Business Activity
What is a business?
It refers to an organisation that provides goods and services to satisfy human needs and wants.
What are needs and wants?
- Needs are essential items that a person cannot live without.
- Wants are unlimited resources that a person wants to have.
What is an Economic Problem?
It is a problem that is concerned with the production of goods and services to satisfy the unlimited wants of society by using its limited resources.
What is Opportunity Cost?
It refers to the next best alternative foregone whenever a choice is being made.
Factors of production
- Land refers to the natural resources. The reward is Rent.
- Labour refers to all human resources. The reward is Wages.
- Capital refers to all the man-made resources. The reward is Interest.
- Enterprise is provided by an entrepreneur; it is the one who assembles land, labour and capital to start up any business. The reward is profit.
Specialisation and Division Of Labour
- Specialisation is a situation whereby people or businesses concentrate resources on what they are best at.
- D.O.L refers to a situation where a worker is being specialised in only one task of the production process.
Advantages of Specialisation
- Innovation
- Improve efficiency
Advantages of D.O.L
- Improve skills and expertise
- Increase production
Disadvantages of Specialisation and D.O.L
- Boredom and Monotony
- Inefficiencies concerning absences
Added Value
It refers to the difference between the selling price and the costs of production.
Importance of Added Value
- Pay for other goods
- Enjoy Profit
- Improve Brand Image
Unique Selling Point (USP)
It is something that differentiates a product from its competitors, such as a special feature, lower cost, or highest quality.
How to increase Added-Value?
- Increase the selling price, but the cost of production remains the same
- Reduce the cost of production, but the selling price should remain the same.