Transcript product

The Nature of Business
What is a business?
Individuals or organizations trying to
earn a profit by providing products that
satisfy people's needs.
1-1
The Nature of Business
What is a product?
A good or service with tangible and
intangible characteristics that provide
satisfaction and benefits
1-2
Products
Tangible Goods & Services
Tangible Goods
Services
Automobile
Computer
Loaf of bread
Television
Dry cleaning
Photo processing
Checkup at doctor’s
Movie star performance
1-3
The Primary Goal of Business
Earn a Profit
The difference between what it costs
to make and sell a product and what a
customer pays for it.
1-4
The Primary Goal of Business
PROFIT -The reward for the risks that
businesses take in providing products.
1-5
Non-Profit Organizations
Not all organizations are businesses.
Nonprofit organizations provide goods
and services but do not have the
fundamental purpose of earning
profits.
1-6
Maintaining Profitability
Quality products
Efficient operations
Management skills
•Planning
•Organizing
•Controlling
•Leading
Profitability
Marketing Expertise
•Products
•Price
•Promotion
•Distribution
Social responsibility
Business ethics
1-7
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.
1-8
The People & Activities of Business
1-9
The People & Activities of Business
Management – Focus on employees
•Coordinating employee’s actions
•Organizing people for efficiency
•Motivating employees toward business goals
.
1-10
The People & Activities of Business
Management – Production and Manufacturing
•Plan activities
•Organize staff
•Control tasks
.
1-11
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
1-12
The People & Activities of Business
Marketing & Promotion
•Advertising
•Personal selling
•Sales promotion
•Publicity
1-13
The People & Activities of Business
Finance – Primary responsibility of owners
•Obtaining money
•Using money effectively
•Accountants, stockbrokers, bankers
1-14
The Economic Foundations of Business
Distribution of resources for the production of
goods and services within a social system.
Resources -•Natural resources (land, forests, minerals, water)
•Human resources (labor)
•Financial resources (capital)
1-15
Factors of Production -Natural, human, and financial resources used to produce
goods and services --
1-16
Economic Systems
How a society distributes its resources to produce
goods and services
Central issue of economics –
•How to fulfill an unlimited demand for goods and
services with a limited supply of resources
1-17
Economic Systems
How a society distributes its resources to produce
goods and services
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?
1-18
Comparison of Communism, Socialism, and Capitalism
1-19
Economic Systems
Communism
A society in which the people without regard to
class, own all the nation’s resources.
•China
•North Korea
•Cuba
1-20
Economic Systems
Socialism
System in which the government owns and operates
basic industries but individuals own most businesses.
•Sweden
•India
•Israel
1-21
Economic Systems
Capitalism
Free Enterprise – individuals own and operate majority
of businesses providing goods and services
•United States
•Japan
•Australia
•Canada
1-22
Economic Systems
Pure Capitalism
Modified Capitalism
Free Market -- All economic decisions made without
government intervention (pure capitalism)
Government intervenes and regulates business to
some extent (modified capitalism)
1-23
Economic Systems
Mixed Economies
No country practices pure capitalism or pure
socialism/communism. Economic systems
contain various elements of government
intervention
1-24
Supply & Demand
Distribution of resources and products
determined by supply and 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
1-25
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
1-26
Nature of Competition
Rivalry among businesses for consumers’
dollars.
Pure competition – many small businesses in
same product market
Monopolistic competition – small number of
businesses little difference in products
Oligopoly– very few businesses selling a product
Monopoly- one business selling a product
1-27
Economic Cycles and Productivity
Expansion and Contraction
Economic Expansion – economy is growing and
consumers are spending money
Economic Contraction – spending declines,
layoffs, economy slows down
1-28
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
1-29
Evaluating Economy
GDP: the sum of all goods and services produced in a country during a year
1-30