1.Business world & business
management
1.1.Key concepts
Business world, community, society, institutions, classification, needs, economic systems,
development, free market, market system, market economy
1.2.Role of business in society
LO1: Demonstrate an understanding of the role of business in society.
• Elements of business
o Human activities – managed & operated by people
o Production – transform resources into products & services
o Exchange – products & services for money or other goods/services
o Profit – reward for meeting people’s needs
• Countries have different economies
o Market economy – business can decide what to produce, how to produce
& selling price. Business’ primary purpose:
o Make profit while satisfying needs of the people.
• Industry – group of businesses performing similar activities, e.g. mining, financial
services, construction etc.
• Business creates wealth & is catalyst for economic growth
• Business serves community indirectly
o Technological innovation, research & development, improvements to
infrastructure.
o Support education
o Develop human resources, arts, conservation & sport
• Interdependency between business and society
o Business: influence on physical environment, consumers, economy and
competitors
o Society: regulations, legislation, exercise choice to support business (or
not), pressure on business:
o Social responsibility
o Responsible & safe workplace
o Housing
o Health
o Involvement – community issues
o Environmental awareness
o Empowerment of previously disadvantaged
individuals
o Business ethics
o Ethical behaviour of managers & executives
o Consumerism
o Social force protecting consumers against unsafe
products & malpractice – exert moral & economic
pressure on business
o Consumer Protection Act
, 1.3.Needs & need satisfaction
LO2: Explain the needs of society and how need satisfaction occurs.
• People have unlimited needs
o Maslow
o All people have same basic needs (hierarchy of needs)
o Physiological needs (hunger, thirst)
o Security needs (protection)
o Social needs (love, recognition)
o Esteem needs
o Self-realisation needs
o Everybody not strive to satisfy same needs
• Society has limited resources (production factors):
o Natural resources
o Production factor of land, e.g. agricultural land, minerals, water
etc.
o Supply cannot be increased - scarce
o Human resources
o Production factor of labour e.g. physical & mental talents and
skills of people employed
o Size of labour force: size of population, level of education &
training, retirement age.
o Capital
o Buildings, machinery etc. used to produce products, e.g.
factories, equipment, roads and other infrastructure.
o Generally long working life & high price.
o Entrepreneurship
o Collective capacity of entrepreneurs – risk taking to develop
goods & services
o Scarce – not everyone prepared to take risks and to identify
opportunities
• Choice to decide best use of resources – Economic problem
• Economic principle – Ensure highest possible satisfaction of needs with limited
resources available.
o Which goods/services to produce/render?
o Who should produce? ( State or private sector, individual business or
industry)
o How to produce? Use of resources. (Labour or machine intensive)
o For whom are products produced/ services rendered? (Rich or poor,
business clients or individuals/families)
o Maximise income after applying economic principle
1.4.Main economic systems
LO3: Discuss the three main economic systems in the world
• Economic system influenced by politics
o Countries choose economic system to address economic problem, i.e.
what to produce, how and for whom.
management
1.1.Key concepts
Business world, community, society, institutions, classification, needs, economic systems,
development, free market, market system, market economy
1.2.Role of business in society
LO1: Demonstrate an understanding of the role of business in society.
• Elements of business
o Human activities – managed & operated by people
o Production – transform resources into products & services
o Exchange – products & services for money or other goods/services
o Profit – reward for meeting people’s needs
• Countries have different economies
o Market economy – business can decide what to produce, how to produce
& selling price. Business’ primary purpose:
o Make profit while satisfying needs of the people.
• Industry – group of businesses performing similar activities, e.g. mining, financial
services, construction etc.
• Business creates wealth & is catalyst for economic growth
• Business serves community indirectly
o Technological innovation, research & development, improvements to
infrastructure.
o Support education
o Develop human resources, arts, conservation & sport
• Interdependency between business and society
o Business: influence on physical environment, consumers, economy and
competitors
o Society: regulations, legislation, exercise choice to support business (or
not), pressure on business:
o Social responsibility
o Responsible & safe workplace
o Housing
o Health
o Involvement – community issues
o Environmental awareness
o Empowerment of previously disadvantaged
individuals
o Business ethics
o Ethical behaviour of managers & executives
o Consumerism
o Social force protecting consumers against unsafe
products & malpractice – exert moral & economic
pressure on business
o Consumer Protection Act
, 1.3.Needs & need satisfaction
LO2: Explain the needs of society and how need satisfaction occurs.
• People have unlimited needs
o Maslow
o All people have same basic needs (hierarchy of needs)
o Physiological needs (hunger, thirst)
o Security needs (protection)
o Social needs (love, recognition)
o Esteem needs
o Self-realisation needs
o Everybody not strive to satisfy same needs
• Society has limited resources (production factors):
o Natural resources
o Production factor of land, e.g. agricultural land, minerals, water
etc.
o Supply cannot be increased - scarce
o Human resources
o Production factor of labour e.g. physical & mental talents and
skills of people employed
o Size of labour force: size of population, level of education &
training, retirement age.
o Capital
o Buildings, machinery etc. used to produce products, e.g.
factories, equipment, roads and other infrastructure.
o Generally long working life & high price.
o Entrepreneurship
o Collective capacity of entrepreneurs – risk taking to develop
goods & services
o Scarce – not everyone prepared to take risks and to identify
opportunities
• Choice to decide best use of resources – Economic problem
• Economic principle – Ensure highest possible satisfaction of needs with limited
resources available.
o Which goods/services to produce/render?
o Who should produce? ( State or private sector, individual business or
industry)
o How to produce? Use of resources. (Labour or machine intensive)
o For whom are products produced/ services rendered? (Rich or poor,
business clients or individuals/families)
o Maximise income after applying economic principle
1.4.Main economic systems
LO3: Discuss the three main economic systems in the world
• Economic system influenced by politics
o Countries choose economic system to address economic problem, i.e.
what to produce, how and for whom.
