Read Ch 1. The Purpose of Business Activity

Grade 9, Ch 1. The Purpose Of Business Activity

Tasks: Submitt, Monday July 28, 2008: 1. Activity 1.1.

The Economic Problem: Needs And Wants A need: Is a good or service essential for living. A want: Is a good or service which people would like to have, but which is not essential for living. People’s wants are unlimited.

The Economic Problem: Needs And Wants (continued) Limited resources, such as: - Land, (fields, forests, oil, gas, metals). - Labour, (people). - Capital, (finance, machinery, equipment). - Enterprise. (The skill).

The Economic Problem: Needs And Wants (continued) The real cause of the economic problem Unlimited Wants Limited Resources Scarcity Plus Equals

Limited Resources: The Need To Choose Opportunity cost: Is the next best alternative given up by choosing another item.

Limited Resources: The Need To Choose Examples of opportunity cost: - Individual, (Holiday or car?) The individual chooses to buy the holiday, so the car becomes the opportunity cost.

Limited Resources: The Need To Choose (continued) Examples of opportunity cost: - Business, (Machine A or machine B?) The company decides to buy machine A, so machine B becomes the opportunity cost.

Limited Resources: The Need To Choose Revision summary: The Economic Problem Capital Labour Enterprise Land Limited Resources Economic Problem Unlimited Wants Scarcity Choice Is Necessary Leads To Opportunity Cost

Making The Best Use of Limited Resources: Specialisation Use the resources in the most efficient way possible.

Why Is Business Activity Needed? Combine factors of production to make products (goods and services) which satisfy people want’s. The products could be: - Goods, (physical items, such as cars, shoes). - Services, (such as insurance, banking).

Why Is Business Activity Needed? Business activity, therefore: - Combines scarce factors of production in order to produce goods and services. - Produce the goods and services which are needed to satisfy the needs and wants of the population. - Employs people as workers and pays them wages to allow them to consume products/services made by other people.

Business Objectives Business objectives: Are the aims or targets that a business works towards. Most common business objectives are: - To make profit. - To increase added value. - To expand the business. - To achieve business survival. - To provide a service to the community.

Conflict of Business Objectives Owner of the company…………..profit. Directors……………growth of the business. Workers…………….ask many jobs. Local community…….pollution? Consumers……………qualities? Profits but pollution. Expand the plant but noisier local environment.

Business Stakeholders And Their Aims A stakeholder: is any person or group with a direct interest in the performance and activities of a business, such as: - owners, - managers, - workers, - consumers, - government, - community.

Homeworks No. 17. Page 14. Purbeck plc owns and manages a major leisure complex. The directors of the company are considering demolishing the complex and building a new shopping centre. The directors have different opinions about this plan. The Human Resource Manager says that too many groups of people would suffer from the plan. He thinks that the plan should be dropped. The Chief Executive says that his main responsibility is to the owners of the business and that profits should come first. a) How would the workers in the leisure centre be affected by the decision? b) Do you agree with the Chief Executive that profits should be the main aim of the business? Explain your answer.