Learn: The Purpose and Nature of Businesses

Welcome!Welcome to today's lesson about the purpose and nature of businesses. We'll explore why businesses exist, their goals, and what makes them successful. Let's get started!

What is the Purpose of a Business?A business exists to produce goods or services that meet people's needs and wants. Needs are essential items like food, while wants are things people desire, like a new phone. Businesses aim to satisfy these needs and wants while making a profit.

Goods vs ServicesBusinesses can focus on selling goods (physical products like cars or books) or services (activities like haircuts or teaching). Goods are tangible, meaning you can touch them, while services are intangible since they involve actions or experiences.

EntrepreneurshipAn entrepreneur is someone who starts a business. They are often risk-takers because they invest their money and time, and there's no guarantee of success. Entrepreneurs are also organised and motivated to achieve goals like profit or independence.

Types of BusinessesThere are different types of businesses, including sole traders (owned by one person), partnerships (owned by two or more people), and companies (Ltds or Plcs). Each has different levels of control, liability, and ways of raising finance.

Aims and ObjectivesEvery business has aims (long-term goals) and objectives (short-term targets). Common aims include making a profit, growing the business, surviving tough times, increasing market share, or satisfying customers. Some businesses also aim to act ethically by reducing pollution or supporting communities.

StakeholdersA stakeholder is anyone affected by a business. This includes owners, employees, customers, suppliers, and the local community. Each stakeholder has different goals, like owners wanting profits or employees wanting job security. Sometimes these goals conflict, such as when cutting costs affects employee wages.

Location FactorsA business chooses its location based on factors like access to customers, availability of workers, costs (e.g., rent), and closeness to raw materials. For example, a factory might locate near suppliers to reduce transport costs.

Review Time!Great work! You've learned about the purpose of businesses, goods vs services, entrepreneurship, types of businesses, and more. Now let’s test your knowledge with some final questions.