Factors of production in businesses Activity

Understanding business activity

1. Understanding
business activity

2. Factors of production
Land -natural resources
Labour -workers, machinery
Capital -equipment, machinery and finance
Enterprise/entrepreneur -risk taker
Businesses combine the factors of production in order to
produce goods and services which meet customer
demand

3. Scarcity and opportunity cost
Wants -do not require for survival
Needs -necessary for survival
(food,water,shelter,clothing)
Economic problem -unlimited wants but limited
resources -choice
Opportunity cost -cost of the next best alternative
which has been given up

4. Specialization & division of labour
Specialization:
-Concentrating on what you are best at
-Makes businesses more efficient
-Reduces cost of production -lower prices for customers
Division of labour:
Production is divided into separate tasks and each
worker does one of those tasks

5. Added value & characteristics of
successful entrepreneurs
Ways to increase added value -increase SP or reduce CP:
-Branding
-Product features
-Convenience
-Excellent service quality
Characteristics of successful entrepreneurs:
-Creative
-Effective communicators
-Risk takers
-Self confident
-Determined
-Self motivated
-Multi-skilled
-Leadership qualities
-Initiative
-Results driven
-Good at networking

6. Business sectors
Public -
Owned by the government
Benefit general public -improve education, healthcare, roads
Private -
Owned by individuals
Main aim is profit making
Mixed economy -resources are owned and controlled by the private and public sectors
Primary -extraction of raw materials -farming, fishing, mining
Secondary -processing raw materials -iron and steel industry, car manufacturing industry
Tertiary -services -doctor, teacher,etc
Chain of production: the production of supply of goods to the final consumer includes activities from the
primary, secondary and tertiary sectors
Industrialisation -growing importance of secondary sector and declining importance of the primary
sector -China, India
De-industrialisation -declining importance of secondary sector and growing importance of tertiary
sector-UK,USA
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7. How and why the government supports business
start ups
Why
-Reduces unemployment -job creation
-Increased consumer choice
-Higher competition -lower prices but better quality
-May grow into well established businesses
How
-Grants
-Lower rate on profit during early years
-Rent free premises for certain time period
-free/subsidised training for workers

8. Business plan
Content included-
-Information about entrepreneur,
-skills that workers/managers,
-Idea for business/product + why customers would buy it -market research
-Market size -current, size, potential for growth, products main competitors
How business plans assist entrepreneurs-
-Help provide finance for the business
-Clear objectives, targets to reach+monitor progress
-Sense of purpose + direction

9. A sole trader, also known as a sole proprietor, is an
individual who owns and runs their own business.
They are responsible for all aspects of the business
and are personally liable for its debts.
Sole Traders
-Complete Control
-Simple Setup
-Direct Profits
-Flexibility
-Privacy
Pro’s Con’s
-Unlimited Liability
-Limited Resources
-Heavy Burden
-Skill Limitations

10. Partnership
A partnership is a business structure where two or more
individuals (partners) share ownership and operation
responsibilities. Partnerships can be general or limited, with
variations in liability and management roles.
Pro’s
-Shared Responsibility
-Combined Skills and
Resources
-Simplicity
-Tax Benefits
Con’s
-Unlimited liability
-Potential Conflicts
-Profit Sharing
-Limited Continuity

11. Public Limited
Company
Private Limited
Company
Pro’s-
-Access to Capital
-Share Liquidity
-Growth Potential
-Limited Liability
A public limited company (PLC) is a type of
company whose shares can be freely sold and
traded to the public, with a minimum share capital
requirement. It is often listed on a stock exchange.
Con’s-
-Public Scrutiny
-Loss of Control
-Costly
-Regulatory
Requirements
A private limited company (Ltd) is a company
whose shares are not publicly traded and are
held privately, often by a small group of
investors. It has limited liability and must adhere
to specific regulations but is not subject to the
same level of scrutiny as PLCs.
Pro’s-
-Control
-Limited Liability
-Privacy
-Lower Regulatory
Burden
Con’s-
-Limited Capital
-Liquidity Issues
-Growth
Limitations
-Continuity