1.Business world & business
management
1.1.Key concepts
Business world, community, society, institutions, classification, needs, economic systems,
development, free market, market system, market economy
1.2.Role of business in society
LO1: Demonstrate an understanding of the role of business in society.
• Elements of business
o Human activities – managed & operated by people
o Production – transform resources into products & services
o Exchange – products & services for money or other goods/services
o Profit – reward for meeting people’s needs
• Countries have different economies
o Market economy – business can decide what to produce, how to produce
& selling price. Business’ primary purpose:
o Make profit while satisfying needs of the people.
• Industry – group of businesses performing similar activities, e.g. mining, financial
services, construction etc.
• Business creates wealth & is catalyst for economic growth
• Business serves community indirectly
o Technological innovation, research & development, improvements to
infrastructure.
o Support education
o Develop human resources, arts, conservation & sport
• Interdependency between business and society
o Business: influence on physical environment, consumers, economy and
competitors
o Society: regulations, legislation, exercise choice to support business (or
not), pressure on business:
o Social responsibility
o Responsible & safe workplace
o Housing
o Health
o Involvement – community issues
o Environmental awareness
o Empowerment of previously disadvantaged
individuals
o Business ethics
o Ethical behaviour of managers & executives
o Consumerism
o Social force protecting consumers against unsafe
products & malpractice – exert moral & economic
pressure on business
o Consumer Protection Act
, 1.3.Needs & need satisfaction
LO2: Explain the needs of society and how need satisfaction occurs.
• People have unlimited needs
o Maslow
o All people have same basic needs (hierarchy of needs)
o Physiological needs (hunger, thirst)
o Security needs (protection)
o Social needs (love, recognition)
o Esteem needs
o Self-realisation needs
o Everybody not strive to satisfy same needs
• Society has limited resources (production factors):
o Natural resources
o Production factor of land, e.g. agricultural land, minerals, water
etc.
o Supply cannot be increased - scarce
o Human resources
o Production factor of labour e.g. physical & mental talents and
skills of people employed
o Size of labour force: size of population, level of education &
training, retirement age.
o Capital
o Buildings, machinery etc. used to produce products, e.g.
factories, equipment, roads and other infrastructure.
o Generally long working life & high price.
o Entrepreneurship
o Collective capacity of entrepreneurs – risk taking to develop
goods & services
o Scarce – not everyone prepared to take risks and to identify
opportunities
• Choice to decide best use of resources – Economic problem
• Economic principle – Ensure highest possible satisfaction of needs with limited
resources available.
o Which goods/services to produce/render?
o Who should produce? ( State or private sector, individual business or
industry)
o How to produce? Use of resources. (Labour or machine intensive)
o For whom are products produced/ services rendered? (Rich or poor,
business clients or individuals/families)
o Maximise income after applying economic principle
1.4.Main economic systems
LO3: Discuss the three main economic systems in the world
• Economic system influenced by politics
o Countries choose economic system to address economic problem, i.e.
what to produce, how and for whom.
