Chapter 1- Business Activity from section 1.ppt

Section 1

1. IGCSE BUSINESS STUDIES
Unit 1 – Business Activity
Chapter 1: The Purpose of Business Activity

2. In this unit you will learn…….
The economic problem of unlimited wants and
limited resources
The factors of production
The development of economic activity and the use
of specialization
What is meant by a business
The most common aims of business
The different groups involved in business activity.

3. Classify these.
Needs Wants

4. Needs and Wants
Needs
›Essential goods or
services necessary for
living.
›Satisfy the basic things
for life.
Wants
›Non-essential goods
and services that
people would like to
have.
›Interests & Tastes

5. Make your list
Needs Wants
Limit your wants to no more than 25 items please!

6. The Economic Problem

The shortage of goods & services
TOO FEW FACTORS OF PRODUCTION!
Land Labour
Capital
Enterprise
Factors of Production

7. Land
All of the natural resources provided by nature

8. Labour
All people’s efforts to make products

9. Capital
All finance, machinery & equipment in manufacturing products

10. Enterprise
All people that have skills & have risk-taking ability  factors of production  produce
good or service

11. Economic Problem
Limited in Supply
Land Labour
Capital
Enterprise
Factors of Production

12. 19/10/25© easilyinteractive.com 2006-9
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Factors of Production
rewards for the factors of production

Each of these factors of production is paid by
business
e.g. The payment for land is rent

Can you think what we call the payments for the
other factors?
Labour
Capital
Entrepreneurs
*
wage/salary
interest
profit

13. Real Economic Problem
Unlimited
Wants
Limited
Resources
Scarcity+ =

14. Limited Resources: Choice
Individual Business Government

15. Summary – Economic Problem

16. Limited Resources
Production 200 years ago
Joe cuts
the wood
He
assembles
the table
Joe polishes
the table
Joe delivers the table on a
horse and cart
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17. Limited Resources
Modern Day Production
The wood for 20 tables is cut
with a specialist machine
Carpenters assemble the
tables
The tables are finished in the
polishing department
A transport company collects the tables to
deliver them to furniture retailers
1
43
2

18. Making the best use of limited resources

Specialization / Division of Labour
Production Process
Different tasks split up
Workers performs a task

19. Specialization
Division of Labour

Advantages
Specialised task training
Increases efficiency
Increases output
Save time

Disadvantages
Bored workers
Possible drops in efficiency
Production stopped due to absence

20. Why business activity is needed?

Unlimited wants

4 factors of production
Resources in limited supply to make goods and services

Scarcity
Limited resources – unlimited wants

Choice
Opportunity Cost

Specialisation
Improves efficient use of resources

21. Business Activity

Combines s_____ f_____of p_______ in order to
produce g_____ and s_______.

Produces those goods and services which are
needed to s______ the n______ and w_____ of
the p___________

E_______ people as worker and pays them w____
/ s______ to allow them to consume p_______
made by other p________.

22. Aim of Businesses

Combine factors of production

Produce products

satisfy peoples wants

23. Classification of Products

Goods
Physical items
Tangible
Touch and see

Services
Intangible

24. Business Objectives

Aim / Target to work towards
Make a Profit
To increase added value
To expand the business
To achieve business survival
To provide a service

25. Profit

26. Value Added
Selling
Price
Cost of
materials/
Components
Value
Added
- =