SQA Higher Business Management

## What business activity does A business takes inputs such as raw materials, labour, premises and money, and turns them into goods or services that people want to buy. When the output is worth more to customers than the inputs cost, the business has **added value**. A baker who turns flour, yeast and an hour of work into bread that sells for far more than the ingredients cost has added value, and the difference pays the wages, the rent and the owner's return. Businesses matter to society beyond the goods themselves. They create jobs, and those jobs give people an income to spend elsewhere in the economy. They pay taxes, which fund schools, hospitals and roads. They help satisfy the needs of customers, and because they compete for those customers they have a reason to improve products, cut prices and bring in new ideas. They also create wealth for owners and shareholders, and for the pension funds that hold shares on behalf of ordinary savers. The same activity can cause harm. A factory may pollute a river, a retailer may pay low wages, and a company that closes a plant may leave a town without work. Society therefore expects businesses to operate within the law and increasingly within ethical standards, which is why social responsibility appears as an objective in its own right. Customer needs change, and so does the environment businesses work in. New technology, a change in tastes or a new competitor can make a successful product out of date, so a business has to keep…