National 5 Business Management 1.1 Business Activity

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National 5 Business Management 1.1 Business Activity

  1. 1. 1.1 Business Activity N5 Business Management
  2. 2. What is a Business?  A business is an organisation that exists to satisfy needs and wants.
  3. 3. Some Key Terms Customer  Consumer  Supplier  Turnover  Costs  Profit 
  4. 4. Needs and Wants  A Need is a basic thing humans have to have in order to survive. I.e. Food, water, shelter and clothes are all needs.  A Want is something extra we would like to have. They can be luxuries or time saving devices. Cars, mobile phones, computers and CDs are all wants
  5. 5. Goods and Services     A Good is something you can touch and feel. Goods can be non-durable, durable or industrial A Service is provided by someone else. A service is non-physical. Hairdryer is a good. A Hairdresser is a service.
  6. 6. Quick Quiz
  7. 7. TASK  Question Bank  1-7
  8. 8. Production Stages INPUTS PROCESS OUTPUT
  9. 9. Factors of Production  Land – all natural resources used in production  Labour – all people used in production  Capital - all items used to make other things in production  Enterprise – the art of bringing together the other factors of production and being successful
  10. 10. TASK  Question Bank  8-20
  11. 11. ICT Task  Create a poster outlining Inputs, Process & Outputs of a product you like  Include suitable images & text
  12. 12. Why do businesses exist?  To satisfy customer needs and wants  To satisfy consumption
  13. 13. Balancing Costs and Benefits  A new airport is to be built near Blantyre. David Livingstone International Airport!  Do you think the people who live in Hamilton, Motherwell & East Kilbride would be happy?  Think of some good points and bad points about this development
  14. 14. Key Terms  Social Costs – bad or negative effects businesses have on the community  Social Benefits - good or positive effects businesses have on the community  Economic Costs – the cost of the business alternative given up  Economic Benefits – the positive, long term changes to an area
  15. 15. Social costs and benefits      Costs Air/noise/water pollution Traffic congestion Lifestyle change Local services unable to cope      Benefits Happier customers Creation of jobs by business Contribution to local community Creation of jobs within other local businesses
  16. 16. Economic costs and benefits      Costs Hospital v leisure centre Shopping centre v Football stadium Pub v Fast Food restaurant Packet of crisps v chocolate bar      Benefits People employed Wages received Rise in standard of living Boost to local firms
  17. 17. TASK  Question Bank  21-34
  18. 18. The Business Cycle
  19. 19. TASK  Question Bank  35-38
  20. 20. Customer Satisfaction  Customers are vital for a business as they buy the goods and services.  Firms try to make customers happy by: Having a quality product  Effective employees  After sales service (including warranties) 
  21. 21. Customer Satisfaction  Firms may also have: Customer Care Policy  Customer Complaints Process 
  22. 22. TASK  Question Bank  39-43 Extension Task:  Create Organisation Charts for:  The School  A Local Business of Your Choice 
  23. 23. Are all Businesses the same?  Organisations differ due to many characteristics. Business Size  Business Objectives  Type of Ownership  Product/Service 
  24. 24. Mission Statements  An organisation usually outlines it vision or values in a mission statement.  For example, Manchester United – the world’s richest sports team, valued at £2 billion – has a simple one:  “To be the best football club in the world on and off the pitch.”
  25. 25. TASK  Question Bank  44-45
  26. 26. Business Size Small Business Medium-Sized Business Large Business Owned by sole trader or partnership Owned by a Owned by group of people shareholders; run by directors Sells goods locally Reaches locally and/or nationally Employees: <= 50 Employees: 50- Employees: 250 250 + Sells locally, nationally and internationally
  27. 27. TASK  Question Bank  44-49
  28. 28. Sectors of Economy  Private  Public  Third Sector Sector Sector
  29. 29. Private Sector  Businesses driven by profit.  That profit only benefits the owners and investors.  Financed by private money from shareholders and bank loans
  30. 30. Private Sector Examples  Sole Trader  Partnership  Private Limited Company Ltd & Plc
  31. 31. TASK  Question Bank  50-58
  32. 32. Public Sector  Provide goods and services for the benefit of the community  Run by the Government.  Public money from taxes
  33. 33. Public Sector Examples  Devolved Services  Local Services
  34. 34. TASK  Question Bank  59-89
  35. 35. Third Sector  Not driven by profit but by need to help parts of the community  Money from donations and gifts  Can be a Social Enterprise
  36. 36. Third Sector Examples Charity Social Enterprise Local Sports Club
  37. 37. TASK  Question Bank  90-101
  38. 38. ICT Task  Create a PowerPoint presentation comparing an organisation from each of the 3 different sectors of ownership:  Private (examples, advantages & disadvantages)    Public (examples, advantages & disadvantages) Third (Voluntary) (examples, advantages & disadvantages) Include suitable images & text
  39. 39. Business Objectives Survival Profit Maximisation Growth Provide a Service Customer Service Sales Maximisation Social Responsibility
  40. 40. TASK  Question Bank  102-109
  41. 41. Sectors of Industry  Primary Sector  Secondary Sector  Tertiary Sector
  42. 42. Primary Sector  This covers raw materials which are straight from land, sea and air  Mining Farming Fishing Oil and gas Forestry    
  43. 43. Secondary Sector  This uses the raw materials and turns them into finished goods Car manufacturing  Engineering  Shipbuilding  Electronics 
  44. 44. Tertiary Sector         This covers all services: Insurance Education Fire Service Health Service Leisure Industry Travel & Tourism Distribution
  45. 45. Production Chain  Production is the transformation of raw materials into the finished product  IPO or Input – Process - Output INPUTS PROCESS OUTPUT
  46. 46. Creating Wealth  Wealth is created by adding value to each stage of the production process  Selling Price = Cost of materials + Value
  47. 47. TASK  Question Bank  110-115

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