1.1.5

Purposes of Businesses 2

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What Do Businesses Do?

Businesses can serve either customers’ needs or wants. Some businesses are called distributors - they can buy products from manufacturers and sell them onto businesses or customers.

Customers' needs

Customers' needs

  • Customers' needs are the things that people can't live without.
  • For example, Severn Trent provides water to people's homes in the United Kingdom.
Customers’ wants

Customers’ wants

  • Some businesses exist to serve customers’ wants. They don’t need these products and services but want them.
  • E.g. television, jewellery or parties.

Why are Businesses Set Up?

We have seen that businesses exist to serve customers’ wants or needs and do so through supplying goods or services. Businesses are set up for a variety of reasons.They are not always set up to provide or increase someone’s income. A few key reasons include:

People want the good or service

People want the good or service

  • An entrepreneur starts to sell a good or service that they think people will want to buy.
Distribute goods

Distribute goods

  • Businesses may be set up to distribute goods – they buy products from manufacturers and then sell these goods to other businesses or to customers.
Benefit society

Benefit society

  • Businesses may be set up to benefit other people or to benefit society as a whole. These businesses are often not-for-profit organisations.
  • E.g. a business that is set up to provide malaria nets to people who can’t afford them in Africa.
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1

Exploring Business

1.1

Features of Business Organisations

1.1.1Sole Traders & Partnerships1.1.2Private & Public Limited Companies1.1.3Types of Liability & Not-For-Profits1.1.4Purposes of Businesses1.1.5Purposes of Businesses 21.1.6The Different Economic Sectors1.1.7Multinational Companies1.1.8Stakeholders1.1.9Influence of Stakeholders
1.2

Organisation of Businesses

1.2.1Organisational Structure1.2.2Types of Organisational Structures1.2.3Business Aims & Objectives1.2.4Business Aims1.2.5Business Objectives
1.3

Business Environment

1.3.1External Influences1.3.2Political & Legal Change1.3.3Economic Environment1.3.4Social & Technological Environment1.3.5Lifestyle & Technological Environment1.3.6Corporate Social Responsibility1.3.7The Competitive Environment1.3.8Innovation1.3.9Risk & Uncertainty1.3.10Porter's Five Forces1.3.11SWOT Analysis
2

Marketing Campaigns

2.1

Marketing

2.1.1Setting Marketing Objectives2.1.2Customer Needs2.1.3The Market2.1.4Competition & The Market2.1.5Consumer Behaviour2.1.6Market Research2.1.7Forms of Market Research2.1.8Market Segmentation2.1.9Cultural & Social Factors in Marketing2.1.10Promotional Decisions 32.1.11Pricing Strategies
2.2

Marketing Mix

2.2.1Marketing Mix2.2.2Product Life Cycle2.2.3Pricing Decisions & Price Skimming2.2.4Pricing Decisions & Price Penetration2.2.5Promotional Decisions2.2.6Promotional Decisions 22.2.7Promotional Decisions 32.2.8Market Mapping
3

Business Finance

3.1

Sources of Finance

3.1.1Internal Finance3.1.2External Finance3.1.3External Finance 23.1.4Sources of Business Finance
3.2

Financial Planning

3.2.1Revenue3.2.2Costs3.2.3Cash & Cash Flow3.2.4Cash & Cash Flow 23.2.5Break-Even Analysis3.2.6Profits
3.3

Financial Statements

3.3.1Balance Sheets3.3.2Income Statements3.3.3Liquidity
4

International Business

4.1

Globalisation

4.1.1Growing Economies4.1.2Specialisation & Trade
4.2

International Business

4.2.1Internationalisation4.2.2International Trade4.2.3MNCS4.2.4Conditions that Prompt Trade4.2.5Assessment of a Country
4.3

International Economic Environment

4.3.1Globalisation4.3.2Factors Contributing to Globalisation4.3.3Protectionism4.3.4The EU & the WTO4.3.5Trading Blocs
4.4

Factors Affecting International Business

4.4.1Global Competitiveness4.4.2Ethics of Global Business4.4.3Controlling MNCs4.4.4Cultural & Social Factors in Marketing
5

Principles of Management

5.1

Management & Leadership

5.1.1Managers5.1.2Management Theories5.1.3Managing Organisational Culture5.1.4Management Style
5.2

Theories of Motivation

5.2.1Motivating & Engaging Employees5.2.2Taylor's Theory5.2.3Mayo's Theory5.2.4Maslow's Theory5.2.5Herzberg's Theory
5.3

Managing Change

5.3.1Change5.3.2Key Factors in Change5.3.3Scenario Planning5.3.4Managing Change5.3.5Managing Strategic Implementation
6

Business Decision Making

6.1

Business Principles & Practices

6.1.1Influences in External Environments6.1.2Product Decisions6.1.3Competitive Environment6.1.4Corporate Strategy6.1.5Quantitative Sales Forecasting6.1.6Legislation
6.2

Quality Management

6.2.1Importance of Quality6.2.2Measuring Quality6.2.3Total Quality Management6.2.4Evaluating TQM
6.3

Human Resources

6.3.1Contracts6.3.2Recruitment6.3.3Training a Workforce
6.4

Documents & Business Decisions

6.4.1Sales Forecasts6.4.2Managing Strategic Implementation6.4.3Problems with Strategy

Practice questions on Purposes of Businesses 2

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Does Chanel serve customers' wants or needs?Multiple choice
  2. 2
    What are customers' needs?Multiple choice
  3. 3
    Why do people set businesses up?Fill in the list
  4. 4
    Why is a company selling malaria nets in Africa likely to have been set up?Multiple choice
  5. 5
    Elon Musk set up Tesla because:Multiple choice
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Purposes of Businesses

The Different Economic Sectors