1.1 What is a business?

a) The nature of business AO1

b) Primary, secondary, tertiary and quaternary sectors AO2

c) Entrepreneurship AO2

d) Challenges and opportunities for starting up a business AO2

Unit 1.1 - Glossary of key terms: What is a business?

Adding value

The process of producing a particular good or service that is worth more than the cost of the resources used to produce it.

Business

A decision-making organization established to produce goods and/or provide services.

Consumers

The individuals or organizations that actually use a product.

Customers

The individuals or organizations that purchase a product.

Entrepreneurs

The individuals who take risks in overseeing a business organization or business venture, usually in pursuit of profit.

Entrepreneurship

The knowledge, skills and experiences of individuals who have the capability to manage the overall production process.

Factors of production

The collective term for the resources used in the production process, i.e. land, labour, capital and entrepreneurship.

Finance and accounts

Function of an organization responsible for ensuring that the business has sufficient funds in order to conduct its daily operations.

Goods

These are physical (tangible) products, such as cars, clothes, flowers, food, furniture, smartphones, and toys.

Human resources (HR)

The business function that handles all aspects relate to the workforce, involving all aspects of a firm's operations related to staff (personnel) within an organization.

Marketing

Business function of identifying the needs and wants of customers so that the organization can provide goods and services to meet these requirements and desires, usually in a profitable way.

Needs

The basic necessities that an individual must have in order to survive, such as food, water, and shelter.

Operations (or operations management)

The business function referring to the process of making goods and providing services from the available resources of a business to meet the needs and wants of its customers.

Primary sector

Business activity involved with the extraction of natural resources, e.g. fishing, mining and agriculture.

Production

The process of creating goods and/or services using the factors of production available to the business.

Quaternary sector

Business activity involving the creation or sharing of knowledge and information.

Secondary sector

Business activity involved with the manufacturing or construction of finished products.

Services

Intangible products, such as haircuts, tourism, public transport, banking, insurance education, and healthcare.

Tertiary sector

Business activity that involves providing services to customers, i.e. consumers and business clients.

Value added

The numerical difference between the cost of factor inputs in the production process and the price that the final output is sold for.

Wants

These are the desires of individual customers, i.e., the goods and services that they would like to have (rather than things they need to survive) such as a new smartphone, a family holiday in an overseas location, fresh flowers, or jewellery.

1. Define the following term in the text:

b. Tertiary sector ( 2marks)

2. Outline the factors of production needed to set up the business providing CVs to school leavers.

[6 marks]

3. Using the gym instructor’s business as an example, outline the business functions involved in this

business. [6 marks]

Definitions:

1. b. Tertiary Sector: The tertiary sector, also known as the service sector, is a category of the economy that primarily focuses on providing services rather than producing tangible goods. It encompasses a wide range of industries such as retail, education, healthcare, hospitality, and financial services. The examples from the case study include CV writing and Gym Instructing

2. To set up a business providing CVs to school leavers, the following factors of production are required:

Definition of each and then examples.

a. Labor: Skilled writers or professionals who can create effective CVs.

b. Capital: Computers, software for document processing, and internet connectivity.

c. Entrepreneurship: The individual(s) with the vision and initiative to start and operate the business (Jessica Lyons)

d. Land: A suitable workspace or office to carry out business operations/ink/paper

3. Definition of each and examples

The gym instructor's business involves various business functions, including:

a. Marketing: Promoting the lunchtime workout service to potential corporate clients and employees, Social Media (Insta and facebook)

b. Operations: Managing the scheduling of workout sessions, equipment transportation, and fitness instruction.

c. Finance: Handling pricing, payment, and financial planning for the gym instructing business.

d. Human Resources: Recruiting and managing fitness instructors if needed and potentially office staff.