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.

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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.
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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:

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People want the good or service

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

Jump to other topics

1Exploring Business

2Marketing Campaigns

3Business Finance

4International Business

5Principles of Management

6Business Decision Making

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