UNIT 9 SOCIAL SCIENCE: THE ECONOMY

THE ECONOMY AND COMPANIES

THE ECONOMY

The economy is all the activities involved in producing, selling and buying the products and services we require for our basic needs.

There are 3 main processes that make up economic activity:

• PRODUCTION: this includes all the activities needed to make a product or provide a service. 

• DISTRIBUTION: this includes transporting the product or service to the customers.

• CONSUMPTION: this is the buying and selling of a product or service to the customers.

COMPANIES

A company is an organization which offers products or services to customers in exchange for making a profit. A profit is a financial gain. To carry out economic activity, companies need different resources:

• Human resources: these are the employees who work for the company.
• Material resources: these include the raw materials to make the products. They also include the machines, transport, new technologies...
• Financial resources: this is the money a company needs to carry out its activities.

TYPES OF COMPANIES

Companies can belong to different economic sectors:

• PRIMARY SECTOR: these companies obtain resources from nature, for example a mining company.
• SECONDARY SECTOR: these companies transform raw materials into products, for example, a furniture company.
• TERTIARY SECTOR: these companies provide services, for example, a dentist, a restaurant or a shop.

Companies can be different sizes:

• Small companies: have less than 50 employees.
• Medium companies have from 50 to 250 employees.
• Large companies have more than 250 employees.

ORGANIZATION OF COMPANIES

A company has different departments:

• PURCHASES: this department buys the materials and services the company needs.
• PRODUCTION: this department creates the product or service the company sells.
• HUMAN RESOURCES: this department employs and manages the company's employees.
• MARKETING: this department creates advertising for products or services.
• ACCOUNTS: this department manages the company's money.

ADVERTISING

WHAT IS ADVERTISING?

Advertising is giving people information about a product or a service using advertisements. Advertisements are special messages. We hear them on the radio or on television, or read them in magazines or on the Internet. There are different types:

• Persuasive advertisements. These are messages to persuade people of the benefits of a product or service.
• Informative advertisements. These are messages about saving energy, healthy living, helping other people...

ADVERTISING TECHNIQUES

• REPETITION: adverts often repeat the name of a product or service many times in a short space of time. For example, they repeat the same telephone number to contact.

• EXAGGERATION: adverts exaggerate the benefitis of buying a product. This is typical of adverts for cars.

• PROMOTIONS: some adverts offer special discounts or prizes when we buy a product.

• ASSOCIATION: adverts associate a product or a service with a famous person or a well-known song.

 

ADVERTISING CAMPAIGNS

An advertising campaign is a series of activities that aim to generate interest and demand for a particular product or service.

Advertising campaigns are created by companies. With this they try to reach a TARGET AUDIENCE: the group of people who may be most interested in the message.

These campaigns deliver a meaningful and inspirational message about a product or service. This message often includes a SLOGAN. This is usually a simple, memorable statement that summarizes the product or service. An advertising campaigns can use different types of media:

• PRINT MEDIA: newspapers, magazines, poster, billboards...
• ELECTRONIC MEDIA: TV, radio, Internet, emails, mobile phone...

MONEY

Thousands of years ago money did not exist. Instead, people used bartering. Bartering is exchanging one product for a different product. Over time, bartering was replaced with money.

Money we earn is called INCOME. People usually put their money into a bank account. We can pay for things in different ways.

MAKING A BUDGET

A budget is a plan for spending income. The money we spend is called expenses. To make a budget we add up our expenses, for example, food, transport, clothes, ... Then, we subtract the expenses from our income. The final amount is called a balance.