Business Studies Revision
Business Revision
Nature of Business 9.1
Role of business:
Nature of a Business:
A business can be defined as the organised effort of individuals to produce and sell, for a profit, the products (goods and services) that satisfy individuals’ needs and wants.
Business enterprises undertake many activities to provide the products demanded by customers, with production being one of the most important. Production occurs when the business combines the resources to create products.
Other functions of business:
Profit, employment, incomes, choice, innovation, entrepreneurship and risk, wealth and quality of life.
Types of businesses:
Classification of business:
Size – businesses can be classified as small, medium or large. Their classification will depend on such things such as the number of employees, market share, ownership and who makes the decisions. A micro-business usually a SOHO employs fewer than five people, including the owner.
Businesses can also be classified as local, national or global according to their geographical spread. A local business has a very restricted geographic spread, as it serves the surrounding area. A national business operates in just one country. A global business – a transnational corporation (TNC) – is a large business with a home base in one country that operates wholly or partially owned businesses in other countries.
The four main reasons businesses expand to serve national and global markets are:
Increase in sales
Desire to increase profits
Increase in market share
Global consumers
Classification by industry sector:
An industry consists of businesses that are involved in similar types of production.
A primary industry includes all those businesses in which production is directly associated with natural resources. Examples are farming, mining, fishing, grazing and forestry.
A secondary industry involves taking raw material and making I into a finished or semi-finished product. For example, iron ore, coal and
Nature of Business 9.1
Role of business:
Nature of a Business:
A business can be defined as the organised effort of individuals to produce and sell, for a profit, the products (goods and services) that satisfy individuals’ needs and wants.
Business enterprises undertake many activities to provide the products demanded by customers, with production being one of the most important. Production occurs when the business combines the resources to create products.
Other functions of business:
Profit, employment, incomes, choice, innovation, entrepreneurship and risk, wealth and quality of life.
Types of businesses:
Classification of business:
Size – businesses can be classified as small, medium or large. Their classification will depend on such things such as the number of employees, market share, ownership and who makes the decisions. A micro-business usually a SOHO employs fewer than five people, including the owner.
Businesses can also be classified as local, national or global according to their geographical spread. A local business has a very restricted geographic spread, as it serves the surrounding area. A national business operates in just one country. A global business – a transnational corporation (TNC) – is a large business with a home base in one country that operates wholly or partially owned businesses in other countries.
The four main reasons businesses expand to serve national and global markets are:
Increase in sales
Desire to increase profits
Increase in market share
Global consumers
Classification by industry sector:
An industry consists of businesses that are involved in similar types of production.
A primary industry includes all those businesses in which production is directly associated with natural resources. Examples are farming, mining, fishing, grazing and forestry.
A secondary industry involves taking raw material and making I into a finished or semi-finished product. For example, iron ore, coal and