Characteristics of Business

Nature of Business Profit=Earned income-Costs 3 major activities of business: Production-making the product Marketing-how goods/services are exchanged between producers and consumers Finance-money matters Supply vs. demand 2 major types of business: Industrial-produce goods used by other businesses Commercial-Sell to consumers Changing nature of business-must react quickly to the changing nature of society, be innovative

Impact of Global Competition 100s of years, we led the way Americans purchase American goods Last 30 years, others have become industrialized Americans purchase American and foreign More efficiency and effectiveness in production Better quality products Better prices Less jobs in America Specialization of worker talent-experts Technology and innovation (better quality, faster) Reorganization (drop unprofitable products, increase technology, empowering workers, redesign workflow)

Business Growth and Prosperity Gross domestic product (GPD) total market value of all goods/services PRODUCED in a yr. (overall well being of nation) Illegal transactions are not recorded (underground economy)-Increases in poor economic times Review the GDP chart for 1987-1998 on pg. 14 What was the GDP for the US in 2010? $ 14.76 T Well being of individuals-household ownership

Entrepreneurship Popularity of small businesses Individuals have a strong desire easy to do Growth of small businesses-lg. began as sm. Growth of Franchise business initial fee and 3-8% of weekly sales pay for rights to sell 5-10% fail (much lower than non-franchised) 12% of all bus. are franchised, grown steadily Risks of Ownership Well managed=adequate income (usually) Risk-possibility of failurecompetition, change is price or style, changes in economic conditions See chart pg. 20 Thousands fail annually Obligations of Ownership Duty to all stakeholders-if go under and owe money-suffer a loss Customers, workers, mgmt, competitors, investors, public

Intrapreneurship Provided to keep creative employees on your staff instead of competition. Employee Stock Ownership Plan (ESOP) Permits ee’s to own the co. in which they work –buy shares

Assignment Book pg. 23 Definitions Review Facts (1-15) Discuss Ideas (1-12)