CHAPTER 1 BUSINESS ACTIVITY IGCSE CAMBRIDGE BST PPT

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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. Topic: Business Activity LO: Understanding the economic problem of unlimited wants and limited resources, the factors of production, scarcity, opportunity cost.

4. Classify these. Needs Wants

5. 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

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

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

8. Land All of the natural resources provided by nature

9. Labour All people’s efforts to make products

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

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

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

13. 12/09/2024 © easilyinteractive.com 2006-9 13 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

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

15. Limited Resources: Choice Opportunity Cost Individual Business Government

16. Summary – Economic Problem

17. 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 1 4 3 2

18. 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 4 3 2

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

20. 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

21. 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

22. Summary: (Self Check) 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________.

23. TOPIC: Purpose of Business Activity LO: Understanding the purpose of business activity & the concept of adding value and how added value can be increased.

24. Pre assessment https://quizizz.com/admin/quiz/66ce1a0496a96f3f2c317301?searchLocale=

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

26. Classification of Products Goods Physical items Tangible Touch and see Services Intangible

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

28. Explanation House – Selling Price $100,000 – Cost of bricks, cement, woods & other materials $15,000 = Value added $85,000 Table – Selling Price 100 – Cost of wood, screws, metals & other materials $ 35 = Value added $65 Value added is achieved by working on materials and/or components to make them into much more expensive finished goods

29. Task: Each group given a company to discuss in how companies add value? Eg 1: Leather company Eg 2: Chocolate manufacturer Eg 3: Housing developer Eg 4: Jeweler

30. Answers. E.g. 1 – Leather company could make jackets, wallets, shoes, bags etc to add value rather than just selling the leather. E.g. 2 – A chocolate manufacturer could use a more appealing/expensive wrapping and charge a higher price. E.g. 3. – A housing developer may opt for very nice upscale gardens to push up the price of the housing estate. E.g. 4. – A jeweler could put up attractive displays, creating the luxury feel and/or offer gift wrapping

31. Why is Added Value important? Added value is important because sales revenue is greater than the cost of materials bought in by the business. Business can pay other costs such as labour cost, management expenses. Business may be able to make profit if these other costs total less than the added value.

32. Topic: Exploring Business Basics LO: Understanding the Foundations of Business: Needs, Wants, and Value Creation, Opportunity C ost, Specialization.

33. How could a business increase added value? Increase selling price but keep the cost of materials the same. Reduce the cost of materials but keep the price the same.

34. Notebook

35. Answers

36. Topic: Applying Business Concepts in Real-World Scenarios LO: The purpose and nature of business activity: • Concepts of needs, wants, scarcity and opportunity cost • Importance of specialization • Purpose of business activity • The concept of adding value and how added value can be increased.

37. Case study(Group work)

38. Discuss How these concepts apply to businesses you can encounter in daily life?

39. Group work/Pair work Plan a business idea. Let's see how you can apply business concepts: Identifying Needs and Wants, Dealing with Scarcity, Specialization, Adding Value, Purpose of business activity. By applying these concepts, you can create a successful business that meets customer needs, adds value, and contributes to the local economy

40. Reminder T ry to identify these concepts in the companies around you. How do they meet needs and wants? How do they add value? Understanding these foundational ideas will help you analyze and evaluate business activities more effectively.