BACKGROUND OF BUSINESS
1. What is a Business?
State the difference between Human needs and wants
What are Basic Human Needs and Secondary Human Needs
What are the Characteristics of a need.
Name three Characteristics of a want
What is meant by Product?
Goods/Commodity
Tangible and physically existing things can be called as commodity. The businesses
manufacturing and providing these goods are known as commodity manufacturing businesses.
Ex: Processed food, Automobiles, Electric ovens, Mobile phones, Washing machines, Furniture
Services
Any activity or a process rendered to consumers by a business in order to fulfill their needs and
wants are known as services.
The businesses providing these services are known as service providing businesses.
Ex: Wholesale businesses, Retail businesses, Insurance Institutions, Banking Institutions, Beauty
salons, Education Institutions
Characteristics of goods and services
Production
Production is the processes used to
transform inputs such as raw materials
into goods or services. Resources are used in this
process to create an output that is suitable for
use or has value.
Production is not a single activity but a process
comprised of few common elements.
Input
(Factors of
production)
-Land
- Labor
Production
process
Output
-Goods and
Services
Goods
Tangible
Separable
Consistent
Less
perishable( Can
store)
Services
Intangible
Inseparable
Inconsistent
Perishable( Cannot
store)
Factors of Production
Land
All the natural resources available are considered as land.
Examples: - Minerals, forests, soil
Labour
The mental and physical contribution in a business can be considered as labour in simple terms.
Ex:
Individuals rendering physical efforts -Workers in the mines
-Sanitary labourers
Individuals rendering mental efforts
- Accountants
-Managers
Capital
Anything produced by man in order to facilitate manufacturing process is known as capital.
Examples: - Machinery, buildings, motor vehicles, money.
Entrepreneurship
Entrepreneurship encompasses the role of organizing factors of production such as land, labour
and capital required for production in order to start and conduct a manufacturing process.
Classification of production
Production
According to
the objective
Direct Production
Indirect
According to the
Nature of the
Primary
Production
Secondary
Direct production
Direct production occurs when someone attempts to satisfy his wants entirely by his own efforts.
Examples: - Producing vegetables for his own usage
Indirect production
Producing goods for sell in the markets are known as indirect production.
Primary Production
Primary production is the process of obtaining raw materials from the nature.
Example: Mining, Quarrying, Farming, Forestry and Fishing.
Secondary Production
Secondary production is making goods from raw materials using the process of Manufacturing,
Processing and Constructing.
Tertiary Production
Tertiary Production is the process of providing commercial services and direct personal services .
Example: Communication, finance, insurance, retailers and wholesalers. Beauty salons,
Education Institutions
Distribution of goods and services/ Channels of Distribution
The movement of goods and services from the source through a distribution channel, right up to
the final customer.
Exchange
Exchange is the act of obtaining a desired object from someone by offering something to return.
Market
A market is the set of actual and potential buyers of a product.
Stakeholders of businesses
Stakeholders are the different parties who are interested in the business activities. These parties
are interested in the business operations in order to fulfill various objectives.
What do meant by a Business?
1. Define the Direct production and Indirect Production.
Human needs
Human needs