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1. Understanding business activity

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5 topics · 9 learning objectives

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  1. 1.1. Business activity

    1. 1.1.1

      • factors of production: land, labour, capital and enterprise • concept of adding value and how added value can be increased • concept of opportunity cost

  2. 1.2. Economic sectors

    1. 1.2.1

      • primary, secondary and tertiary sectors • private and public sectors

  3. 1.3. Enterprise, business growth and size

    1. 1.3.1Enterprise and entrepreneurship

      • characteristics of successful entrepreneurs • purpose and key elements of a business plan: overview/summary, objectives, resources, market research, marketing, finance, people, operations • the importance of having a business plan • why governments support business start-ups • how governments support business start-ups, e.g. grants, advice, low-cost loans, training schemes

    2. 1.3.2The methods and problems of measuring business size

      • methods of measuring business size, e.g. number of people employed, value of output/sales, volume of output/sales, capital employed (profit is not a method of measuring business size) • problems when measuring business size

    3. 1.3.3Why some businesses grow and others remain small

      • why the owners of a business may want to grow the business • how and why businesses can grow internally, e.g. develop new products, develop new markets • how and why businesses can grow externally: mergers and takeovers, including horizontal integration, vertical integration • advantages and disadvantages of methods of growth • problems linked to business growth • why some businesses remain small

    4. 1.3.4Why some businesses succeed and others fail

      • reasons why businesses succeed or fail, e.g. management skills, availability of finance, suitability of product, demand for products, changes in the economy, level of competition

  4. 1.4. Types of business organisation

    1. 1.4.1

      • sole traders, partnerships, private limited companies and public limited companies • advantages and disadvantages of different types of business organisation • recommend and justify a suitable type of business organisation to owners/management for a given situation • different forms of business organisation: franchises, joint ventures, social enterprises • advantages and disadvantages of franchises for the franchisor and franchisee • advantages and disadvantages of joint ventures

  5. 1.5. Business objectives and stakeholder objectives

    1. 1.5.1Business objectives

      • businesses can have several objectives, e.g. survival, growth, profit, market share • the importance of business objectives

    2. 1.5.2The role of stakeholder groups

      • internal stakeholder groups: owners (sole traders, partnerships, shareholders), managers, employees • external stakeholder groups: customers, suppliers, lenders/banks, government, local community • objectives of different stakeholder groups • how these objectives may conflict with each other