Business Studies

Business
Studies
INTRODUCTION
Syllabus
1. Business and its environment • Business structure

• Size of business
• Business objectives
• Stakeholders in a business
2. People in organisations • Management and leadership
• Motivation
• Human resource management
3. Marketing • What is marketing?
• Market research
• The marketing mix
4. Operations and project management • The nature of operations
• Operations planning
• Inventory management
5. Finance and accounting • The need for business finance
• Sources of finance
• Costs
• Accounting fundamentals
• Forecasting cash flows and managing working
capital
6. Strategic management • [No topics at AS Level]
Assessments
Purpose of business activity
Identify and satisfy the needs and wants of people

Need –essential for survival; want- desires (Luxuries)
Make use of resources/fop- inputs required by a
business
Overall aim of earning profit (revenue-cost)
Produce goods/services
Goods –tangible…Services-intangible
Consumer goods and capital goods?
Types of consumer goods? Durable (last over a period
of time) and non durable (intangible) (don’t last.
Perishable)
Capital goods- used to produce other goods
Resources/ FOP
Land: land itself and its resources both (sea

and land) ex, fish forest, oil, coal
Labour: Manual and skilled workforce
Capital: not just finance but all the man-made
resources example? Machinery, tools and
equipment
Enterprise: combines other fop into one unit.
Managing, decision making, coordination &
risk taking
Nature of economic activity
Business activity involves concept of creating

value/adding value
Involves selling goods/services at a higher price than
the cost of materials
To add extra features to a product or process it
further
The customer is willing to pay more after the “value
addition”
Value added= selling price – cost of raw material
(not all the costs)
Native communities would exist otherwise (hunters
and gatherers)
What a business needs to succeed
Factors of production including Finance

(capital)
Planning
Contacts
Customers
Suppliers
Economic problem
 Needs and wants difference

 Limited resources  unlimited wants
 Scarcity  wants are unlimited but the resources
required to satisfy the wants are limited
 Applies to rich and poor both
 Cant satisfy all needs and wants therefore,
choices are required
 How to make a choice? Prioritize
 Government, businesses, workers, individuals all
have to make choices
 Opportunity cost- next best alternative foregone
3 sectors in business activity
 Primary sector: extraction of resources or involves
changing natural resources into primary products
Examples: Fishing, Mining, Farming, Forestry
 Secondary sector: converts the primary goods into

manufactured goods
Examples: Construction, Textile production, Processing
 Tertiary sector is the service industry.

Examples: Banking, Hair cutting, Teaching
Industrialization – moving from primarysecondary sector.

Takes place in the developing world
De-industrialization- moving from secondarytertiary
sector. Developed world
Entrepreneur
Qualities?
• Innovation
• Good planner and organizer
• Commitment and self motivation
• Multi-skilled –make, promote, sell and keep accounts
• Leadership skills and motivate workforce
• Self confidence
• Risk taking
• Optimist
• Charismatic
• Ability to bounce back
Entrepreneur: Challenges?
• Identification of successful business opportunities

Where does the idea come from?
-own skills/hobbies
-previous employment
-conferences and exhibitions
-market research
• Finance
-lack of own finance
-unaware of grants and financial support
-no trading record for banks, higher ir
-business plan that does not convince a potential investor
• Location
-work from home
-Not close to potential market
-cause family tension
• Competition and building customer base
-already existing consumers
-personal customer care
-pre/after sales service
Why business fails?
 Lack of record keeping/ planning

accurate and up to date records
soft and hard copy back up should be done
 Lack of funds :cash and working capital (day to day transactions)
cash flow forecast (inflows and outflows of cash)
inject sufficient cash
establish good relations with the banks
 Lack of expertise/skills
leadership, management, planning, decision making,
coordinating, marketing, sales
 Changes in business environment as Business environment is
dynamic : Everything is changing ( demand doesn't stay the same
. Fashions changes)
 Economic changes e.g inflation ( demand decreases and
purchasing power of people decreases)
 Production/technical (techniques might be outdated)
 Competition’s behavior (try to drive you out of biz)
4 imp roles of the govt
 Economic growth measured by an increase in

GDP (gross domestic product) output produced by
a country in a given year in a given time period
 Employment generation. Will give them income
and increase consumption/ demand in the
economy. Govt will not have to spend on
unemployment benefits
 BOP(balance of Payments)+ve- (X>M) & -
ve(M>X). +ve will attract foreign exchange
inwards and vice versa
 Control inflation- sustained and persistent
increase in general price level in the economy
Role of businesses in the development of a country
provide employment
Economic growth/ increase the GDP/output of the
country
Improved standard of living
Increase consumption by satisfying the needs and
wants of the people
Increased taxes for the government revenue
Innovation and technological change
Exports
bring foreign currency if the products are sold outside
the country
Personal development and Social cohesion
Social enterprises
 They operate for the well being of the society

 Not charities
 Making profit is not the main aim
 Main aim is to solve social problems faced by people
 Profit is kept to provide more services
 They normally provide education and health
 Common features;
-directly produce goods/service
-social aims and achieve them via ethical (moral) ways
-profit making for survival as they cant run on donations/charities
 Measure the aims of a business via Triple bottom line
-Economically: profit for reinvestment
-Socially: support for local and disadvantaged communities
-Environmentally: protect env and mange business that way

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Business

1. Business and its environment • Business structure

Identify and satisfy the needs and wants of people

Land: land itself and its resources both (sea

Business activity involves concept of creating

Factors of production including Finance

 Needs and wants difference

 Secondary sector: converts the primary goods into

 Tertiary sector is the service industry.

Industrialization – moving from primarysecondary sector.

• Identification of successful business opportunities

 Lack of record keeping/ planning

 Economic growth measured by an increase in

 They operate for the well being of the society

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