Role of Business in Society

S3 Business Management

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Learning Intentions/Success Criteria

Learning Intentions Learners should be aware of business activity.

Success Criteria

By end of this topic you will be able to describe: • the role of business • the difference between needs and

wants • the difference between goods and

services • factors of production • different sectors of industry • different sectors of economy.

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Human Needs and Human Wants

• Needs are essential for us to be able to live and include water, clothing, food and shelter.

• Wants are things that we would like to have, but can live without.

• We can live without a mobile phone, television and holidays, but we couldn’t live without food or water.

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Task 1

Do worksheet called Needs and Wants.

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Roles of Businesses

• Produce goods and services to help us satisfy our needs and wants.

• To make a profit – some of the profit is re-invested back into the business to expand, pay debts, buy more stock, etc.

• Develop ideas - to improve and/or produce new products and services.

• Fill a gap in the market to increase profit and have a larger number of customers compared to their competitors.

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Goods (Tangible)

• Goods are things we can see, touch and pick up (tangible).

• Examples of goods are DVDs, a chocolate bar, clothes and a newspaper.

• Some goods are durable (can be used more than once) such as a washing machine, whereas some are non-durable (can’t be used more than once) such as a plaster.

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Services (Intangible)

• Services are things we can’t see, touch or pick up.

• Services are usually provided by people who have been trained to supply them.

• For example, getting a haircut from a hairdresser, getting a tooth filled by a dentist or getting a mechanic to fix a car.

• Services are usually provided by people who are trained in carrying out a specific task.

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• Some businesses provide us with goods and services.

• For example, Greggs the Bakers will sell us a sausage roll (providing a good) but if we ask for it, they will heat it up (providing a service).

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Task 2

Do worksheet called Goods and Services.

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Factors of Production

Business provide goods and services which combine the following factors:

• Land

• Labour

• Capital

• Enterprise

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Land

This refers to the natural resources that are used by producers to produce and/or provide their goods and services. They include resources from the land, sea, or air, such:

• crops

• oil

• fish

• wind power.

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Labour

These are human resources – the people that work for the organisation to produce and provide the goods and services. Examples include:

• managers

• production staff

• accountants

• designers.

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Capital

These are the man-made resources that are used by the business to produce and/or provide their goods and services. These resources have been manufactured from natural resources. Examples include:

• machinery

• tools

• motor vehicles

• buildings

• money to start-up the business.

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Enterprise

• This is the skills of creating a good or service.

• The entrepreneur is the person who develops an idea and turns it into a business:

- they spot a gap in the market

- they bring together the factors of production

- they take the risks.

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Task 3

Do worksheet called Factors of Production.

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Sectors of Industry

Businesses belong to different sectors of industry:

• Primary

• Secondary

• Tertiary

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Primary Sector

• Businesses in this sector extract raw materials from the natural habitat (earth or oceans).

• These raw materials are then passed to the next sector in the production process.

• Examples of businesses operating in the primary sector are farming, oil extraction, fishing and quarrying.

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Secondary Sector

• Businesses in this sector manufacture products by taking raw materials and making them into finished products.

• Examples of business operating in the secondary sector are: manufacturers of products such as washing machines, cars, food or computers.

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Tertiary Sector

• This involves providing a service.

• Examples of business operating in the tertiary sector are hairdressers, banks, travel agents, schools, dentists, etc.

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Task 4

Do worksheet called Sectors of Industry.

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Sectors of the Economy

As well as operating in a particular sector of industry, businesses and organisations also operate within a particular sector of the economy:

• the private sector,

• the public sector or

• the third sector.

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Private Sector

This sector of the economy is owned and controlled by private individuals and is made up of types of businesses known as:

• Private individuals (sole traders)

• Partnership

• Private limited companies (Ltd)

• Public limited companies (PLC)

• Multinational

• Franchise

They are funded by private individuals and shareholders.

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Public Sector

• Public sector organisations are owned by the

Government on behalf of the taxpayer and aim to provide a service to the general public.

• They are funded by taxes that individuals and businesses have to pay.

• Different types of taxes exist including income tax, road tax and council tax.

• Taxes goes towards schools, hospitals, the armed forces and social services.

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Third Sector

• This is made up of charities and other

community organisations that aim to raise money for good causes and to help people.

• The third sector also includes social enterprises and co-operatives.

• They are not ‘owned’ by anyone: they raise money from donations, fundraising activities and grants from the lottery.

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Task 5

Do worksheet called Sectors of Economy.

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Homework

Complete homework task called Role of Business in Society.

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