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Topic 1- Business in the real World - Coggle Diagram
Topic 1- Business in the real World
Reasons for starting a business
To provide a good or service
To distribute products, eg Tesco and Asda
To benefit society, eg charities and social enterprises
To fill and gap in the market, eg new hair salon in the area
To fulfil a business opportunity
Goods and services
Goods are
tangible
(physical) items. Business make goods and sell them to customers. For example, phones, shoes, clothes
Services are
intangible
(non-physical) items which a business provides to customers. For examples, a barber shop, restaurant
Wants and Needs
Wants are things that people would like to have but would be able to live
without
. For example, luxury items, holidays, cars
Needs are things required in order to
survive
. For example, food, shelter, basic clothing
Factors of production
C
- Capital- The machinery and equipment needed by the business in order to carry out its activities
E
-Enterprise- This relates to an entrepreneur who takes on the risks associated with starting a business
L
- Land- describes the land on which the business is located on as well as the natural resources a business might need
L
-Labour- Involves the workforce that use their skills and qualifications in order to make products or provide services
Opportunity cost
The
opportunity cost
can be described as the loss of other alternatives when one is chosen. For example, if a business chooses between two offices, the one they did not choose is described as the opportunity cost
Business sectors and business functions
Primary sector
- the extraction of raw materials. The first stage of the production process.
Secondary sectors
- The making and manufacturing of goods. The raw materials are taken from the primary sector and converted into finished goods.
Tertiary sector
- The provision of
services
There are four main functions that work together within a business. These are
marketing, operations, human resources and finance