2 Business Activity involves using Factors of Production FACTORS OF PRODUCTION are…..LAND = somewhere to work from.LABOUR = people to work in the business.CAPITAL = money to cover the business’ needs.ENTERPRISE = ideas.
3 Train Company Factors of Production LANDLABOUR doing the jobCAPITAL used in the form..ENTERPRISE the ideaLand=Garage, or mobile so you can go to officesLabour=A number of people with their own vans, people working part time or only at busy timesCapital=Bank loan to get a van. Ask friends or familyEnterprise=Go to other people rather than them come to you
4 Your business…Car washing Working in pairs and thinking of the FACTORS OF PRODUCTION. Write in your exercise books all the resources your company would require to provide the service below! Be imaginative!!!!10 minsAlso, write down how you would decide whether your business has been a success?
5 Car Wash Factors of Production? LANDLABOURCAPITALENTERPRISE
6 Business Success?How do you know if your car washing business is successful?
7 Link between Goods & Service? Some businesses use goods to provide a serviceServiceGoods needed for ServiceCar WashNail ManicuristBus CompanyRestaurantTaxi Company
8 Opportunity Cost…The need to choose Businesses have to balance their FACTORS OF PRODUCTION to make choices; they can’t do everything they want to do. All choices involve giving up something.OR…OR…OR…ConsumersPrivate businessesPublic Services
9 Opportunity Cost…The need to choose Business are continuously having to balance their resources, and will not be able to do everything they want to do. The benefit lost as a result of this choice is called the OPPORTUNITY COSTFor example…A cinema chain might want to open a cinema in Manchester and Reading, but cannot because it cannot afford to do so and decides to open one in Reading only. The loss of the Manchester site is called the OPPORTUNITY COST.
10 Opportunity Cost - Definition Opportunity Cost = ‘measures cost in terms of the next best or highest valued alternative that was forgone'.CONSUMERS:e.g. Jeans or shoes?PUBLIC SERVICES:e.g. A Hospital or a road?BUSINESS:e.g. A branch in Reading or Manchester?OPPORTUNITY COST
11 Business DecisionsBusinesses have to make choices based on decisions, for example where to build a cinema, where to locate a bank branch.Business decisions balance goods companies make or services they provide. i.e their production and the goods and services they use i.e. their consumption