Notesale: Turn your study into money

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Unit 1
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The marketplace
Market is a place or process where buyers and sellers meet to trade
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Customers are the people or organizations that buy a product whereas consumers are the ones
actually using the product
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Types of products
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Consumer goods
o Product that are sold to the general public, rather than to other businesses
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o Ex) Machinery, computer, specialist equipment and tools
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o Ex) restaurants, gyms and health care



Adding Value
value added- difference between the value of inputs and the value of outputs
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Value added can come in the form of:
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Speed and quality of service
Prestige associated with the purchase
Feel0god factor
Perceived value for money
Quality of the finished product
Brand image and loyalty
Taste or design

Opportunity cost and business activity
opportunity cost
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The best alternative that is forgone when making a decision
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Ex) if a student chooses to go for higher education instead of getting a job, then the money
that the student could earn from the job during the time he will be studying becomes the
opportunity cost
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Functions of profit:
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Acts as an incentive to produce
Rewards for risk taking
Encourages invention and innovation
Indicator of growth
Source of finance



Factors of production
Factors of production- Resources needed in order to produce a good or to provide a service
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Renewable resources
o Replenish themselves, such as fish stocks, trees and water
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Labour
Physical and metal effort of people used in the production
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Enterprise
The management, organization and planning of the other three factors of production
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Successful entrepreneurs tend to be creative, innovative and passionate
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Ex) Italian restaurant specializes in the provision of Italian food such as pastas and pizzas
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Departmental
o Departments within an org specialize in various functions, ex) Marketing, finance
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Regional
o Certain regions within a country also specialize, ex) London, Wall Street and NY all
specialize in financial services
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Advantages of specialisation
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Increased productivity & efficiency
Standardization
Higher profit


Disadvantages of specialisation
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Boredom
Inflexibility
Lack of autonomy
Capital costs (Purchase and maintenance of specialist machinery can be very costly)

Business Functions
Production (Operations)
Production department is responsible for the process of converting raw materials into finished
goods
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They
are ultimately in charge of ensuring that the firm’s products sell
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Price
o Using various pricing methods to sell the products
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Place
o Ensuring that goods and services are available in convenient places for consumers to
buy
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Accurate recording and reporting of financial documents
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Workforce planning
Recruitment
Training
Appraisal
Health and Safety matters

Business Sectors
3 Stages of production
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Primary sector
o Taking natural resources such as extraction, harvesting and minerals as a factor of
production
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o Ex) Wood, Metal Ore, etc
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o Ex) Pharmaceutical companies, construction firms, clothes manufacturers, etc
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o Ex) education, tourism, entertainment, insurance, etc
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The shift towards the tertiary sector being the predominant sector in developed countries occur due
to changes in factors such as:
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Higher household incomes
More leisure time
Larger focus on customer relations management
Increasing reliance on support services


*Business activity- Process of turning factor inputs (4ps) into outputs of goods and services in order
to meet the needs and wants of different customers

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