The Purpose of Business (AQA GCSE Business)

What is a Business?

• Businesses exist to obtain and process inputs so that they can provide goods and/or services that meet the needs or wants of customers while adding value

Diagram: The Purpose of Business Activity

The purpose of business activity is to take inputs, add value to them, and create products which meet customer needs

 To produce goods or services

• The primary purpose of business activity is to produce and sell goods or services that satisfy a demand in the market

  • Goods are physical, tangible products, such as bicycles and T-shirts

  • Services are non-physical, intangible products such as hairdressing, tourism and manicures 

Meeting customer needs and wants

• The ultimate goal is to create products that meet the needs, wants and preferences of customers and provide value to them

• By meeting customer needs, businesses can build customer loyalty, increase brand awareness, and generate revenue

To add value

• The third purpose of business activity is to add value to products or services 

• Value-added features can differentiate products from competitors, create a unique selling point, and increase customer satisfaction

  • E.g. a product that is easier to use, has a better design, or is of higher quality than competitors can create a competitive advantage for a business

Reasons for Starting a Business

• Businesses are established for a range of reasons

  • Producing goods and services

    • Identifying an opportunity to produce a unique product

    • E.g. Levi Roots identified an opportunity to produce his Reggae Reggae Sauce products on a large scale

  • Distribution of products

    • Ensuring customers can purchase products that they may otherwise be unable to obtain

    • E.g. Wing Yip Wholesale sells Chinese cooking ingredients to restaurants and small businesses in the Birmingham area

  • Fulfilling a business opportunity

    • Having a business idea that has the potential to make a profit

    • E.g. Elvis & Kresse's owners spotted the potential to turn used fire hose material into luxury accessories such as handbags, belts and wallets

  • Providing a good product to benefit others

    • Meeting a social need that is currently overlooked

    • E.g. Creed Outdoor Learning provides holiday adventure activities at an affordable price to families in Kent

• Further information on the reasons entrepreneurs set up and run businesses can be found here