SQA National 5 Business Management

Businesses exist because people have more wants than they have the means to satisfy. A **need** is something a person must have to live, such as food, water, clothing and shelter, while a **want** is something they would like and can live without, such as a games console or a holiday. Because the resources available are limited and wants are not, businesses take resources and turn them into the goods and services that people choose to buy, and in doing so they create wealth, provide jobs and pay taxes that fund public services. ## Factors of production The resources a business uses to produce goods or provide services are the **factors of production**. There are four, and each earns its owner a reward. | Factor | What it is | Examples | Reward | |---|---|---|---| | Land | Natural resources and the ground itself | Farmland, forests, oil, fish stocks, a building plot | Rent | | Labour | The work done by people, physical or mental | Chefs, shop assistants, engineers, accountants | Wages or salary | | Capital | Man-made resources used to produce other goods, including money invested in the business | Machinery, vehicles, tools, computers, factory buildings | Interest | | Enterprise | Organising the other three factors, taking the decisions and accepting the risk of loss | The owner of a start-up, the founder of a new café | Profit | The word capital is also used for the money an owner puts in, which is then spent on the buildings and machines that count as capital in the table…