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, what they aim to achieve, and how they operate.

Why Do Businesses Exist?Businesses exist to produce goods and services that meet people's needs and wants. Needs are essential things like food, shelter, and clothing. Wants are things people desire but don’t necessarily need, like luxury cars or holidays.Businesses also create job opportunities and contribute to the economy by generating income and taxes.

What is Entrepreneurship?An entrepreneur is someone who starts and manages a business. Entrepreneurs are often risk-takers, because starting a business involves uncertainty. They also need to be organised and have a clear vision for what they want to achieve.Motivations for becoming an entrepreneur can include earning profits, gaining independence, or pursuing a personal passion.

Types of BusinessesBusinesses can take different forms depending on their size, structure, and ownership. Sole traders are owned by one person who has full control and responsibility. Partnerships have two or more owners who share responsibilities. A private limited company (Ltd) is owned by shareholders, often family or friends, while a public limited company (Plc) is owned by shareholders who buy shares on the stock exchange. Finally, not-for-profit organisations, like charities, aim to help others rather than make profits.

Business Aims and ObjectivesBusinesses set goals to focus their efforts and measure success. Common aims include making a profit, surviving, growing, increasing market share, satisfying customers, and acting ethically.For example, a small bakery might aim to increase sales, while a large clothing brand might aim to reduce its environmental impact.

StakeholdersStakeholders are people or groups that have an interest in a business. Examples include owners, employees, customers, suppliers, and the local community. Each stakeholder has different aims, which can lead to disagreements.For example, owners might want to maximise profits, but employees may want higher wages, which increases costs for the business.

Review Time!Great work! You've learned about the purpose and nature of businesses, including why they exist, different types, aims, and stakeholders. Let's test your understanding with a few questions.