The Nature and Importance of Business

The Nature and Importance of Business

  • Submitted By: heln92
  • Date Submitted: 02/14/2010 2:00 AM
  • Category: Business
  • Words: 2898
  • Page: 12
  • Views: 709

Topic 1: Nature of business


• The function of business in creating value/benefits and adding value to all the business processes (value chain)

o Function of business ( create/add value, raw materials ( intermediate/finished products ( production

o Intermediate products ( produced by business & then used as input by another

Value of production
Value of sales – value of intermediate products used in production

o Value adding ( raw material move along various stage of production & transformed into either intermediate or finished products, then extra value is created/added

o Value added ( diff between cost of raw materials bought from outside the business & amount received from customer when sold

o Finished product ( ready for customers to buy & use

o Production ( activities undertaken – satisfy customers’ N&W

o Profit ( income (revenue) > cost of production (expenses)

• Social and economic roles

o Wealth creation ( business grow their assets become more valuable & owners investment value increases – flows on positively to employees/consumers/society/economy

o Provide employment

o Innovation ( something already established – improved

o Research & development ( steps undertaken: improve existing product, create new products, and develop more efficient ways of distributing & marketing products.

o Quality Of Life ( overall wellbeing of an individual & combination of material & non-material benefits

o Choice ( business compete – more choice ( low price, better product

o Entrepreneurship ( starts operates assumes the risk of business venture in hope of making profit

• Identification of relevant stakeholders

o Stakeholders ( any group of individual who has an interest in or is affected by the activities of a business


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