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Businesses should aim to improve customers' quality of life. This is done by trading goods and services and improving the production quality of goods and services to satisfy consumers' needs. There is much more to the business process, though. Read along to take a closer look at some of the fundamentals.
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Sign up for freeHuman resources can also be referred to asLandManagement Labour None of the above
Identify an external stakeholder from the following list.
Which of the following is NOT an example of a profit-making business?
______ is economic activity that involves the exchange of products and/or services for profits or other motives. It is a transactional activity.
Which of the following is NOT a Business Factor of Production?
Which of the following is an example of service?
State TRUE or FALSE.The business environment does not comprise internal events that influence businesses.
Pick the odd one out.
'John bought iPhone via Amazon for his daughter Leena. Leena uses Spotify to listen educational podcasts on her iPhone.'In the example above, identify customer and consumer for Amazon.
____________ consists of producing goods or services in exchange for commercial and financial benefits.
Goods are _____ while services are ______.
Human resources can also be referred to asLandManagement Labour None of the above
Identify an external stakeholder from the following list.
Which of the following is NOT an example of a profit-making business?
______ is economic activity that involves the exchange of products and/or services for profits or other motives. It is a transactional activity.
Which of the following is NOT a Business Factor of Production?
Which of the following is an example of service?
State TRUE or FALSE.The business environment does not comprise internal events that influence businesses.
Pick the odd one out.
'John bought iPhone via Amazon for his daughter Leena. Leena uses Spotify to listen educational podcasts on her iPhone.'In the example above, identify customer and consumer for Amazon.
____________ consists of producing goods or services in exchange for commercial and financial benefits.
Goods are _____ while services are ______.
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Send FeedbackBusiness is economic activity that involves the exchange of products and/or services for profits, or other motives. It is a transactional activity.
Business looks to satisfy customers' needs through the provision and production of necessary services or goods.
Goods are tangible items produced and traded by businesses in order to generate profits. Examples include bags, food, and electronics.
Services are intangible products that cannot be touched, held, or stored. Examples include services from lawyers, doctors, banks, or internet providers.
Business activities are important for improving the standard of life by creating employment opportunities, providing services, and producing goods.
Some businesses are not established for profit generation, though. These businesses, referred to as not-for-profit organisations, are established for purposes other than the generation of profit.
These purposes usually include goals that benefit society as a whole, such as the provision of education or community empowerment. Examples of such organizations include Amnesty International, Boy Scouts, and the Bill and Melinda Gates Foundation.
In the provision of goods and services, businesses utilise the four factors of production. They are land, labour, capital, and entrepreneurship (see Figure 1 below).
Fig. 1 - Factors of Production
Often referred to as just land, natural resources are inputs such as raw materials and land areas essential for business activities. Examples of natural resources include minerals, farmland, water, forests, etc.
Capital refers to the resources and money used by the business to create further wealth. It is used to purchase non-current assets like machinery, equipment, warehouses, etc.
Often referred to as labour, human resources involve human input - skilled or unskilled - into business activities. Examples include business managers, workers, scientists, and all employees who work for a company.
These are risk-takers who manage other factors of production to provide the goods and services needed to satisfy consumers' needs, while also making profits for the business. They are referred to as risk-takers because not all business processes return profits.
The business environment takes into consideration all events, factors, or conditions, internal or external, that influence business activities. These factors may either have a direct or an indirect effect on the business and may either provide it with an opportunity or a risk.
The interaction between the environment and business is mutual. Examples of business environments include government regulations, health and safety regulations, the economic climate, the political environment, technology changes, environmental culture, competition, and customer demand.
The two types of business environments are internal and external.
Fig. 2 - Types of Business Environments
The internal environment is related to the internal functions of the business, such as its operations, its employees, its management, ethics, marketing resources, etc.
The external environment is related to influences that come from outside of the business, such as governmental bodies, the economic climate, customer demands, etc.
Stakeholders are either internal or external parties who hold interest in the activities of a business, and can exert or receive influence in regard to that business. Stakeholders include owners, investors, employees, suppliers, customers, communities, trade associations, and government bodies.
A business stakeholder can be of two types - internal or external.
Internal stakeholders have a direct relationship with the business. They could be employees or investors. Thus they have a significant interest in the business.
External stakeholders are those who don’t have a direct relationship with the business but are still affected by or are affecting business activities. Examples include suppliers and local communities.
Check out our explanation on Stakeholders to find out more!
Business management refers to the organising, maintaining and allocating of business resources in order to achieve business goals and develop the business. Business managers are responsible for overseeing the management processes of the business enterprise.
An 'entrepreneur' is someone who uses an available opportunity to set up a new business. This opportunity may arise due to an unsatisfied market need, a drive to make a social difference, or simply to make a profit. Entrepreneurs bear most of the risks that come with setting up a new business. However, they also enjoy the rewards if it is a success.
Want to learn more about entrepreneurship? Take a look at our Business enterprise explanation
Starting a new business is risky. The kinds of risks in starting a new business include:
Strategic risks
Operational risks
Financial risks
Compliance risks
Reputation risks.
The rewards of starting a new business include:
Sense of satisfaction
Financial rewards mostly from business profitability
Expanding business reach
Provides the entrepreneur with autonomy
Provides the entrepreneur with a platform for growth and development.
To learn more about this topic, check out our explanation, Risks and rewards of business enterprise.
In conclusion, businesses are essential for improving stakeholders' quality of life. An entrepreneur might have a fantastic idea for a business opportunity that leads to a huge amount of sales and profit. Starting a company is a huge challenge, though, and there are numerous internal and external risks businesses face. It is important to pay attention to these to minimise business failure.
Business is any economic activity that involves the exchange of products and/or services for profits, or other motives. It is a transactional activity.
Goods are tangible items produced and traded by businesses in order to generate profits. Examples include bags, food, and electronics.
Services are intangible products that cannot be touched, held, or stored. Examples include services from lawyers, doctors, banks, or internet providers.
When providing goods and services, businesses utilise the four factors of production. They are land, labour, capital, and entrepreneurship
The business environment takes into consideration all events, factors, or conditions - internal or external - that influence business activities.
Stakeholders are either internal or external parties who hold an interest in the activities of a business.
An'entrepreneur' is someone who uses an available opportunity to set up a new business.
There are various risks and rewards associated with starting a business.
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