BM Unit 1 - LO1 1

Learning Intention

Understanding the Role of Business

in SocietyBy the end of this lesson you will understand the following terms:

• The terms goods/services/tangible/intangible

• The importance of Factors of Production• The Cycle of Production• The Sectors of Industrial Activity

Course ContentThree Units in this NQ Course = 3 NABs Unit 1 Business Enterprise

LO 1 – Business in Contemporary Society LO 2 – Business Information and ICT LO 3 – Decision-Making in Business LO 4 – Internal Organisation

Unit 2 Business Decision Areas I LO 5 - Operations LO 6 - Marketing

Unit 3 Business Decision Areas II LO 7 - Human Resource Management LO 8 - Finance

BUT FIRST……

Time Line

June – Oct Unit 1 & NAB

Oct – Jan Unit 2 & NAB

Jan – Feb Unit 3 (HRM only) Revision for Prelim

Feb - Mar Unit 3 (Finance)

& NAB

April Revision – Case Studies

Past Paper QuestionsCommand Words

BM Unit 1 - LO1 4

UNIT 1 LO1 - BUSINESS IN CONTEMPORARY SOCIETY

1. Role of Business in Society

7. Factors affecting Operation of Business 6. Methods of

Obtaining Finance

3. Business Objectives

4. Role of Enterprise and the Entrepreneur

2. Types of Business Organisations

5. Stakeholders

8. Business as a Dynamic Activity

9. Changes in the Business Environment

• Creation of wealth• Production & consumption of goods

and services• Satisfaction of wants• Sectors of activity

• Self employed• Private limited company• Public limited company• Voluntary organisation• Charity• Publicly-funded organisation

• Multinationals

• Profit maximisation • Survival• Sales maximisation• Growth• Social responsibility• Managerial

objectives• Provision of a

service

• Identifying business opportunities

• Franchising• Combining factors

of production• Innovation• Risk taking

• Shareholders• Customers• Employees• Donors• Management

• Government• Suppliers•

Banks/lenders• Tax Payers• Community

• Internal & external factors which cause change

• Changes in size of firm• Need to respond to

survive

• Internal & external

• Short & long term• Share issue• Loans / banks• Local Enterprise

Companies (LECs)

• Government

• Finance & other assistance available

• LECs, banks, local authorities

• Subsidised premises, grants, allowances, trade fairs

• Methods of growth / downsizing

• Changes in demand

• Demographics• Competition• Regional policies• Labour market• Privatisation• EU * Technology• Environment *

ICT

BM Unit 1 - LO1 5

What is a ‘Business’?

Any organisation set up to achieve a set of objectives

Why are Businesses Important? They create wealth for a country They provide goods or services which

satisfy our wants and needs

BM Unit 1 - LO1 6

Goods and Services Goods are tangible (ie can be

touched) and services are intangible Services are things done for us e.g.

banking, hairdressing Goods sold to individuals are called

consumer goods Goods can be durable (last a long

period of time) and most services and some goods are non-durable (consumed over a short period)

BM Unit 1 - LO1 7

Description Goods (G) or Service (S)

Durable (D) or Non-Durable (N)

1. Volkswagen Golf GTI

2. Walkers Crisps

3. Hire of limo to S6 prom

4. The Herald Newspaper

5. Nail manicure

6. Dell Laptop

7. Kentucky Fried Chicken Meal

8. Higher Bus. Mgt. Lessons

9. Trip to the cinema

10. New shoes

G D

S N

G N

G N

S N

G D

G N

S N

S N

G D

Using the sheet issued to you complete the table:

BM Unit 1 - LO1 8

What is Business Activity?

Using “resources” to produce goods and services which people require in order to satisfy their “wants”.

Any kind of activity that results in the provision of goods and services which satisfy human “wants”.

BM Unit 1 - LO1 9

The Entrepreneur Develops a business idea – perhaps

by seeing a gap in market or desire to innovate

Acquires and then combines other factors of production e.g. finds ways to raise finance

Undertakes most of the start-up decision making

Carries the risk of losing the money they invested

Anita Roddick, Richard Branson, James Dyson, Marth Lane Fox

BM Unit 1 - LO1 10

Factors of Production

Land - raw materials, factory site

Labour - people with required skills

Capital - finance to buy equipment, machinery, computers, etc

Enterprise – the idea behind the business, the person willing to take a risk

BM Unit 1 - LO1 11

Cycle of Business

WANTS

IDENTIFICATION

PRODUCTION

CONSUMPTION

WANTS

BM Unit 1 - LO1 12

Sectors of Industrial Activity

PRIMARY(Extractive)

MiningFishingFarming

Oil

SECONDARY(Making goods)

ManufacturingConstruction

DurablesNon-durables

TERTIARY(Services)

BankingInsuranceTourism

Distribution

Third world economies

Developing economies

Fully developed economies