BUSINESS ACTIVITY – IGCSE BUSINESS STUDIES NOTES
Almost everything you eat, wear or use has been made by a business.
NEEDS AND WANTS
- Business provide consumers (you, me, us) with products we need or want.
- Needs are things we require for survival (air, water, healthcare, shelter, clothes)
- Wants are things we require because they make our life comfortable, enjoyable (gadgets, designer clothes, cars).
- Are smart phones WANTS or NEEDS? This is debatable.
GOODS AND SERVICES
- Business offer us products in 2 forms
- Goods: tangible items you can touch (hair brush, shoes, biscuits)
- Services: intangible offerings you cannot touch, but use through experiencing them (hair salon services, banking services, insurance services, teacher’s services, doctor’s services, a jewelry store’s services, tailor’s services, travel services, retail store services, etc.)
FACTORS OF PRODUCTION
- Things you needs to make goods and services are called RESOURCES, which are also called FACTORS OF PRODUCTION
- There are 4 Factors of Production
- Land – all the natural resources that can be obtained from the land or sea (fish, water, oil, trees)
- Labour – the people who help provide goods and services
- Capital – machines and money that are used to produce goods and services
- Enterprise – the ability and willingness to take risks (by entrepreneur) to bring together and organise the other three factors of production to produce goods and services.
VALUE ADDITION (ADDING VALUE)
- Businesses always keep the price higher than the cost of making a product (good or service). This allows the business to make extra money, which leads to profit.
- DEFINITION: Added value is the difference between the selling price and the cost of raw materials used to make the product.
