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Business Mind Map Section 1 - Coggle Diagram
Business Mind Map Section 1
Business Activity
Economic Problem
There is unlimited needs and wants but limited resources.
Scarcity
Choices have to be made
Opportunity Cost
Factors of Production
Labour
Capital
Land
Enterprise
Specialisation
Involves Division of Labour
Advantages
Less time wasted moving between workbenches
Quicker and cheaper to train workers since they only need to learn a few skills
Increases efficiency and output
Disadvantages
If only one worker can do a task, and is absent, then production halts
Workers get bored doing one job, so productivity falls
The Purpose of Business Activity
Combines factors of production to products to satisfy needs and wants
Pays workers so that they can buy products to satisfy needs and wants
Added Value
Is the difference between selling price and cost of production
Used to pay workers, overhead costs, profit for the owners
To increase added value
Increase selling price
Decrease cost of production
Classification of Business
Stages of Economic Activity
Secondary: turning natural resources into final goods
Tertiary: selling final goods to consumers
Primary: extraction of natural resources
Relative Importance of Economic Sectors
Can be measured by
Value of output of a sector in proportion to total output of an economy
% of total number of workers employed in a sector
Primary sector usually more important in Developing Countries
Secondary and tertiary sector most important in Developed countries
Changes in Sector Importance
As a country develops, the secondary sector will overtake the primary sector as the most important. Then, as consumers get wealthier, the tertiary sector overtakes the secondary sector in importance
Caused by
Other countries manufacturing products at a cheaper price leads to decline of secondary sector
Consumers getting richer and buying more goods and services leads to rise of tertiary sector
Depletion of natural resources leads to decline of primary sector
Mixed Economy
Consists of
Public Sector
Includes
Defence
Public Transport
Education
Water
Health
Electricity
Private Sector
Causes of Privatization
Private owners can invest more money into the business
Competition between businesses in the private sector lead to higher quality
Higher efficiency than if subsidized by the government
Enterprise, Business Growth & Size
Entreprise & Entrepreneurship
Disadvantages
Requires owner to use own money or loan to set up business
Entrepreneurs usually need knowledge and experience to be successful
Lost income from being a normal employee
Business can fail
Characteristics of Entrepreneurs
Optimistic
Self-Confident
Creative
Innovative
Risk Taker
Independent
Hard Work
Effective Communicator
Benefits
Fame as business grows large
Higher income compared to employees
Put own ideas into practice
Can work using own skills & interests
Can choose how to spend time & money
Business Plan
Business Size
Why calculate business size?
Compare themselves with other firms (Competitors)
Know how many people they'll be working with (Workers)
Impose different tax rates for big and small businesses (Government)
See how important a loan to a business is compared to its overall size (Banks)
Decide which business to invest in (Investors)
Business Growth