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Chapter 1

Organizing Business Notes

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14 views

Chapter 1

Organizing Business Notes

Uploaded by

procanes22
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The Nature of Business: Businesses try to earn profits by providing products that

satisfy people’s needs


Products include:
• Tangible goods
o Automobile, smartphone, pair of jeans
• Service
o Dry cleaning, doctor’s visit, movie
• Idea
o Accountants and attorneys provide ideas for solving problems
o
The Goal of a Business: to earn a profit
Nonprofit organizations:
• No purpose of earning profits
• May provide goods or services
• Engage in fund-raising
• Engage in management, marketing, and finance to
reach goals
Stakeholders: groups that have a stake in success and outcomes of a business

The People and Activities of Business:


Management:
• Marketing
• Finance
• Planning, organizing, leading, and controlling
• Focus of all marketing activities is satisfying customers
• Refers to all activities concerned with obtaining money and
using it effectively

Why Study Business?


• Develop skills and acquire knowledge to
prepare for future career
• Understand activities needed to provide
goods and services
• Become a well-informed consumer and
member of society
The Economic Foundations of Business
What is economics? Study of how resources are used for the production of a
product
• Resources:
o Natural resources
o Human resources (also called labor)
o Financial resources (also called capital)
o Intangible resources

Economic Systems:
• Communism - classless system in which the means of production are owned
communally, and private property is nonexistent
• Socialism - workers or the government own the buildings and tools that make goods and
services like farms and factories
• Capitalism (or free enterprise) - provides individuals the opportunity to make their own
economic decisions, free of government constraints, and as private profit-potential
businesses
• Pure capitalism
• Modified capitalism
• Mixed economies

The Free-Enterprise System:


• Many large economies are free-enterprise, such as
U.S., Canada, and Japan
• Many communist and socialist countries apply free-
enterprise principles, such as China and Russia
• Allows a company to succeed or fail based on
market demand
• Basic individual and business rights must exist in
order for free enterprise to work
• Right to own property, earn profits and use them as one wishes, determine business
operations, and choose a career, where to live or locate a business,
what goods/services to purchase, and more

Forces Of Supply and Demand: Demand, supply, equilibrium price (where


supply curve and demand curve intersect)

The Nature of Competition:


Four types of competitive environments:
• Pure competition: many small businesses selling one standardized product (gas)
• Monopolistic competition: when many companies offer competing products or services
that are similar, but not perfect, substitutes
• Oligopoly: very few businesses in an industry sell a product, price of product follows in
tandem of each other (airlines with charging bags)
• Monopoly: one business selling a product in a market (utilities like electricity water gas)

Economic Cycles and Productivity:


• Economic expansion: Inflation - economy grows from more spending and production
• Economic contraction: Deflation – economy suffers from less spending and production
o Can lead to recession, unemployment, depression

Economic Cycles and Productivity:


• Measuring the economy
• Gross domestic product (GDP)
• Budget deficit
United States economy: Mixed economy, foundation based on capitalism,
standard of living is high
• The Importance of the American Economy:
o Open economy
o Economy assessed on several factors
o Growth in GDP and jobs
o Government public policy
o Tax revenue from individuals and businesses

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