What is Business Activity? 

What is a Business? 

➔ A business is an organisation that provides goods and services. 

What are Goods and Services? 

• Goods – Physical Products, such as a Mobile phone, pair of shoes. 
• Services – Non – physical products, such as banking 

Businesses provide a wide range of goods and services. Some are produced for consumers – ordinary people known as Consumer goods. 

• Consumer goods – goods and services sold to ordinary people (consumers) rather than businesses
  • Businesses also produce products sold by one business to another which is called Producer goods. 
• Producer goods – goods and services produced by one business to another business. 

Satisfying Needs and Wants 

• Businesses have to satisfy people’s needs and wants.
  • Needs – Basic Requirements for human survival. E.g food, shelter, clothing, water. 
  • Wants – People’s desires for goods and services. E.g a bigger house, a bigger car. 
• People have infinite wants, but businesses have finite resources. This means there is a limited amount. Economists say such resources are scarce.
  • Infinite – without limits in space or time. 
  • Finite – Having a limit or end. 
  • Scarce – resources with limited availability. 

The purpose of business activity 

Businesses exist to provide goods and services. However, different types of organisations provide goods and services for different reasons and purposes. 

Private enterprise – Most businesses are owned privately by individuals or groups of individuals. They are the private sector businesses. 

Purpose: is often to make more money (profit for the owners) 

Social enterprise – some organisations in the private sector are non-profit making. E.g Charities, clubs, societies. 

Purpose: provide opportunities and facilities for people with common interests.

Public enterprise – Some goods and services are provided by organisations owned by central or local governments. These are the public sector organisations. In many countries public sector organisations often provide health care, education, mail delivery, policing, the fire service, etc. 

Purpose : to provide the goods and services that private enterprise fails to provide adequately. 

Business Stakeholder 

● Stakeholder – an individual or group with an interest in the operation of a business. 

There different types of Stakeholder 

1. Owners – A business belongs to its owners. Many businesses are owned by individuals, families, friends or a small group of people. The people are often called entrepreneurs. Large businesses, such as limited companies (we will go through in CHAP 4), are owned by shareholders. 

Entrepreneurship – a person who takes risks and sets up businesses; individuals who organise the other factors of production and risks their own money in a business. 

2. Customers – they buy goods and services that businesses sell. 
3. Employees – people who work in the business. They depend on businesses for their salary. 
4. Managers – assist in the management of the majority of the company’s operations. They work in marketing, production, and finance, among other departments. Managers are responsible for leading their teams, resolving issues, making decisions, resolving conflicts, and motivating their employees. 
5. Financiers – lend money to a business. e.g. banks, investors, family friends. 
6. Suppliers – Companies that supply raw materials, parts, and commercial services to other companies. 
7. Local community – The majority of businesses are likely to have an impact on the community in which they operate. If a company succeeds, it benefits the surrounding community by providing more job opportunities, more overtime, and possibly higher pay. 
8. The government – interested in every business. They generate wealth, create jobs, and pay taxes. Government spending is funded by taxes levied on businesses and their employees.