Learn: The Purpose and Nature of Businesses

Welcome!Welcome to today's lesson on the purpose and nature of businesses. We'll explore why businesses exist, their different types, and their goals. Let's get started!

Why Do Businesses Exist?Businesses exist to produce goods (physical items) and services (activities or work done for people). They aim to meet the needs (essential items like food) and wants (optional items like luxury goods) of customers.

EntrepreneurshipAn entrepreneur is a person who starts and runs a business. They are often risk-takers, organised, and innovative. Entrepreneurs may be motivated by profit, independence, or spotting an opportunity in the market.

Types of BusinessesBusinesses can be categorised by their structure. Examples include:Sole trader: Owned by one person, simple to set up, but has unlimited liability.Partnership: Business shared between two or more people, with shared risks and rewards.Ltd (Private Limited Company): Owned by shareholders, limited liability.Plc (Public Limited Company): Shares sold publicly, requires large capital.Not-for-profit: Focuses on social goals instead of making profit, e.g., charities.

Business Aims and ObjectivesBusinesses set aims and objectives to guide their activities. Common aims include:Profit: Making more money than costs.Survival: Keeping the business running.Growth: Expanding its size or market presence.Market share: Increasing its percentage of sales in its market.Customer satisfaction: Ensuring happy customers.

StakeholdersStakeholders are individuals or groups with an interest in the business. Examples include owners, employees, customers, suppliers, and the local community. They may have different aims, which can lead to conflicts, e.g., owners wanting higher profits while employees want higher wages.

Location FactorsChoosing the right location is essential for a business. Factors include:Proximity to customers: Being near customers can increase sales.Access to labour: Availability of skilled workers.Availability of raw materials: Important for manufacturing businesses.Competition: Businesses may avoid areas with lots of competitors.Costs: Rent, taxes, and utilities impact profit.

Review Time!Great work! You've learned about the purpose and nature of businesses, including types, aims, stakeholders, and location factors. Now let's test your understanding with a few questions.