Business
Studies
INTRODUCTION
Syllabus
1. Business and its environment • Business structure
• Size of business
• Business objectives
• Stakeholders in a business
2. People in organisations • Management and leadership
• Motivation
• Human resource management
3. Marketing • What is marketing?
• Market research
• The marketing mix
4. Operations and project management • The nature of operations
• Operations planning
• Inventory management
5. Finance and accounting • The need for business finance
• Sources of finance
• Costs
• Accounting fundamentals
• Forecasting cash flows and managing working
capital
6. Strategic management • [No topics at AS Level]
Assessments
Purpose of business activity
Identify and satisfy the needs and wants of people
Need –essential for survival; want- desires (Luxuries)
Make use of resources/fop- inputs required by a
business
Overall aim of earning profit (revenue-cost)
Produce goods/services
Goods –tangible…Services-intangible
Consumer goods and capital goods?
Types of consumer goods? Durable (last over a period
of time) and non durable (intangible) (don’t last.
Perishable)
Capital goods- used to produce other goods
Resources/ FOP
Land: land itself and its resources both (sea
and land) ex, fish forest, oil, coal
Labour: Manual and skilled workforce
Capital: not just finance but all the man-made
resources example? Machinery, tools and
equipment
Enterprise: combines other fop into one unit.
Managing, decision making, coordination &
risk taking
Nature of economic activity
Business activity involves concept of creating
value/adding value
Involves selling goods/services at a higher price than
the cost of materials
To add extra features to a product or process it
further
The customer is willing to pay more after the “value
addition”
Value added= selling price – cost of raw material
(not all the costs)
Native communities would exist otherwise (hunters
and gatherers)
What a business needs to succeed
Factors of production including Finance
(capital)
Planning
Contacts
Customers
Suppliers
Economic problem
Needs and wants difference
Limited resources unlimited wants
Scarcity wants are unlimited but the resources
required to satisfy the wants are limited
Applies to rich and poor both
Cant satisfy all needs and wants therefore,
choices are required
How to make a choice? Prioritize
Government, businesses, workers, individuals all
have to make choices
Opportunity cost- next best alternative foregone
3 sectors in business activity
Primary sector: extraction of resources or involves
changing natural resources into primary products
Examples: Fishing, Mining, Farming, Forestry
Secondary sector: converts the primary goods into
manufactured goods
Examples: Construction, Textile production, Processing
Tertiary sector is the service industry.
Examples: Banking, Hair cutting, Teaching
Industrialization – moving from primarysecondary sector.
Takes place in the developing world
De-industrialization- moving from secondarytertiary
sector. Developed world
Entrepreneur
Qualities?
• Innovation
• Good planner and organizer
• Commitment and self motivation
• Multi-skilled –make, promote, sell and keep accounts
• Leadership skills and motivate workforce
• Self confidence
• Risk taking
• Optimist
• Charismatic
• Ability to bounce back
Entrepreneur: Challenges?
• Identification of successful business opportunities
Where does the idea come from?
-own skills/hobbies
-previous employment
-conferences and exhibitions
-market research
• Finance
-lack of own finance
-unaware of grants and financial support
-no trading record for banks, higher ir
-business plan that does not convince a potential investor
• Location
-work from home
-Not close to potential market
-cause family tension
• Competition and building customer base
-already existing consumers
-personal customer care
-pre/after sales service
Why business fails?
Lack of record keeping/ planning
accurate and up to date records
soft and hard copy back up should be done
Lack of funds :cash and working capital (day to day transactions)
cash flow forecast (inflows and outflows of cash)
inject sufficient cash
establish good relations with the banks
Lack of expertise/skills
leadership, management, planning, decision making,
coordinating, marketing, sales
Changes in business environment as Business environment is
dynamic : Everything is changing ( demand doesn't stay the same
. Fashions changes)
Economic changes e.g inflation ( demand decreases and
purchasing power of people decreases)
Production/technical (techniques might be outdated)
Competition’s behavior (try to drive you out of biz)
4 imp roles of the govt
Economic growth measured by an increase in
GDP (gross domestic product) output produced by
a country in a given year in a given time period
Employment generation. Will give them income
and increase consumption/ demand in the
economy. Govt will not have to spend on
unemployment benefits
BOP(balance of Payments)+ve- (X>M) & -
ve(M>X). +ve will attract foreign exchange
inwards and vice versa
Control inflation- sustained and persistent
increase in general price level in the economy
Role of businesses in the development of a country
provide employment
Economic growth/ increase the GDP/output of the
country
Improved standard of living
Increase consumption by satisfying the needs and
wants of the people
Increased taxes for the government revenue
Innovation and technological change
Exports
bring foreign currency if the products are sold outside
the country
Personal development and Social cohesion
Social enterprises
They operate for the well being of the society
Not charities
Making profit is not the main aim
Main aim is to solve social problems faced by people
Profit is kept to provide more services
They normally provide education and health
Common features;
-directly produce goods/service
-social aims and achieve them via ethical (moral) ways
-profit making for survival as they cant run on donations/charities
Measure the aims of a business via Triple bottom line
-Economically: profit for reinvestment
-Socially: support for local and disadvantaged communities
-Environmentally: protect env and mange business that way
