Business 1
What is business?
Nature and purpose of business
—> Why businesses exist
Purpose of business activity
– Produce goods or services
– Meet customer needs, build customer loyalty
– Add value, can differentiate products and create a USP
Transformation process
– Takes inputs and transforms to produce outputs for customers to buy
– During the process, businesses add value to inputs, allowing them to be sold to consumers to
generate a profit
Business and the economy
– Businesses bring a range of economic benefits to country
-> create employment and provide income
-> development new products that may improve standards of living
-> sell products abroad, improve balance of trade
Sectors of industry
– Primary
-> extraction of raw materials
– Secondary
-> processing of raw materials, manufacture
– Tertiary
-> provision of wide range of services for consumers and other businesses eg leisure or banking
– Quaternary
-> knowledge focused services eg IT, consultancy
● By 2023, more than 81% of the population was employed in the tertiary and quaternary
sectors, with less than 1% employed in the primary sectors
—> Business Objectives
● Mission, aim and objectives serve as a direction for an organisation and its overall strategy,
helping it focus efforts and resources towards a common purpose
Mission statement
, – Outlines purpose and reason for organisation existence
– Describes what company does, for who, how it provides value to customers and stakeholders
– Eg. BBC to enrich people’s lives with programmes and services that inform, educate and
entertain
Objectives
– Specific performance goals set by senior management for a business to achieve over time
– Quantifiable allowing a business to determine what and to what what extent they have been
achieved
– Eg. Smile Dental Services improve average customer satisfaction rating from 4.6 to 4.8 by
September 2025
Why businesses set objectives
-> Clarify the business’s direction
-> Guide decisions
-> Motivate and focus employees
-> Measure progress and improve
Financial objectives
– specify the goal related to the financial performance, resources or structure of a business
– Eg. Survival, Profit, Cash flow, Growth
Social and ethical objectives
– not directly connected to making money
– Provide a reliable, high quality service to particular community
– Charities and cooperative focus on improving human wellbeing or the environment
– Eg. Vinay Patel set up music society focused on encouraging disadvantaged young people to
engage in meaningful social activity
– Often aim to meet needs of a range of stakeholders, provide employment, be eco friendly,
contribute to local community
—> The importance of profit
Why is profit important
– Financial reward
– Source of finance
– Indicator of success
Revenue - value of units sold by a business
Revenue = selling price x quantity sold
Fixed costs - do not change
Variable costs - vary directly with output
Total costs - variable and fixes together
What is business?
Nature and purpose of business
—> Why businesses exist
Purpose of business activity
– Produce goods or services
– Meet customer needs, build customer loyalty
– Add value, can differentiate products and create a USP
Transformation process
– Takes inputs and transforms to produce outputs for customers to buy
– During the process, businesses add value to inputs, allowing them to be sold to consumers to
generate a profit
Business and the economy
– Businesses bring a range of economic benefits to country
-> create employment and provide income
-> development new products that may improve standards of living
-> sell products abroad, improve balance of trade
Sectors of industry
– Primary
-> extraction of raw materials
– Secondary
-> processing of raw materials, manufacture
– Tertiary
-> provision of wide range of services for consumers and other businesses eg leisure or banking
– Quaternary
-> knowledge focused services eg IT, consultancy
● By 2023, more than 81% of the population was employed in the tertiary and quaternary
sectors, with less than 1% employed in the primary sectors
—> Business Objectives
● Mission, aim and objectives serve as a direction for an organisation and its overall strategy,
helping it focus efforts and resources towards a common purpose
Mission statement
, – Outlines purpose and reason for organisation existence
– Describes what company does, for who, how it provides value to customers and stakeholders
– Eg. BBC to enrich people’s lives with programmes and services that inform, educate and
entertain
Objectives
– Specific performance goals set by senior management for a business to achieve over time
– Quantifiable allowing a business to determine what and to what what extent they have been
achieved
– Eg. Smile Dental Services improve average customer satisfaction rating from 4.6 to 4.8 by
September 2025
Why businesses set objectives
-> Clarify the business’s direction
-> Guide decisions
-> Motivate and focus employees
-> Measure progress and improve
Financial objectives
– specify the goal related to the financial performance, resources or structure of a business
– Eg. Survival, Profit, Cash flow, Growth
Social and ethical objectives
– not directly connected to making money
– Provide a reliable, high quality service to particular community
– Charities and cooperative focus on improving human wellbeing or the environment
– Eg. Vinay Patel set up music society focused on encouraging disadvantaged young people to
engage in meaningful social activity
– Often aim to meet needs of a range of stakeholders, provide employment, be eco friendly,
contribute to local community
—> The importance of profit
Why is profit important
– Financial reward
– Source of finance
– Indicator of success
Revenue - value of units sold by a business
Revenue = selling price x quantity sold
Fixed costs - do not change
Variable costs - vary directly with output
Total costs - variable and fixes together
