pm/02business activity in contemporary society1 wants and needs a person’s needs are limited -...

PM/02 Business Activity in Contemporary Society 1

WANTS AND NEEDS

A person’s NEEDS are limited -

• FOOD

• CLOTHING

• SHELTER

A person’s WANTS are unlimited -

• CAR

•MOBILE PHONE

• HOLIDAY

• NEW CLOTHES

• ENTERTAINMENT


BUSINESS ACTIVITYBusiness activity

provides us with goods and services to satisfy

our wants


GOODS• GOODS are things which you can see and touch.

• DURABLE goods are goods which we use again and again, eg, computer.

• NON-DURABLE goods are things we normally use only once, eg, food, newspaper but we buy regularly


SERVICES• Services are things which are done

for us, eg, banking, education, transport


GOODS WANTS

Durable Non- durable

SERVICES

Copy this table into your jotter and complete by writing down 6 of your WANTS. State whether they are goods (durable or non-durable) or services.


BUSINESS ACTIVITY

INPUTSResources

OUTPUTSGoods/Services

PROCESS

In order to produce goods and services (OUTPUTS), a business needs to use resources (INPUTS)

For exampleMaterialsLabour

For exampleTrainersMeal in restaurant


FACTORS OF PRODUCTION

•LAND•LABOUR•CAPITAL •ENTERPRISE

The resources a business uses are called the FACTORS OF PRODUCTION.


LAND• The factor of production called LAND

refers to all natural resources for example,–oil–coal–water– forests

• as well as land itself–


LABOUR• The factor of production called

labour refers to the human resources used in the organisation. For example,– sales persons– accountants– cleaners– machinists


CAPITAL• The factor of production called capital refers to

– all the man made resources owned by the business, such as,•factory•tools•equipment•machinery•vehicles

– the finance invested in the business


ENTERPRISEThe ability of the owner or manager of a business to use the other factors of production - land, labour and capital - effectively.

LAND

LABOUR

CAPITAL

FACTOR OF PRODUCTI ON

LAND LABOUR CAPI TAL ENTERPRISE

Furniture

Herr Kutt

Carpark

£ 3,000 savings

Liam, Lisa and Linda

Equipment

£ 2,000 bank loan

Salon

Water

Lauren and Luke

Herr Kutt opened a hairdressing and beauty salon business with £3,000 from his savings and a bank loan of £2,000 He found premises in the High Street which had land at the back he could use as a customer car park. He fitted out the salon with furniture and equipment and ensured he had a good supply of water for washing. He employed Liam and Linda as stylists, Lisa as a junior, Luke as a receptionist and Lauren as a beautician. Copy out the table below and complete showing Herr Kutt’s factors of production. One has been done for you.


THE BUSINESS CYCLE and WEALTH CREATION

Business produces goods and services to meet the

never ending wants ofconsumers

Consumers buy goods andservices to obtain the

things they want

Wealth is created forbusinesses and their

employees

Consumers have money from their wages to spendon other goods and

services


BUSINESS CYCLE CYCLE OF BUSINESS

The continual flow of money from around the economy

CONSUMERSPeople who use a product or a service (may not be the buyer)

PRODUCTION The making of a product or the provision of a service

CONSUMPTIONThe using up of goods and services

PRODUCERS Business organisations who make a product or service


Answer the following questions in your jotter

1 What is the difference between needs and wants? Give examples.

2 If we only had needs rather than wants, why would there be very limited business activity?

3. Identify and Describe the 4 factors of production.

Which do you think is the most important? Justify your answer.

4 Explain how the cycle of business creates wealth.

5 Which of the following jobs create wealth? Teacher; Doctor; Miner; Baker; Accountant; Jewellery

Designer


SECTORS OF ACTIVITY/INDUSTRY

• Businesses can be grouped into sectors according to the types of products or services they provide.

• These sectors are called– PRIMARY– SECONDARY – TERTIARY


PRIMARY SECTOR

• Businesses involved in exploiting natural resources

FORESTRY FARMING MINING OIL EXCAVATION


SECONDARY SECTOR• Businesses involved in

manufacturing and construction• Taking natural resources and

changing them into things we can use

Clothing manufacture

Shipbuilding Carmanufacture


TERTIARY SECTOR

• Businesses which provide a service, eg

BANKING BARBERS HOTEL

ORGANI SATI ON PRI MARY SECONDARY TERTI ARY

Shell Oil Company

Marks & Spencers

Ford Motors

Oxfam

Barratt Housebuilders

Showcase Cinema

Cadbury’s Ltd

De Beers Diamond Mines

Copy this table into your jotter and complete showing which of the following organisations are involved in Primary, Secondary and Tertiary activities


UK SECTORS OF

ACTIVITY

4%

28% 68%

Primary Secondary Tertiary

• All countries are heavily involved in primary sector activities at first

• As their economies grow they become industrialised and become more involved in secondary industries

• In the last 30 years the UK has lost many of its traditional industries (de-industrialisation)

• In the UK there has been a significant growth in service industries

Changes in Industrial Activity


QUESTIONS

• Identify and describe each of the 3 sectors of economic activity?

• Identify 3 examples of activity for each sector.

• Can you think of ways in which Shell Oil could be involved in all 3 sectors of economic activity?


Design a poster explaining the 3 sectors of business

activity

pm/02business activity in contemporary society1 wants and needs a person’s needs are limited -...

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