1. Business Study
By: Budi Christanto
Chapter I: The need for and Nature of Business Activity
Business study is one of the pure-science study where we face a huge
problem which is: “There’s insufficient goods to satisfy our needs and wants”.
We have faced this problem a long time, and we also have a shortage of products
which isn’t enough to satisfy our needs and wants. That’s why we need to imply
the opportunity cost.
Opportunity Cost: Decision to purchase one item, where me must give up other
goods as they can’t all be purchase.
In this chapter, they also teach us about business activities, which is:
producing goods and services. We also need to concern about factors of
production, which are: Labor, Capital, Land, and Enterprises. Those are needed
to build a company.
Goods and services are also divided into some points.
Consumer Goods:
- Durable: food, drinks, goods that can be finished in a short time.
- Non Durable: Laptop, computer, cars, goods that can’t be finished. Can be
in form of services also
Consumer Services: Non-tangible products that’s sold to public
Capital Goods: Goods that is used as capital.

2. We also learn about the classification of business activities (primary
industries, secondary, tertiary, and also quaternary) and also the changes in
business activities from time to time.
- Primary Industries: Industries that deal directly with raw materials
- Secondary industries: Deals with packaging, or transforming the raw
materials into good materials.
- Tertiary Industries: Services company that sell the products.
- Quaternary Industries: Industries that deals with researches,
consultation, making the other 3 industries better.
Changes in Business Activities:
- Industrialization Revolution: A process of socio-economic changes that
transform from agriculture and industrial community.
Public and Private Sectors
Public Sector: Sector or company that is accountable to and controlled by
central or local government.
Private Sector: Sector or company that is controlled by individuals or groups of
individuals.
Private sector Organization:
- Sole trader: One and only trader, don’t cooperate with others.
- Partnership: Work in partner or group of 3-4 (usually 2)
- Limited Companies: Companies with limited share, responsibility,
liability.
- Public limited Companies: Stock listed in stock exchange, citizens are
able to be the stock holders.

3. - Private limited companies: Not listed in stock exchange, own by
relatives or closed friends.
Company using .Tbk at the back can allow people or citizens to gain share
holders.
Economic Formula:
INCOME – EXPENSES: Profit (If the result is positive) Loss (if the result is
negative)
Other Forms of Business Organization
- Cooperative: Form of business organization with a little profit (or even
no profit) when the customer is the cooperative member of the
organization, the price is cheaper.
- Franchise: Make contract between companies. Usually famous products.
- Holding Companies: Make companies using same name, but different
product to sell.
- Join Ventures: Companies that join together to gain more profit.
We also learn about public sector and also privatization. Public sector, is a
place or sector that is owned by one government (TMII, Airport). While
privatization, is one way where companies that is owned by government but
then it’s bought by private sector.

4. Chapter I: Business Activity and Economy Structure
Economic Structure:
Planned Economy
Economic system that is controlled by government. Mostly used by communist
country. This economic activity is used to make things that’s asked by the
government. Controlled by government.
Advantages:
- Capital is supplied by government
- No need to afraid of wasted materials
- Planned really good and tidy
- Can determine which goods are supplied
- No competition
Disadvantages:
- Requires a lot of information in order to function well
- Cannot create innovation (not innovative)
- Corruption
Free Market Economy
Economic system where one individual (company) control the economic system
itself. Government doesn’t interfere with the company.
Advantages:
- A lot competition
- Because of the competition, makes the company become more innovative

5. - No one control it
- Free to produce goods
Disadvantages:
- Poor at predicting (surpluses and shortages)
- Need to find capital by itself
- Need to pay taxes (reducing profit)
Mixed Market Economy
Mixed economic system between free market economy and planned market.
Some decision are made by the company itself, and some is made by government
or central authority.
Advantages:
- Able to gain capital from government
- Able to promote their product to societies
- Company mostly control their market
Disadvantages:
- Taxes
- Mostly all of the disadvantages in free market economy exist in here
Nature and Scope of International Trading Links
Every countries need a international trading system, no countries can stand
alone, no country have all of the natural resources they need. Besides, the world
trade in recent years has been very rapid.

6. Advantages of International Trading:
- Much wider choice of goods and services.
- Creates more competition, where able to keep costs and prices down and
make better innovation and high quality products as possible.
- Able to build up political and social links between themselves.
Disadvantages of International Trading:
- Loss of output and jobs from domestic or local firms that can’t compete
each other.
- Decline, due to import.
- New company may can’t stand against the competitions.
Free Trade:
No Restriction or trade barriers exists that able to prevent or limit trade
between countries.
Trade Barriers:
- Tariffs: Taxes imposed
- Voluntary export limits: exporting country agrees to limit the quantity
of certain goods
Globalisation
Is one of the way where all people in a country feel free to have any culture and
goods that another country have.