Section - 1 Understanding Business Activitiy: Teacher: Hanan Salman High Level Academy
Section - 1 Understanding Business Activitiy: Teacher: Hanan Salman High Level Academy
Section - 1 Understanding Business Activitiy: Teacher: Hanan Salman High Level Academy
01 02 03 04 05
Business Types of
Classification Enterprise, Business
Activity
of business business growth business objectives and
and size. organization stakeholders
objectives
Objectives
and consumers.
Business Activity
Business Activity
Business Activity
Business Activity
Activity 1.1
Section 1/ lesson 1 : Business Activity
Section 1/ lesson 1 : Business Activity
Section 1/ lesson 1 : Business Activity
Factors of Production
The production of goods and services requires four factors of production:
Land: is all natural recourses such as minerals, ores, fields ail and forests..
Opportunity cost
• The next best alternative you give up is known as the opportunity cost of your
decision.
• The benefit that could have been gained from an alternative use of the same
resource.
Section 1/ lesson 1 : Business Activity
Answers:
1. Land – natural resources, such as wheat for flour used in cakes.
Labor – number of people available to work in Fatima’s business
Capital - machinery, equipment and finance needed to make cakes.
Enterprise – Fatima prepared to take risk in setting up businesses.
Section 1/ lesson 1 : Business Activity
Answers:
Answers:
3. ‘Needs’ are things that people need to survive. ‘wants’ are things that people would like, but are
not essential for living. Fatima produces cakes for special occasions. Although cakes are food, they
are luxury items so are ‘wants’ rather than ‘need’
Section 1/ lesson 1 : Business Activity
Importance of specialization
• They must do this because of the scarcity of goods and services which results
• It is very important that the factors of production are not wasted on the production of
Importance of specialization
• Breaking production down into small tasks (Division of labour) and each
• Specialization: people and businesses concentrate on what they are best at.
• Division of labor: production is divided into separate tasks and each worker does
Advantages
https://www.youtube.com/watch?v=ZtWkGfKhsG8
https://www.youtube.com/watch?v=8DiEG0vot_w
Section 1/ lesson 1 : Business Activity
• Reduces the costs of production. This benefits its consumers by providing more goods
Disadvantages
https://www.youtube.com/watch?v=DfGs2Y5WJ14
Section 1/ lesson 1 : Business Activity
Disadvantages
1. Workers become bored from repeating the same task. efficiency may fall
2. If the worker is absent, maybe no other worker can do the job, efficiency may fall
Section 1/ lesson 1 : Business Activity
Case study p.13
Section 1/ lesson 1 : Business Activity
Case study p.13
Answers:
a. Special Machinery
b. The production process is divided into 5 stages and one worker only completes only one of
those stages.
Section 1/ lesson 1 : Business Activity
Case study p.13
c. Workers become skilled in just one task so they are able to produce more. Because workers
are skilled at what they do there will be fewer mistakes so the quality of footballs produced will be
better.
d. One benefit to Global Sports is that workers will produce more footballs. This reduces the cost
of producing each football. Global Sports will earn more profit for every football made, or they will
be able to lower their prices below competitors and sell more footballs. The benefit for the
consumers is that they will be able to buy high quality footballs at lower prices
Section 1/ lesson 1 : Business Activity
Business produce different types of goods and services. These are known as:
1. Consumer goods.
2. Consumer services.
3. Capital goods
Section 1/ lesson 1 : Business Activity
Business produce different types of goods and services. These are known as:
1. Consumer goods: sold to the public and can be seen (physical goods) and
Business produce different types of goods and services. These are known as:
2. Consumer services: sold to the public and cannot be seen (physical goods)
Business produce different types of goods and services. These are known as:
3. Capital goods: are products which are sold to other businesses to help them
b. Consumer goods are sold to public for their use; can be divided into durable and non-durable.
Printer cartridge are non-durable consumer goods and once ink has been used to print, it cannot
be used again. Capital goods are sold to other business for them to use in the production process,
e.g. computer- controlled equipment to manufacture
Section 1/ lesson 1 : Business Activity
Case study p.15
c. Division of labour is where each member of RTP’s workforce will specialize in one area of the
production process. They will become very skilled at doing the same task and this could increase
RTP's labour productivity. However, the workers may become bored if they are only doing simple
repetitive tasks and this might cause problems for RTP.
(Although not expected at this stage in the course, more able students may identify some of these
problems, e.g. lower productivity, poor quality, increased absenteeism and an increase in labour
turnover.) Student's answer must include suitable justification.
Section 1/ lesson 1 : Business Activity
Adding Value
Adding Value
It does this by taking the raw materials and turning them into a
goods or services, which it sells to consumers at price higher than
the cost of the raw materials used in the business.
Section 1/ lesson 1 : Business Activity
Adding Value
Value added is the difference between selling price of a product and the cost
of raw materials used to produce it.
Section 1/ lesson 1 : Business Activity
Adding Value
Adding Value
1. Branding: spending
money on advertising
and other promotional
activities to build and
maintain the brand,
allow the producer to
charge higher price.
Section 1/ lesson 1 : Business Activity
3. Product features:
4. Convenience
HW
Case study/p.18
Test yourself/p.18
Section 1/ lesson 1 : Business Activity Case study p.18
1. A 'need' is something that is essential to living, e.g. food, water, clothing, shelter. A 'want' is
something that people would like but is not essential for living, e.g. mobile phone, holiday.
2. Impossible to produce enough goods and services to meet consumers' needs and wants.
3. Unlimited wants cannot be satisfied because there are limited factors of production. This creates
scarcity.
4. Specialized machinery may help a business to increase productivity, lower costs of production and
produce a wider range of products.
Section 1/ lesson 1 : Business Activity
Math in business
Past
Past papers
papers question
question
1. Kew Construction is specializes in building large houses. Each house costs $30,000 to build and
the company adds 40% to total cost to calculate the selling price.
2. Izaak owns a small fish restaurant. He employs two chefs (cooks) and three workers who serve in
the restaurant.
Izaak has been trying to increase added value to improve profits. Izaak has been looking at the financial
performance of his business. Izaak has received a number of complaints about food and service. He
knows he must improve quality but cannot decide on the best way to do this.
a. Outline two ways Izaak could increase added value. [4]
Way 1:
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Explanation:
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Way 2:
Section 1/ lesson 1 : Business Activity
Past
Past papers
papers question
question
2. Izaak owns a small fish restaurant. He employs two chefs (cooks) and three workers who serve in
the restaurant.
Izaak has been trying to increase added value to improve profits. Izaak has been looking at the financial
performance of his business. Izaak has received a number of complaints about food and service. He
knows he must improve quality but cannot decide on the best way to do this.
a. Outline two ways Izaak could increase added value. [4]
Way 1: increase the selling price
Explanation: by adding extra margin to the price of meal served
3. Explain what is meant by added value. use the following information to help you.
A food company buys materials for $2,000. it sells its products for $3,500. it spends $1,000 on wages
and other costs.
Section 1/ lesson 1 : Business Activity
3. Explain what is meant by added value. use the following information to help you.
A food company buys materials for $2,000. it sells its products for $3,500. it spends $1,000 on wages
and other costs.
Value added is the difference between selling price of a product and the cost of raw materials used to
produce it.