(Extractive)
MiningFishingFarming
Oil
SECONDARY(Making goods)
ManufacturingConstruction
DurablesNon-durables
TERTIARY(Services)
BankingInsuranceTourism
Distribution
QUATERNARY(IT companies)
.com companiesResearch
and Development
TASK TIMENo 4 and 5
Draw up a table listing everyone in your class. Find out what job/career they have in mind to follow and complete the
table. Indicate which sector of industry the career would be classified as. Describe and justify your findings eg number for each sector, explaining
why there are so few, if any, in a specific category and why most people want to work in another category.
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Task: Class Careers
Name Career Sector of Industry
De-industrialisation
Economies begin in the primary sector and move through each sector as they grow.
De-industrialisation explains the decline in heavy manufacturing in Scotland (shipbuilding, car manufacture).
The Proclaimers song ‘Letter from America’ mentions some towns that suffered due to de-industrialisation, such as Linwood. Other areas include Ravenscraig (Steelworks) and coal mining industry in Scotland.
Reasons for de-industrialisation Customer demand may change.
Increased overseas competition may mean jobs go elsewhere to keep costs low for firms.
Legislation may hamper firms.
Introduction to the command words
Explain
Describe
Discuss
Compare
Identify
Distinguish between
Justify
Outline
Every question in the examination will contain
a specific command word
Explain
Explain the cause of de-industrialisation in the UK.
De-industrialisation is caused by increased overseas competition. This means that as other countries, eg China, become more competitive jobs are lost in the UK.
Your answer must have the main theory point and then a detailed explanation of what that means.