Understanding Business Activity – Easy 5 Mins

In this chapter, “Understanding Business Activity” we will cover the following main topics of 0450 Business Studies for IGCSE and 7115 O-Level Business Studies in detail. You can get IGCSE Revision Notes, Activities, Worksheets, Past Papers, Topical, Exam Style Questions from Sir Afzal Shad.

• Needs
• Wants
• Difference b/w needs and wants
• Economic Problem
• 4 Factors of Production
• Land
• Labour
• Capital
• Enterprise
• Activity of Factors of Production
• Scarcity of Resources
• Opportunity Cost

Step 1: Watch Lecture of Chapter 1 Business Studies (Part 1)

Step 2: Solve Chapter 1 Business Studies Worksheet

Once you have watched the complete video (part 1) of Chapter 1 Business Studies, have a look at the questions below and try to solve them:

You can Download the Worksheet of Chapter 1 – Understanding Business Activity

Step 3: Understanding Business Activity Revision Notes

Purpose of Business Activity

• The production of finished goods involves several stages, where value is added to resources like
• raw materials, making them more desirable to the final purchaser.
• Business activity is essential as it allows us to access goods and services that we cannot
• produce ourselves, leading to a higher standard of living.
• Without business activity, we would be reliant solely on what we can make or grow on our own.
• Business uses the planet’s scarce resources to create goods and services for our benefit.

Factors of Production

Land

• Natural resources: Coal, Iron ores, water, fisheries, mines
• Land: Agricultural Land, Land used to erect any building

Labour

• Unskilled humans: General Labour
• Skilled humans: Managers, Directors, Supervisors, Architects

Capital

• Money invested in business
• Assets: Machinery, Equipment, Building

Entrepreneurship

• Risk takers
• Decision makers
• Combining all factors of production.
• Coordinate inside & outside the business.

Factors of Production – An Example:

The restaurant (Hardees) requires factors of production.

1. Land: The location where the outlet will initiate its operations
2. Labour: Cashier, Janitorial Staff, Manager, Chef
3. Capital: Initial investment, machinery, equipment.
4. Entrepreneurship: The franchisee is taking the risk (failure), Owner manage all FOP’s

Specialisation – Understanding Business Activity

Specialization is when people concentrate on a specific task and become expert at it.
When employees are divided to perform a specific task in a business, it’s called division of labour. This division leads towards specialization.
Example: A doctor specializing in cardiology focuses solely on heart-related medical issues, allowing them to develop a deeper understanding and expertise in that specific field.
Similarly, a company specializing in producing electric vehicles concentrates solely on the research, development, and production of electric cars.

Advantages of Specialisation – Understanding Business Activity

• Employees can make best use of their particular talents and skills.
• Employees can increase their skills and experience by repeating tasks
• Employees can produce more output and reduce business costs if they concentrate on the same job or tasks.

Disadvantages of Specialisation – Understanding Business Activity

• Individuals must rely on others to produce the goods and services they want but cannot produce themselves
• Workers can become bored doing the same job or completing repetitive tasks. The quality and efficiency of their work may fall
• Many repetitive manual tasks are now undertaken by computer-controlled machinery and robots. This has reduced job satisfaction for many workers and reduced employment opportunities for many low-skilled workers

Chapter 1 Business Studies Revision Notes for IGCSE & O-Levels are written by Sir Afzal Shad. If you want to buy notes Online, please contact us

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Needs, Wants, Difference b/w needs and wants, Economic Problem, 4 Factors of Production, Land, Labour, Capital, Enterprise, Activity of Factors of Production, Scarcity of Resources, Opportunity Cost.

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