What Do Businesses Do?

WHAT DO BUSINESSES DO? UNIT 1.1

Look out for the  ... This means you have to DO SOMETHING!

WHAT IS A BUSINESS?
A business is a type of organisation
It involves people and resources
Goods or services are produced

What are Goods?
Items which you can see and touch and carry away with you
Examples include chocolate, clothes or cars
Goods can be durable (longlasting – eg cars) or non-durable (used up quickly – eg chocolate)
What are Services?
Services are things that you might want someone to do for you but which you cannot touch – they are intangible.
Examples of services include – doctors, dentists, lawyers, insurance companies etc

Goods and Services satisfy our Needs and Wants Needs ... The things we must have in order to survive:
Water
Food
Shelter
Clothing
Wants ... The things we would like to have (but don’t really need )
Fashion clothes
CDs
Car
Holiday

It is human nature
Never to be satisfied with what we have - we always want more
Which is good news for business!
OK, I’ve got the flat and the Ford Focus, which I really wanted, but a house and a Porsche would be better ….

BUSINESS AIMS
The main aim of most businesses or organisations is to sell their goods or services to make a profit ...
… but there are some which do not -
These are charities , which raise funds by a variety of means and use them to help the needy, or
Organisations set up to provide a service to the public

 Answer the questions on Worksheet What Businesses Do – worksheet 1


CATEGORISING BUSINESSES Businesses may be put into categories based upon...
Size
Market
Ownership
Product

Size of Business Businesses may be described as Small , Medium or Large

SMALL ...
Often owned and run by one person - a sole trader
Or they may be run as a partnership - between 2 and 20 people
They employ less than 50 people
They usually sell their good and services locally
Opticians, solicitors, accountants
Tradespeople - plumbers, electricians, hairdressers
Small shops
Examples of small businesses ...

MEDIUM ...
Usually owned and run by a group of people - these may be partners, directors or shareholders
They employ between 50 and 250 people
May have branches and sell goods nationally
Examples of Medium-size businesses ...
Manufacturers of clothing, furniture
Car hire companies
Theatres
Insurance Companies

LARGE
Usually owned by a large number of people - the shareholders - and run on their behalf by directors
They employ more than 250 people
May produce and sell goods internationally
Examples of Large Businesses ...
Car manufacturers eg Ford, Nissan
Chainstores eg Marks & Spencers
Finance companies eg Bank of Scotland
Oil companies eg Esso

Ownership Businesses can also be classified according to who owns them ... THE PRIVATE SECTOR
Owned by one or more persons (sole traders, partners and shareholders)
Started in order to provide goods or services
They use private money from owners or lenders
Aim to make a profit
Examples include – McDonalds, BP, Florists, Newsagents etc

THE PUBLIC SECTOR
Nationalised industries, local authority services, schools and hospitals
Owned by the state
They use public money from taxes
Supply Public Services, eg Hospitals, Schools, Police, Armed Forces etc
THE VOLUNTARY SECTOR
Charities, youth clubs, golf clubs
Run by officials who may volunteer or be elected, and are often unpaid
They use money from donations, gifts and fund-raising

Type of Product Another category is based on what is made ...

PRIMARY SECTOR
oil
fishing
forestry
agriculture
quarrying
mining
This is the first stage of the production process where raw materials and natural resources are farmed or extracted from the land or sea.

SECONDARY SECTOR
Deals with manufacturing goods – turning the raw materials into finished products
car manufacturers
engineering
shipbuilding
“ white goods” manufacturers (including fridges, freezers, dishwashers etc)
housebuilding

TERTIARY* SECTOR
(* Pronounced “tershary” - just means third)
Offers services rather than goods
insurance
banking
education
hairdressing
tourism & leisure
armed forces

All businesses and organisations have a number of things in common
Name
Resources (including people)
Aims
Rules/procedures
Image

Smaller businesses ...
May be quite informal , and may not have anything written down about Aims, Rules and Image. Information often passed on verbally .

Larger firms ...
Are more likely to be formal and have everything written out.

 Your school is an organisation.
Fill in the blanks on Worksheet
What Businesses Do – worksheet 2

 Now do the same for HMV

GOODS AND SERVICES
We all use hundreds of goods and services every day without thinking much about them ...

(unless we can’t get them, such as when the water goes off and we can’t fill the kettle or have a shower!)

Think about ...
What you did when you got up this morning –
and the goods or services which you used before you got to school

These might include cornflakes, bowl, spoon, milk, fridge, toothbrush, clothes, bus

 On your worksheet What Businesses Do – worksheet 3 make a list of the goods and services you used this morning.


But these products don’t just appear by magic!
What happens to them before they reach you?

Goods go through many steps before they reach you, the consumer ...
For example, take a newspaper –

Life of a Newspaper
A tree was grown
It was cut down
It was transported to a mill where it was turned into pulp
The pulp was made into paper ...

Then ...
The paper was transported to the printing works

The newspaper was transported to the shop ...

Where it was sold to you!
This is known as the
Chain of Production

Chain of Production The process of making goods, where raw materials are turned into final products. INPUTS Raw Materials (Money, Premises, People) PROCESS Manufacturing stages OUTPUTS Finished Goods (sold on to customers) At every stage in the production process, value is added, eg a house is worth more than the bricks and plaster it started out as.

 Now choose ONE item that you used this morning. On Worksheet What Businesses Do – worksheet 4 write down all the steps it went through before reaching you.


End of Unit

What Do Businesses Do?

by Musselburgh Grammar School

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