Higher Business Management Understanding Business

Introduce pupils to Business Activity, goods and services and factors of production. Learning Intentions: You should be able to: identify, describe and Give examples of goods and services and the factors of production.

What is a business?  A business is an organisation that exists to satisfy needs and wants for a profit.

 Any activity which results in the provision of goods/services which satisfy human wants 5 Wants Needs Durable Non-Durable Goods & Services Consumer Goods Capital Goods

Needs and wants  Needs – a need is something essential to our lives: food, water, shelter, clothing.  Wants – a want is an additional luxury that makes life pleasurable.

Goods  Goods are tangible, physical products we can see and touch, such as cars, plasma TVs, MP3 players and iPads.  Goods can be durable or non-durable.

Services  Services are things that are done for us. They are intangible.  The police, your hairdresser and travel are examples of services.

IPO InputProcessOutput Raw materialsWorkersFinished Natural resources Machinerygoods

Business cycle Business provides goods/services Consumers buy goods/services Wealth for companies and employees Consumers have money to spend from wages Needs and wants

TASK TIME No 1 and 2

Learning Intentions: To introduce pupils to Wealth creation for both individuals and Society To define assets both personal and social To look into the world’s richest and poorest economies To introduce pupils to Input, Process and Output (IPO) and Adding Value You should be able to: identify and explain how wealth is created for both individuals and society identify and explain what assets are understand how wealth is created and give example explain adding value

Wealth creation  A country’s wealth is measured by how many goods and services the country can produce.  GDP (gross domestic product) = the number of goods and services produced in a territory over a specific period (usually annually).  The more goods/services sold, the more likelihood of more jobs for the population, and therefore the more tax raised for the government.  This in turn should be invested in services for the nation.

Wealth is created at each stage of production where value is added.

Adding value = the difference between the price of the finished product/service and the cost of the inputs involved in making it.

Sales revenue 1000 units sold for £20,000 revenue Costs To make 1,000 units: Raw materials - £7,500 Labour – £5,000 Other production costs - £2,500 Total costs = £15,000 Added Value £20,000 less £15,000 = £5,000

Build a brand Deliver excellent customer service Add product features and benefits that customers want Operate efficiently

Charge a higher price Create a point of difference with competitors Protection against competitors offering lowering prices Focus business on its target market segment

Tyrells Potato Chips Will Chase had been farming potatoes for 20 years (loss- making) Wanted to produce something with more added value Came up with the idea to make hand-fried chips with distinctive flavours and packaging Successfully created a premium product and turned Tyrells into a profitable business

. Learning Intentions: To introduce pupils to Factors of Production – Land, Labour, Capital and Entrepreneur You should be able: To be able to identify the factors of production and be able to describe them To explain how the 4 factors of production link with one another To give examples of the 4 factors in a real- life context

Factors of production In order to produce goods and services, businesses need to use resources:  land  labour  capital  enterprise/entrepreneur/ship

Factors of production  Land – natural resources extracted from Earth. Can be renewable or non-renewable.  Labour – physical and mental effort of people in organisations.  Capital – synthetic resources, such as buildings, machines and tools.  Enterprise – bringing together the other three factors of production.

TASK TIME No 3

. Learning Intentions: To introduce pupils to the sectors of industry – primary, secondary, tertiary/service and quaternary You should be able: To be able to identify the 4 sectors of industry To give examples of the sectors of industry To link the 4 sectors of industry to IPO and Adding value

These are extractive industries which use the earth ’ s natural resources.  Fishermen – fish/shellfish  Farmers – wheat, beef, lamb, oranges, berries  Refineries – oil, gas  Coal miners – coal  either finished or semi- finished products

These types of businesses are involved with making things, which go through several different stages. They use raw materials, semi-finished goods

Stages of Production:  Input  Process  Output This involves taking raw materials or semi-finished goods and putting them through processes to make finished goods.

These are service the industries and the following are some examples:. Banking. Deliveries. Nursing. Mail deliveries. Hair dressing/barber. Insurance

These are the industries such as.com companies and those which are heavily involved in research and development. The following are some examples:. Moneysupermarket.com. Comparethemarket.com. Skyscanner.net

PRIMARY (Extractive) Mining Fishing Farming Oil SECONDARY (Making goods) Manufacturing Construction Durables Non-durables TERTIARY (Services) Banking Insurance Tourism Distribution QUATERNARY (IT companies).com companies Research and Development

TASK TIME No 4 and 5

 Draw up a table listing everyone in your class.  Find out what job/career they have in mind to follow and complete the table.  Indicate which sector of industry the career would be classified as.  Describe and justify your findings eg number for each sector, explaining why there are so few, if any, in a specific category and why most people want to work in another category. 32 NameCareerSector of Industry

De-industrialisation  Economies begin in the primary sector and move through each sector as they grow.  De-industrialisation explains the decline in heavy manufacturing in Scotland (shipbuilding, car manufacture).  The Proclaimers song ‘Letter from America’ mentions some towns that suffered due to de-industrialisation, such as Linwood. Other areas include Ravenscraig (Steelworks) and coal mining industry in Scotland.

Reasons for de-industrialisation  Customer demand may change.  Increased overseas competition may mean jobs go elsewhere to keep costs low for firms.  Legislation may hamper firms.

Introduction to the command words  Explain  Describe  Discuss  Compare  Identify  Distinguish between  Justify  Outline Every question in the examination will contain a specific command word

Explain  Explain the cause of de-industrialisation in the UK.  De-industrialisation is caused by increased overseas competition. This means that as other countries, eg China, become more competitive jobs are lost in the UK. Your answer must have the main theory point and then a detailed explanation of what that means.