1. Business & It’s Environment
Ch. 1 - Enterprise
Unit 1
Business & It’s Environment
EQ: What is the nature of business activity and the role of enterprise in setting up and developing businesses?

2. Chapter Objectives You will be able to:
Understand what business activity involves
Analyze the meaning & importance of value added
Recognize the key characteristics of successful entrepreneurs
Assess the importance of enterprise and entrepreneurs to a country’s economy
Understand the meaning of social enterprise and the difference between this and other businesses

3. Purpose of Business Activity
Provide a product or service
Add value to resources to make them more desirable
W/O business we are limited to what we can make/grow ourselves
Purpose of Business Activity
A business is any organization that uses resources to meet the needs of customers

4. Business Activity uses…
Scarce Resources
To Produce
Desirable Goods & Services

5. Purpose of Business Activity
Identify the needs of customers
Purchase resources
Using factors of production
Produce goods & services
Satisfy needs while making $$$$
Purpose of Business Activity
What do businesses do?

6. Key Definitions Consumer goods (items that can only be used once)
physical and tangible goods sold to the public –includes durable consumer goods, (cars, houses and household appliances), and non-durable consumer goods (clothing, food, drinks, and candies)
Consumer services (emotional items/services)
The non-tangible products sold to the public (hotel accommodations, insurance and travel services)
Capital goods (items used in production)
Physical goods used by industry to aid in the production of other goods and services (machines and commercial vehicles)

7. Purpose of Business Activity
Identify the needs of customers
Purchase resources (factors of production)
Produce goods & services
Satisfy needs while making $$$
Purpose of Business Activity
What do businesses need to produce goods and services?

8. Factors of Production (p.4)
Resources needed by business to produce goods or services
Land
Labor
Capital
Enterprise

9. Added Value
The difference between the cost of purchasing raw materials and the price the finished goods are sold for
Cost of inputs/materials
Production process adds value
Value of output of finished goods, includes the services, and ‘extras’ added during production

10. Role of the entrepreneur (p.7)
Entrepreneur – someone who takes the financial risk of starting and managing a new venture
Characteristics of successful entrepreneurs
Innovation
Commitment and self-motivation
Multi-skilled
Leadership skills
Self-confidence and an ability to “bounce back”
Risk taking

11. Challenges faced by entrepreneurs
Identifying successful business opportunities
Sourcing capital (finance)
Lack of sufficient own finance
Lack of awareness of financial support & grants available
Lack of any trading record to present to banks as evidence of past success
Poorly produced business plan that fails to convince potential investors
Determining a location
Competition
Building a customer base

12. Why do new businesses often fail?
Lack of record keeping
Lack of working capital
Poor management skills
Changes in the business environment

13. 3 Types of businesses Primary sector - Extract natural resources
Farming , fishing, oil drilling
Secondary Sector - Manufacture and process products made from natural resources
Computers, clothes making, construction
Tertiary sector – provides services people need
Hairdressing, car repair, daycare, restaurants

14. Impact of Enterprise on a country's economy
Employment creation
Economic growth
Firms’ survival and growth
Innovation and technological change
Exports
Personal development
Increased social cohesion

15. Social Enterprise
A business with mainly social objectives that reinvests most of its profits into benefiting society rather than maximizing returns to owners
Makes money in socially responsible ways
Uses most of it’s profits to benefit society
ARE NOT A CHARITY!

16. Social Enterprise Common features:
They directly produce goods or provide services
They have social aims and use ethical ways of achieving them
They need to make a profit to survive as the do not rely on donations

17. Social Enterprise 3 Objectives
Economic – make a profit to reinvest back into the business and give a return to owners
Social – provide jobs or support for local, often disadvantaged, communities
Environmental – to protect the environment and to manage the business in an environmentally sustainable way
Triple Bottom Line

18. Economic Activity & Choice
Consumers have to choose what to buy
Opportunity cost – the benefit of the next most desired option which is given up OR
With limited resources, if consumers choose the iPod, then the Jordan's become the opportunity cost.