Transcript Chapter 3 Intro to Business

Chapter 5
Intro to Business
Business in the Economy
Four Kinds of Business
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Extractors-a business that grows products or takes raw
materials from nature.
 Farmers
 Silver/coal miners
 Fishermen
Sometimes the extractor’s products are ready to be sold
just as they come from the earth or sea. (i.e. fish from
the sea, potatoes from the ground)
2nd of the 4 kinds of Businesses
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Manufacturers-takes the extractor’s products or raw
materials and changes them into a form that consumers
can use.
-some manufactures are only a part of the total activity of
producing goods from the extractor’s products.
-together, extractors and manufacturers are industries
that change the form of resources from their natural
states into products for consumers.
Manufacturers-cont.
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Custom Manufacturing -building a specific and unique
product to meet the needs of one customer.
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Mass Production-a large number of identical products
are assembled using a continuous, efficient procedure.
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Golf courses
Dentures
Automobile assembly lines (thank you Henry Ford)
Beverage bottling plants.
Processing-changes the form of materials so they can
be consumed or used to manufacture other products.
(3) Marketers
The services of many businesses are often needed before
goods actually reach consumers.
A business that is involved with moving goods from producers
to consumers is called a marketer.
The activities of marketers are called marketing.
Marketing includes more than just transporting and selling
products.
Marketers also help to:
Identify
Develop
And test new products to see whether consumers will like
them and buy them.
Marketing adds value to products by bringing them to where
the consumer is, at a time they are wanted, in the assortment
wanted, and at prices the consumer is willing to pay.
Service Business
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A business firm that does things for you instead of making or
marketing products is called a Service business.
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Service businesses are the fastest growing part of our
business world.
 By the year 2006, it is expected that three out of four jobs will
be in businesses that provide services to others.
 Examples of service businesses:
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Moving companies that move you from one state to another.
Airlines that fly you from one place to another.
Style your hair
Wash your car
Do your income taxes
Board your pet
Clean your teeth.
Daycare (more multiple workers per household)
James Vicary, an advertising expert, went into a
1950s movie theater to test his devious new tool for
persuading others: subliminal advertising.
During the movie he allegedly flashed the commands
"EAT POPCORN" and "DRINK COKE" so fast that the
unsuspecting audience couldn't consciously see the
words. Vicary claimed Coke sales jumped 18.1% and
popcorn sales leaped 57.7%.
On that day, subliminal advertising was born.
Study hard..
do what your teacher tells
you to do..
behave!
Business Activities
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Generating Ideas-once a business is established to sell a
good or service, it must continue to develop ideas in order to
survive.
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Businesses compete with other firms that sell the same or similar
products.
Many firms have research and development departments (R and
D) who work full time creating and testing new products.
Raising Capital-start-up money is critical and must be found
to start the business. It can come from many sources.
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Established businesses must continue to raise capital throughout
the life of the firm.
• Most money obtained from loans or from people who wish to invest
in the business.
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Buying goods and services-businesses buy goods and
services both for resale and for their own use.
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Businesses that manufacture products need to buy raw materials
to produce their products.
Business Activities-cont.
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Using Human Resources-all firms need to have a system for
carrying out activities that attract, employ, and develop human
resources. These include:
Recruiting (finding workers)
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Interviewing and testing applicants
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Selecting employees
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Training and developing both new and experienced employees
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Appraising job performances
These activities are often carried out by a human resources, or
personnel department.
****Mitsubishi story!!
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Marketing Goods and Services-activities directed toward
providing the kind of product or service desired by consumers.
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Assists in the design and development of products and services
that will meet the needs of prospective customers.
Business Activities-cont.
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Producing Goods and Services-the heart of a successful business
is the production of quality products and services.
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The good or service must be produced at the scheduled time
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In the appropriate quantity and quality
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And at a competitive cost
Keeping Records-all businesses must have some kind of a record
keeping system, probably utilizing computer technology.
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Many records must be completed and compiled in reports to
enable the owner or manager to know how the business is
doing.
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How much has been sold
How much what they sold cost
What was returned
How much they owe to others
Records are important for:
• Determining whether a business lost or made money
• Provide information for management decisions
• Provide date for government reports and taxes
Impact of a New Business on a Community
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Pays wages to employees
Workers spend this money for goods and services
New People come to a community
Local builders will hire more workers and buy more materials
Businesses also tend to attract other businesses which
creates more jobs
Others: