Transcript Unit 1: Business Fundamentals - Halton District School Board

UNIT 1: BUSINESS
FUNDAMENTALS
Economic Basics
Profile: Pita Pit
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Page 5 in the World of Business textbook
Profile: Pita Pit
1.
2.
How has Pita Pit been successful in matching its
understanding of customers with the needs and
wants of its customers?
Businesses always try and gain a competitive edge
on their competition. Explain how Pita Pit has been
successful in this regard?
What is a Business?
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Businesses come in many shapes and sizes, such as
local, regional, national, and/or global. They are
classified by their size, structure, and the role they
play in the community.
There are many different ways to describe or
classify a business, depending on characteristics
such as the purpose of the business, its size, its
structure, and the role it plays in the community.
Good vs. Service
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Record these terms & definitions if they are new to
you
 Good:
 An
item that can be seen and touched (tangible)
 Service:
 Providing
assistance to others that does not result in a
tangible product (intangible)
Q. What are some examples of goods & services?
Profit or Non-Profit?
1. For-Profit Business
A for-profit business produces or sell goods and services to satisfy the needs,
wants, and demands of consumers for the purpose of a making profit.
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Profit is the income left after all costs and expenses are paid.
Expenses are the payments involved in running a business and the assets that get “used
up” operating it.
Cost is the money required to produce or provide the goods and services.
Revenue – Expenses = Profit (or Loss)
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When a business makes a profit, it can
1. reinvest money for expansion
2. provide improved goods and services
3. give the owner(s) funds to spend on personal needs or wants
The business is considered solvent when debts are paid and financial obligations
are met.
2. Non-profit and Not-for-profit Organizations
A non-profit and/or not-for-profit organization operates strictly to help people in a
community.
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Non-profit Organizations
The primary motive of a non-profit organization is to raise funds for a specific goal. Only
charities and charitable organizations are called non-profit and are allowed to raise such
funds. These organizations operate to serve people and their communities.
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Not-for-profit Organizations
A not-for-profit organization uses any surplus funds to improve the services offered to its
members. However, they do not distribute profits to members. A co-operative, unlike a notfor-profit organization, consists of an independent association of persons who join
together to meet economic, social, and cultural needs and goals.
Q. What are some examples of NFPs?
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Task: Complete your ‘Profit or Non-Profit’ worksheet
One way to classify a business is by its motive for
existence. For each business and organization listed,
decide whether it is a for-profit or non-profit
business/organization by placing an X in the
appropriate column. Then describe its primary goal.
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Video: High-priced Fashion (7 min)
http://www.youtube.com/watch?v=PWOEnMsgFGY
End of lesson 1
Large or Small Business
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A small or medium-sized business (SMB) can be
classified by the following characteristics:
 employs
fewer than 500 people
 estimated to be over one million in Canada
 provides jobs for more than 60 percent of the
Canadian workforce
Forms of Business Ownership
Informal descriptions of business ownership include:
1. sole proprietorship
2. partnership
3. corporation
4. co-operative
5. franchise
The Role of the Consumer
Most businesses provide goods or services to satisfy
consumer needs and wants.
Producers
are the businesses that make goods or provide services
that consumers need or want.
Consumers
are the people who purchase goods and services from
producers.
A marketplace
or location is where producers and consumers come
together to buy and sell their goods and services.
Businesses use consumer habits plus their own research to decide what quantities of
goods and services they will provide to consumers. Some key questions that
businesses might ask about themselves are
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When do they want these goods and services?
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Where do they want them?
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How much goods or services do they want?
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What price will they pay for these goods and services?
Consumers greatly influence businesses in regards to what they produce and how
they deliver it.
Consumer Influence
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Consumer influence on price
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Businesses are in control when they have pricing power. They
can increase prices in response to increased costs or to increase
their profits.
Consumers have control when they have power. They
demonstrate this by “voting with their feet” to look elsewhere for
products and services.
Consumer influence on service
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Consumer purchasing power gives individuals the control to buy
goods and services at the price they want and the location they
like. This power influences the products, prices, and service levels
that businesses offer consumers.
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Task: Consumer Influence Worksheet
Video: Consumer Influence Video (5 mins)
Over time, a shift has occurred from businesses
controlling the marketplace to consumers having more
influence on decisions that are made in the
marketplace. For each item below, provide an
example of how consumers have influenced the
product, price, or service. The first example has been
completed for you.
End of lesson 2
Starting a Business
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Characteristics of Entrepreneurs
Entrepreneurs are individuals who are risk-takers and
problem-solvers. They are acutely aware of
opportunities in the marketplace and take advantage
of these in their businesses.
What do you think are some important
entrepreneurial characteristics?
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Consumer Needs and Wants
Entrepreneurs often start businesses to satisfy
consumer needs. Basic survival needs for individuals
are food, clothing, and shelter. However,
entrepreneurs can also provide consumers with new
products or services that are not considered a need
but a want—something that adds comfort or pleasure
to their lives.
Task:
Using your textbook, read pages 15-22 and answer the following questions:
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List four characteristics required of an entrepreneur?
When planning a new business, what factors need to be considered with respect
to potential consumers?
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There are 3 ways a business can respond to customer feedback. What are they?
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Explain how too much inventory can hinder a business.
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List the 5 steps in the decision making model.
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1 Red Paperclip (9 minutes)
As you watch the ABC 20/20 segment, fill in your
worksheet
End of lesson 3
Economic Systems
are a way of dealing with the selection, production,
distribution, and consumption of goods and services.
Government and business work together to foster activity
and growth in the marketplace.
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Economic systems have to answer three key questions:
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What goods and services should be produced within the system?
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For whom should these goods and services be produced?
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How should these goods and services be produced?
Law of Demand
Law of Demand
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Demand is the quantity of a good or service that consumers are willing
and able to buy at a particular price.
Law of demand and its relationship to prices and consumers is
defined as the following:
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When prices  decrease consumers buy more and demand goes up .
When prices  increase consumers buy less; demand goes down .
Several conditions that create demand are:
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consumer awareness
Price
Supply
accessibility
Law of Supply
Supply is the quantity of a good or service that businesses are
willing and able to provide within a range of prices that people
would be willing to pay. Increasing the quantity supplied as
prices increase is called the law of supply.
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Several conditions that affect supply are
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the cost of producing or providing a good or service
the price consumers are willing to pay for it
Relating Price to Supply and Demand
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Price is determined by supply and demand as well as the cost of
producing or providing the good or service
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Task: Using your textbook (pages 28-32)
answer the following questions:
 What
conditions create demand?
 List the four factors that increase or decrease demand.
 What conditions affect supply?
 List the five factors that can increase or decrease
supply.
End of lesson 4
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Supply & Demand for Video games Video (8 mins)
Chart - The relationship between supply and demand is a
fundamental concept of economics and forms the basis of
our economy. Product prices are a reflection of supply
and demand. Keep this in mind as you read each
statement below. Indicate whether the statement is true or
false by placing an X in the appropriate column.