Developing Relationships: is Architecture with customers, employees & businesses. Businesses, which look carefully at the way it works with customers, employees, and other businesses are more likely to be successful.
Reputation: A reputation of a company can be achieved through developing a particular image:
- Low Prices
- Appealing to the affluent
- Ensuring top quality
Competitive Advantage: Is a distinctive feature that makes a business successful. A business must carefully identify the people who will buy the product to gain an competitive advantage over others.
A Market: Is any location or process that brings buyers and sellers together.
Price: is the amount of money that is given in exchange for a product.
Goods: are anything you buy which are natural or manufactured for a products.
Services: involve buying the skills o another person.
Profit: is the difference between the price and the cost of making a product available.
Reward
Revenue – Cost = Profit
Profit is the difference between a firm’s revenues from its trading activities and its total costs. It is a reward for the risk and a return on capital invested.
There are 3 factors of production:
Entrepreneurs use these 3 factors to make a profit.
The Basic Economic Problem
Resources are finite, desires are infinite, and thus we must make choices. The real value of what you buy is the sacrifice of what you don’t buy.
Demand and Supply
Key Terms
The Supply Curve: gives the relationship between price and quantity supplied when shown on a graph. It is usually upward sloping to the right because higher prices provide a greater insensitive to produce.
The Equilibrium price: is the price at which the amount buyers demand and the amount seller’s supply is exactly the same.
The Market Clears: when there are no unsold stocks and no customer unable to obtain the product.
Excess Demand: a situation in which the quantity demand is greater than the quantity at current prices.
If Price = Demand
If Price = Demand
If Price = Supply
If Price = Supply
Key Terms
Value: How much something is worth.
Added Value: Is the difference between the price, which is charged, and the total cost of material inputs of the product.
Value Chains: Are value adding activities that form a sequence. Each activity can be subdivided into many more value chains that will be complex in their pattern and interaction.
Key Terms
Specialisation: means that people make the most of their skills by concentration their expertise in a particular field. As a skilled person produces more, output per head will rise. It can only occur when people are in a position to trade.
Exchange: refers to the process of getting the things you need by offering someone your product and taking the orders in exchange. Money makes the process of exchange much easier.
The Division Of Labour: refers to the practice of organising workers so that individuals specialise in one part of a product process. It generally leads to an increase in output per person.
The Contradiction between Specialisation and Motivation
Specialisation has enabled society to develop faster. However, if a worker specialises in a certain area for too long then the motivation of the worker will decrease. If a worker has a wider work range then the motivation to finish jobs will rise. If the worker has a greater responsibility then the motivation will increase because there are less repetitive tasks.
Key Terms
Primary Sector: includes industries involved in mining, fishing and farming.
Secondary Sector: includes all manufacturing industries.
Tertiary Sector: includes all service industries.
Quaternary Sector: includes all finance and insurance.
Trade Unions
Developed to protect the rights of workers. By working collectively, members of a union have more power to negotiate than they do as individuals.
