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Role of Business in Society
S3 Business Management
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Learning Intentions/Success Criteria
Learning Intentions Learners should be aware of business activity.
Success Criteria
By end of this topic you will be able to describe: • the role of business • the difference between needs and
wants • the difference between goods and
services • factors of production • different sectors of industry • different sectors of economy.
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Human Needs and Human Wants
• Needs are essential for us to be able to live and include water, clothing, food and shelter.
• Wants are things that we would like to have, but can live without.
• We can live without a mobile phone, television and holidays, but we couldn’t live without food or water.
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Task 1
Do worksheet called Needs and Wants.
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Roles of Businesses
• Produce goods and services to help us satisfy our needs and wants.
• To make a profit – some of the profit is re-invested back into the business to expand, pay debts, buy more stock, etc.
• Develop ideas - to improve and/or produce new products and services.
• Fill a gap in the market to increase profit and have a larger number of customers compared to their competitors.
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Goods (Tangible)
• Goods are things we can see, touch and pick up (tangible).
• Examples of goods are DVDs, a chocolate bar, clothes and a newspaper.
• Some goods are durable (can be used more than once) such as a washing machine, whereas some are non-durable (can’t be used more than once) such as a plaster.
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Services (Intangible)
• Services are things we can’t see, touch or pick up.
• Services are usually provided by people who have been trained to supply them.
• For example, getting a haircut from a hairdresser, getting a tooth filled by a dentist or getting a mechanic to fix a car.
• Services are usually provided by people who are trained in carrying out a specific task.
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• Some businesses provide us with goods and services.
• For example, Greggs the Bakers will sell us a sausage roll (providing a good) but if we ask for it, they will heat it up (providing a service).
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Task 2
Do worksheet called Goods and Services.
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Factors of Production
Business provide goods and services which combine the following factors:
• Land
• Labour
• Capital
• Enterprise
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Land
This refers to the natural resources that are used by producers to produce and/or provide their goods and services. They include resources from the land, sea, or air, such:
• crops
• oil
• fish
• wind power.
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Labour
These are human resources – the people that work for the organisation to produce and provide the goods and services. Examples include:
• managers
• production staff
• accountants
• designers.
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Capital
These are the man-made resources that are used by the business to produce and/or provide their goods and services. These resources have been manufactured from natural resources. Examples include:
• machinery
• tools
• motor vehicles
• buildings
• money to start-up the business.
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Enterprise
• This is the skills of creating a good or service.
• The entrepreneur is the person who develops an idea and turns it into a business:
- they spot a gap in the market
- they bring together the factors of production
- they take the risks.
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Task 3
Do worksheet called Factors of Production.
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Sectors of Industry
Businesses belong to different sectors of industry:
• Primary
• Secondary
• Tertiary
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Primary Sector
• Businesses in this sector extract raw materials from the natural habitat (earth or oceans).
• These raw materials are then passed to the next sector in the production process.
• Examples of businesses operating in the primary sector are farming, oil extraction, fishing and quarrying.
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Secondary Sector
• Businesses in this sector manufacture products by taking raw materials and making them into finished products.
• Examples of business operating in the secondary sector are: manufacturers of products such as washing machines, cars, food or computers.
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Tertiary Sector
• This involves providing a service.
• Examples of business operating in the tertiary sector are hairdressers, banks, travel agents, schools, dentists, etc.
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Task 4
Do worksheet called Sectors of Industry.
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Sectors of the Economy
As well as operating in a particular sector of industry, businesses and organisations also operate within a particular sector of the economy:
• the private sector,
• the public sector or
• the third sector.
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Private Sector
This sector of the economy is owned and controlled by private individuals and is made up of types of businesses known as:
• Private individuals (sole traders)
• Partnership
• Private limited companies (Ltd)
• Public limited companies (PLC)
• Multinational
• Franchise
They are funded by private individuals and shareholders.
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Public Sector
• Public sector organisations are owned by the
Government on behalf of the taxpayer and aim to provide a service to the general public.
• They are funded by taxes that individuals and businesses have to pay.
• Different types of taxes exist including income tax, road tax and council tax.
• Taxes goes towards schools, hospitals, the armed forces and social services.
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Third Sector
• This is made up of charities and other
community organisations that aim to raise money for good causes and to help people.
• The third sector also includes social enterprises and co-operatives.
• They are not ‘owned’ by anyone: they raise money from donations, fundraising activities and grants from the lottery.
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Task 5
Do worksheet called Sectors of Economy.
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Homework
Complete homework task called Role of Business in Society.
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