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. Classify these.
Needs
Wants

4. Needs and Wants Wants Needs
Non-essential goods and services that people would like to have.
Interests & Tastes
Needs
Essential goods or services necessary for living.
Satisfy the basic things for life.

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

6. Why? Why? Why?

7. Why? Why? Why?

8. Is this the answer?

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

10. All of the natural resources provided by nature
Land
All of the natural resources provided by nature

11. All people’s efforts to make products
Labour
All people’s efforts to make products

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

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

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

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

16. Limited Resources: Choice
Individual
Business
Government
Opportunity Cost

17. Summary – Economic Problem

18. Limited Resources Production 200 years ago1 2 3 4
Joe cuts the wood
He assembles the table
Joe polishes the table
Joe delivers the table on a horse and cart

19. Limited Resources Modern Day Production1 2
The wood for 20 tables is cut with a specialist machine
Carpenters assemble the tables 4 3
A transport company collects the tables to deliver them to furniture retailers
The tables are finished in the polishing department

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

21. 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

22. 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

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

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

25. Business Activity
Combines scarce factors of production in order to produce good and services
Produces those goods and services which are needed to satisfy the needs and wants of the population
Employs people as worker and pays them wages to allow them to consume products made by other people

26. Business Objectives Aim / Target to work towards Make a Profit
To increase added value
To expand the business
To achieve business survival
To provide a service

27. Profit

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

29. Growth

30. Survival

31. Providing a service

32. Business Objectives Activity
Get into groups and look at the text and prepare to explain to the rest of the class what your objective means.
Group 1 – Profit and Growth
Group 2 – Added Value
Group 3 – Survival and providing a service
Prepare to give a presentation on your findings

33. Activity

34. Conflict in Business

35. Summary – Business Objectives

36. Groups involved in Business
Owners
Workers
Managers
Consumers
Government
Community

37. Summary of Stakeholders

38. Explain and provide examples for the following…….
The difference between wants and needs, with examples
Scarce resources
Principle of opportunity costs
Importance of specialization in production
Purpose of business activity
Importance of different groups in business activities.

39. Assignment 1 IGSCE Business Studies The purpose of Business Activity
Revision Questions