revision: Business Studies - Test 1

THE ECONOMIC PROBLEM 

We have unlimited wants but limited resources and this becomes an economic problem since the inability to obtain resources to produce goods and service creates scarcity and lack of the certain goods or services to satisfy people's wants.

scarcity = the limited resources unable to satisfy all our unlimited wants.

WHY DO BUSINESSES SEEK PROFIT AND WHY WANT TO GROW?

Businesses all want to seek profit and in order to increase their profit, growth is required. Profits are the main thing that will keep a business running and main purpose of a business continuing to provide goods and services to fulfill people's needs and wants, in order to do so, they must grow both externally and internally.

 EXTERNAL and INTERNAL GROWTH-

External = Where two businesses join to form another business

Merger, take over and acquisition.

External growth is when a company relies on another company to grow, this could be in three forms: a merger, meaning two companies of the same size join together to help each other; a take over, when a larger business takes over a smaller one to try and develop it; or an acquisition which is when a business buys part of another business. 

Acquisition -> Apple bought AuthenTec's finger print technology for 365 million USD to put on their best selling products such as the iPhone, iPad and iMac.

Internal = Where a business grows without involving others. 

This could be increasing the number of employees or outlets. Expanding to different countries and increasing the prices of their goods or services.

ADDED VALUE 

Added value is when a business creates an increase worth for a product in addition to changing it from raw materials into a good or service. This could be quality, a unique selling point or branding. You would pick a good or service with factors such as these and even pay a higher price for it.

STAGES OF PRODUCTION 

PRIMARY = Extraction of raw materials

SECONDARY = Manufacturing the materials into goods or services.

TERTIARY = Providing the goods or services, retailers and such.

Called the stages or chain of production.

MARKET SYSTEMS

Planned economy is when the government plans all the goods and services produced. This means they have control over the work people get and the products that are produced. It means that there is a limited variety and little rewards for employees. Countries like Cuba and North Korea have a planned economy.

Free economy is when companies and groups of people are freely given the rights to produce products and compete. There may be lack of jobs and a lot of competition, but this creates a vast variety of products to choose from. 

Mixed economy is a mixture of both. Some of the businesses are owned by the government and some by people, there are both public and private sectors.

 PRIVATIZATION 

-When a business goes from public sector to private sector as it is sold by the government to people, this could be a business strategy for better development or efficiency in a certain area. 

STAKE HOLDERS

-The people who will gain or lose something depending on the status of a company - whether it is doing well or not. These people therefore have an interest in the business.

-They are affected by the activities of the business so are interested in it's successes and failures. 

Conflict between these stake holders occur when they have different aims. For example, shareholders and managers want to sell products at the highest price possible but customers want the lowest price for these products.

REMEMBER GIVE EXAMPLES AND ADVANTAGES AND DISADVANTAGES AND THE DEFINITION TO GET THE MOST MARKS