Introduction to Business Studies
Business
It is commercial activity conducted to satisfy human needs and wants usually done for profit. Business
studies is the study of such activities. Examples of Businesses include
a) buying and selling purchasing goods at a lower price and sale them at a higher price realizing
profit
b) Provision or offering of services such as Direct services eg nursing, nursing etc
c) Production of goods ie tangible items
Remember that, the word business does not refer to a building although it is often misused in
this way as many businesses are done under the roof.
Needs– these are things that human beings require in order to survive e.g. water, shelter, clothes and
food. Needs are finite (they can be counted.) Humans cannot survive if their needs are not met. Needs
are necessary in order to live.
Wants– these are things that are required by humans to make life more comfortable e.g. sofas,
Television, cellphone etc. Wants are infinite (uncountable) that is they are unlimited. Humans can
survive even if their wants are not met. Wants are luxuries humans desire to live comfortable lives.
Factors of Production (Resources)
Factors of production are those things that are used as inputs in the production process. They are also
generally known as resources. Finished products are given out as output. There are four factors of
production (CELL):
• Capital– all the manmade resources that are used in the production process e.g. tractors, bridges,
money etc. These are used as aids to production i.e. they help in the production of goods for example
machines that produce other goods. The reward for capital is interest.
• Enterprise-People/Individuals that are prepared to take the risk and have the skill of starting a
business. Entrepreneurs combine the other three factors of production with the intent of making profit.
The reward for enterprise is profit.
• Land– these are all the natural resources that are used in the production process e.g. freehold land.
Land also includes those things that are above and below the soil provided that they are natural for
example copper ore and air are part of land. The reward for land is rent.
• Labour– the number of people that are able to work. Labour refers to the human effort and expertise
(skill) that is used in the production process. The reward for labour are wages and salaries.
Scarcity and the factors of production
The factors of production (resources) are finite and therefore limited. They are not enough to meet all
what consumers need and want.
Choice-because resources are scarce people need to decide which needs and wants they have to satisfy.
Choice is the process of deciding between alternatives.
Opportunity Cost-is the cost of foregoing the next best alternative. For example Tapiwa has $30 which
she can use to either go to the movies or to buy food. If she decides to go to the movies it means she
can no longer buy food therefore she goes hungry. In this case food is an opportunity cost because she
does not get to enjoy eating the food. When a choice is made the thing that you do not choose is called
opportunity cost.
Specialization

A situation where, by agreement, people who are more suited to perform a task as a result of
technical skill, location or any other qualification assume greater responsibility for the
performance of that task.

Under specialization people perform tasks that they are good at only.

There are various types of specialization:

Job specialization-this is where individuals that are adept at certain tasks are confined to those
tasks within the business. For example in a garage we have one person dealing with wheel
replacements and repairs, another dealing with auto-electronics, another with the suspension,
yet another with painting etc depending on the specialty of the people involved.

Regional Specialization-certain areas concentrate in producing certain products e.g. Hwange
Produces coal and Katiyo tea estates produces tea.

International specialization– certain countries have a comparative advantage in producing
certain goods for example Japan produces motor vehicles because they have a distinct
technological and skill advantage over Zimbabwe.
Advantages
• No time is wasted moving from one job to another. For example going from the pottery wheel to the
furnace to complete the making of a clay pot.
• Workers become efficient and very skilled at the tasks they have been allocated.
• Makes mechanization and automation possible thereby greatly improving the speed of manufacturing
products.
• Take advantage of the comparative advantage of certain areas.
• Time saved in training employees since they only need to learn the task which they have been
allocated.
• Allows employees to concentrate in areas that interest them only.
Disadvantages.
• Loss of flexibility since workers stick rigidly to their allotted tasks.
• Monotony and workplace alienation can result from workers who constantly perform the same
repetitive tasks.
• Can lead to stress and injury for example workers that have to bend constantly during work have a
higher risk of developing back complications.
• Workers risk losing their jobs if their skill become obsolete.
Division of labour.

Each worker does one job.

Division of labour is an example of specialization.
Advantages
To the business.
• Specialist workers become quicker at producing goods.
• Reduced wastage and increased efficiency
• Less time is wasted moving from one job to another.
To the worker.
• Less time is needed in learning the skill
• Worker becomes more productive and has the opportunity to earn more.
Disadvantages
See disadvantages of specialization
The need for exchange (Trade)

As a result of specialization people can no longer subsist on their own since they no longer
produce all they need.

For example a farmer would need a blacksmith to work on his hoe and conversely
the blacksmith would need to eat.

In order for both to satisfy all their needs and wants they need to trade outputs:
the blacksmith exchanges his hoes for food from the farmer.

This exchange is known as trading and it has been perfected over time through the use of
money as a medium of exchange.

People trade in order to be able to satisfy to meet those needs and wants they cannot satisfy on
their own.

Specialization therefore results in trade.