1.1.1 The Nature of Business Activity – Cheat Sheet

Purpose of Business Activity

• Satisfy human needs and wants by producing goods and services.
• Create employment and income.
• Generate profit for owners/shareholders.
• Provide innovation and solutions to problems.
• Example: Uber provides transport services, creating jobs and fulfilling transport needs.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course

Factors of Production

• Land: natural resources (oil, water, minerals, land for farming).
• Labour: human effort (skilled/unskilled workers, managers).
• Capital: man-made resources used in production (machines, buildings, finance).
• Enterprise: entrepreneur’s ability to organise land, labour, and capital, take risks, innovate.

Concept of Adding Value

• Adding value = Selling price – Cost of inputs.
• Businesses transform inputs into outputs worth more than cost.
• Ways to add value: branding, quality, customer service, packaging, innovation.
• Example: A coffee shop buys beans for $1, sells coffee for $3 → $2 added value.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course

Nature of Economic Activity

• Economic activity = Using scarce resources to satisfy unlimited wants.
• Involves production, distribution, consumption of goods/services.
• Problem of scarcity leads to choices.
• Opportunity cost: The next best alternative forgone when making a choice.
• Example: Choosing to start a business instead of going to university = university education is opportunity cost.

The Dynamic Business Environment

• Business environment constantly changes due to:
  • Technology (AI, automation).
  • Consumer tastes (eco-friendly products).
  • Globalisation (outsourcing, trade links).
  • Competition (new entrants).
  • Government policy (taxes, laws).
• Businesses must adapt or risk failure.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course

Why Businesses Succeed or Fail

• Succeed: Strong leadership, innovation, financial control, customer loyalty, adaptability.
• Fail: Poor cash flow, lack of demand, high competition, poor management, legal issues.
• Example: Blockbuster failed due to not adapting to streaming (Netflix adapted successfully).

Types of Business: Local, National, International, Multinational

• Local: Operates in small area, limited customers. Example: A bakery.
• National: Operates across a country. Example: Tesco in UK.
• International: Operates in more than one country, but smaller scale than MNCs. Example: A regional export business.
• Multinational (MNC): Operates in multiple countries with global presence. Example: Coca-Cola, Apple.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course