Enterprise
What do businesses do?
- Identify needs of consumers and purchase factors of production to produce goods/services to
satisfy these needs
Goods: physical and tangible goods sold to the general public e.g. food and drinks
Services: non-tangible products sold to the general public e.g. hotels, insurance
Factors of Production:
Land: all natural resources (renewable and non-renewable)
e.g. coal, fish, water, wood, metal
Labour: all human effort available for production; manual and skilled workers
Capital: not just finance needed bu all human made resources of production
e.g. machinery, tables, combs
Enterprise: the entrepreneur that takes the risk of setting up a business and uses the factors of
production to product goods and services to make a profit. It provides a managing, decision-making
and coordination role.
e.g. Elon Musk, Steve Jobs
Adding Value
All businesses aim to sell products at a higher price than cost of goods sold;
Adding Value: The process of increasing the worth or value of resources by working on them.
NB: Value added is not profit made as part of the value goes towards other business expenses
Ways of Adding value:
• painting/colouring • Limited edition • Speed
• Increasing quality • Packing • Accessories
• Printing • USP • Reduction in waste
• Change material • Brand • Cost-cutting
• Transport worldwide • Better customer service
Opportunity Cost
- There aren’t enough factors of production to satisfy all our needs and wants because we are
limited by the resources - there are scarce
- Consumers must choose which method is best to produce with the scare resources
Opportunity Cost: what has to be given up by not being chosen; the next best alternative sacrifice
SxTeri Page 1
What do businesses do?
- Identify needs of consumers and purchase factors of production to produce goods/services to
satisfy these needs
Goods: physical and tangible goods sold to the general public e.g. food and drinks
Services: non-tangible products sold to the general public e.g. hotels, insurance
Factors of Production:
Land: all natural resources (renewable and non-renewable)
e.g. coal, fish, water, wood, metal
Labour: all human effort available for production; manual and skilled workers
Capital: not just finance needed bu all human made resources of production
e.g. machinery, tables, combs
Enterprise: the entrepreneur that takes the risk of setting up a business and uses the factors of
production to product goods and services to make a profit. It provides a managing, decision-making
and coordination role.
e.g. Elon Musk, Steve Jobs
Adding Value
All businesses aim to sell products at a higher price than cost of goods sold;
Adding Value: The process of increasing the worth or value of resources by working on them.
NB: Value added is not profit made as part of the value goes towards other business expenses
Ways of Adding value:
• painting/colouring • Limited edition • Speed
• Increasing quality • Packing • Accessories
• Printing • USP • Reduction in waste
• Change material • Brand • Cost-cutting
• Transport worldwide • Better customer service
Opportunity Cost
- There aren’t enough factors of production to satisfy all our needs and wants because we are
limited by the resources - there are scarce
- Consumers must choose which method is best to produce with the scare resources
Opportunity Cost: what has to be given up by not being chosen; the next best alternative sacrifice
SxTeri Page 1
