LECTURE # 01 & 02

THE PURPOSE OF BUSINESS ACTIVITY

BY FAIZ MOHAMMAD BHUTTA

Factors of Production
LAND LABOUR CAPITAL ENTERPRISE

Limited resources ECONOMIC PROBLEM Unlimited Wants

Scarcity Choice is necessary Leads to opportunity cost

DEFINITIONS

Need is a good or service essential for living A want is good or service which people would like to have Economic problem results from being unlimited wants but limited resources to produce the goods and services to satisfy those wants. This creates scarcity Factors of production are those resources needed to goods or services. These are four factors of production and they are in limited supply Scarcity is the lack of sufficient products to fulfill the total wants of the population. Opportunity cost is the next best alternative given up by choosing another item.

Aim of business
The aim of the business is to combine the factors of production to make products which will satisfy the peoples wants. These products can either be goods physical items such as computers, routers, switches or they can be services such as insurance, education and health care.

May change over time

MAKE PROFITS GROWTH ADDED VALUE SURVIVAL PROVIDE A SERVICE

Business Objectives

Interested groups can have Different objectives

OWNERS

COMMUNITY

MANAGERS

WORKERS

Conflict can occur

Profits Security

Salaries, status And control

Income, job security Satisfying work

Owners

Managers

Workers

BUSINESS STAKEHOLDERS

Consumers
Goods and services Quality Good value

Community
Jobs Clean environment Safe products

Government
Employment/ Unemployment Taxes

CONFLICT OF BUSINESS OBJECTIVES

Consumers Local community Workers

Directors Managers Managers Managers Managers Growth

JOBS Environment Price and quality

Quiz NO 1 on 24-01-08 ASSIGNMENT NO 1

Revision Questions No 17 Page 14 To be submitted on 24-01-08

THANKS