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Business As level Chapter 1 summary (9609)
A short and precise summary of chapter 1 of the business as level chapters.
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BUSINESS (As Level) SUMMARYCHAPTER 1 : ENTERPRISE
Business activity: producing goods & services to satisfy customer’s needs & wants
and make a profit. It also involves adding value to resources such as raw materials.
Input: raw materials, other factors of production
Business: adding value by transforming / transporting a product
Output: the final product
Added value: the difference between the cost of purchasing bought-in materials and
the price the finished goods and sold for
Opportunity cost: In deciding to purchase or obtain one item, we must give up other
goods as they cannot all be purchased. The next most desired product given up
becomes the ‘lost opportunity’ or opportunity cost.
FACTORS OF PRODUCTION
What does a business need in the transformation process?
- Capital: money, things you can buy with it such as computers or machines
(capital goods)
- Land: oil, water, trees, natural resources
- Labour: people, employees
- Enterprise: the idea that brings together the other factors of production
ENTREPRENEUR
A person with an idea that is willing to take financial risk of starting and managing a
new venture business.
They must:
■ have an idea for a new business
■ invest some of their own savings and capital
■ accept the responsibility of managing the business
■ accept the possible risks of failure.
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