Definition and Purpose of Business Activity

• A business is an organisation that combines resources to produce goods or services in order to meet customer wants and needs.
• The key purposes of a business include to provide goods and services, generate profit for owners, create jobs, and help economic growth.
• A core objective of most businesses is to make a profit. This profit can be retained within the business for development or distributed to the business's owners/shareholders.

Production of Goods and Services

• Production involves the process of creating goods or services.
• This process involves transforming resources (inputs) into goods or services (outputs). Resources include raw materials, labour, and capital.
• Businesses use several production methods, including job, batch, flow, and lean production.
• Businesses also make decisions about the scale and mix of production - this involves choosing what, how much, and how often to produce.

The Business Environment

• Businesses operate in an external environment that impacts their activities. This environment includes factors like technology, legislation, economy, and market competition.
• Business activity also impacts the environment. It can result in job creation, wealth generation, impacting the natural environment (pollution), as well as changing social and cultural norms.
• Corporate Social Responsibility (CSR) is increasingly important as businesses are held accountable for their impact on society and the environment.

The Economic Problem and Resource Allocation

• The economic problem is about scarcity: limited resources but unlimited wants. This creates the need to make choices about how to best use resources.
• Resources (land, labour, capital, and enterprise) need to be allocated efficiently to solve the economic problem.
• Businesses play an essential role in resource allocation through the decisions they make about what and how to produce.
• Markets and pricing mechanisms also influence resource allocation decisions.

Role of Enterprise

• Enterprise is a key factor of production involving risk-taking and innovation. It combines the other resources (land, labour, and capital) in the production process.
• Entrepreneurs are individuals who show enterprise. They initiate, manage, and accept the financial risks of a new business venture.
• Innovation and enterprise are crucial for a business' competitiveness and growth in the market.

Understanding Consumers

• Consumers influence business activities since demand for goods and services affects what, how, and how much businesses produce.
• Successful businesses understand consumer needs and wants, and strive to satisfy them better than their competitors.
• Market research, including surveys and focus groups, can help businesses understand their customers better.