Stakeholder

Business activity exists because resources are scarce and human wants are not. Every business takes scarce inputs, combines them, and produces goods or services worth more than the bought-in materials it started with — that difference is added value. Somebody must organise those inputs and accept the risk of being wrong: the entrepreneur. The legal form they choose decides who owns the business, who controls it and how much of their own money is exposed if it fails. The objectives they set decide what “success” even means — and different stakeholder groups will judge that success by different, sometimes conflicting, standards.

Business activity is the combining of scarce resources — land, labour, capital and enterprise — to produce goods or services that satisfy human needs and wants. Because resources are scarce and wants are not, every choice carries an opportunity cost: the next best alternative forgone. Cambridge O Level Business Studies (7115) Chapter 1 covers why business activity exists, how a business is classified by economic sector and by ownership sector, how size and growth are measured, the forms of business organisation from sole trader to public corporation and what each means for ownership, control, finance and risk, and the objectives that businesses set and that their stakeholders judge them by.