Colored People's Blue-book and Business Directory of Chicago, Ill (1905)
The Nature of Business What is a business? Individuals or organizations trying to earn a profit by...
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The Nature of Business
What is a business?Individuals or organizations trying to earn a profit by providing products that satisfy people's needs.
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The Nature of Business
What is a product?A good or service with tangible and intangible characteristics that provide satisfaction and benefits
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ProductsTangible Goods & Services
Tangible GoodsAutomobileComputerLoaf of breadTelevision
ServicesDry cleaningPhoto processingCheckup at doctor’sMovie star performance
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The Primary Goal of Business
Earn a ProfitThe difference between what it costs to make and sell a product and what a customer pays for it.
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The Primary Goal of Business
PROFIT -- The reward for the risks that businesses take in providing products.
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Non-Profit Organizations
Not all organizations are businesses.
Nonprofit organizations provide goods and services but do not have the fundamental purpose of earning profits.
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Maintaining Profitability
Management skills•Planning•Organizing•Controlling•Leading
Marketing Expertise•Products •Price•Promotion•Distribution
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Stakeholders
Customers, employees, investors, government regulators, community and society. Those that have a stake in the success and outcomes of a business are considered stakeholders.
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The People & Activities of Business
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The People & Activities of Business
Management – Focus on employees•Coordinating employee’s actions•Organizing people for efficiency•Motivating employees toward business goals
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The People & Activities of Business
Management – Production and Manufacturing•Plan activities•Organize staff•Control tasks
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The People & Activities of Business
Marketing – Focus on satisfying customers•Determine what products customers want•Plan and develop products•Determine distribution•Determine place•Determine promotion
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The People & Activities of Business
Marketing & Promotion•Advertising•Personal selling•Sales promotion•Publicity
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The People & Activities of Business
Finance – Primary responsibility of owners•Obtaining money•Using money effectively•Accountants, stockbrokers, bankers
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The Economic Foundations of Business
Resources --•Natural resources (land, forests, minerals, water)•Human resources (labor)•Financial resources (capital)
Distribution of resources for the production of goods and services within a social system.
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Factors of Production --
Natural, human, and financial resources used to produce goods and services --
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Economic Systems
Central issue of economics –
•How to fulfill an unlimited demand for goods and services with a limited supply of resources
How a society distributes its resources to produce goods and services
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Economic Systems
Three Important questions –1. What types and quantities of goods/services will
satisfy consumer needs?2. How will goods/services be produced? By whom?
With what resources?3. How are goods/services distributed to consumers?
How a society distributes its resources to produce goods and services
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Comparison of Communism, Socialism, and Capitalism
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Economic Systems
A society in which the people without regard to class, own all the nation’s resources.
•China•North Korea•Cuba
Communism
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Economic Systems
System in which the government owns and operates basic industries but individuals own most businesses.
•Sweden•India•Israel
Socialism
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Economic Systems
Free Enterprise – individuals own and operate majority of businesses providing goods and services
•United States•Japan•Australia•Canada
Capitalism
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Economic Systems
Free Market -- All economic decisions made without government intervention (pure capitalism)
Government intervenes and regulates business to some extent (modified capitalism)
Pure CapitalismModified Capitalism
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Economic Systems
No country practices pure capitalism or pure socialism/communism. Economic systems contain various elements of government intervention
Mixed Economies
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Supply & Demand
Demand -- number of goods/services consumers buy at given price at a specific time
Supply -- number of products businesses will sell at different prices at a specific time
Distribution of resources and products determined by supply and demand
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Forces of Supply & Demand
Price at which number of products supplied equal amount of products consumers are willing to buy at a specific time = equilibrium price
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Nature of Competition
Pure competition – many small businesses in same product marketMonopolistic competition – small number of businesses little difference in productsOligopoly– very few businesses selling a productMonopoly- one business selling a product
Rivalry among businesses for consumers’ dollars.
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Economic Cycles and Productivity
Economic Expansion – economy is growing and consumers are spending money
Economic Contraction – spending declines, layoffs, economy slows down
Expansion and Contraction
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Economic Cycles•Inflation– condition characterized by continuing rise in prices•Recession– decline in production, employment, and income•Unemployment– % population wants to work but unable to find jobs•Depression– unemployment very high; consumer spending low; business output sharply reduced
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Evaluating Economy
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GDP: the sum of all goods and services produced in a country during a year