Business Organization Chapter 5 Business Organization

5-1 Business in the U.S. Economy After finishing this section you will know how to: Describe the changing status of U.S. employment Discuss the role of business in the U.S. economy Describe the three major types of businesses

THE CHANGING U.S. JOB MARKET The beginning of the 21st century saw many new career opportunities along with a decline in manufacturing and agriculture jobs

Employment Data From 1996-to 2006 total employment grew by 14 percent In 2007 nearly 144 million people held jobs That number is projected to reach 165 million by 2014 increasing by almost 13 percent

Baby Boomers- a large number of people born between 1946 and 1964 They have dominated the labor market since they began working in the 1960s They will continue to do so until the 2010s when they begin to retire The average age of U.S. workers in 2020 will be over 50

A mini-boom of younger workers will cause the 20-30 year-old age group to grow faster than the rest of the labor force Other groups that will go through higher employment growth rates are Asian-, Hispanic-, and African-American workers

Currently white non-Hispanic workers make up 70 percent of the labor force That number will drop to 66 percent by 2014 In the early 1960s, 35 percent of women were working outside the home The number of working women doubled by 2000 by 2014 47 percent of all jobs will be held by women

Pressures on Employees It was thought at one time that technology would allow people to work fewer hours. That hasn’t occurred.

Economic stress has led to downsizing the number of employees Businesses required employees to take on new tasks and work extra hours Some full time jobs were changed to part time Wage rates were decreased Many people had to find second jobs to meet economic needs

Not a permanent employee Contingent workers- one who has explicit or implicit contract for long-term employment Not a permanent employee About 5 percent(6 million people) of the workforce It is estimated that that number will double in 10 years Some workers choose this because they: can’t find other work like the flexibility of the hours

Checkpoint>> List several groups that will increase as a percentage of the total U.S. workforce in the next decade?

BUSINESS AND THE ECONOMY Businesses make the goods and services you use each day. In 2002, all businesses world wide produced more than $40 trillion of goods and services U.S. businesses were responsible for almost 29 percent of that production

Size of Businesses Most U.S. businesses are quite small. Nearly 19.5 million businesses have no employees other than the owner About 4.5 million companies employ less than 20 people Just over 26,000 employ 20-100 people About 107,000 large businesses employ 100 or more 890 employ more than 10,000 people

Roles of Business Provide employment Pay taxes Make and distribute products and services

Impact on a Community When a new business opens, it pays wages to workers buys goods and services money spent can lead to more jobs being created this leads to more taxes which will go back into providing community services

When a large business opens in an area, other businesses will locate there to support them Small businesses may be started to meet the needs of residents and other businesses

Business Activities Large or small, simple or complex, all businesses complete the following activities: Generating ideas Raising capital Employing and training personnel Buying goods and services Marketing goods and services Maintaining business records

Generating ideas A business begins with a new idea. A business must continue to improve and develop new ideas to remain successful Many companies use research and development departments to discover new product, service, and operations ideas

Raising Capital Businesses need financial resources to operate. Used to buy buildings, train workers, and complete day-to-day business operations

A large amount of capital is needed to start a business Most comes from owners and loans from financial institutions and investors A business continues to need money as it develops and grows That money comes from reinvested profits, bank funding, and investors

Employing and Training Personnel Businesses need human resources. Businesses have procedures for recruiting, hiring, and training employees New employees receive training in order to perform their jobs correctly.

Buying Goods and Services Businesses use many of their purchases for their own operations, other purchases are resold. Manufacturers of cars must buy: steel, aluminum, and plastics tires batteries, and airbags

A retailer buys an assortment of products to sell to customers. Must also buy display equipment, computers, and cleaning supplies used to run their business

Marketing Goods and Services Marketing- activities directed at providing the goods and services wanted by a business’s customers Without marketing, even the best products would remain unsold

Maintaining Business Records All businesses must have some type of record keeping system. Owners and managers need records to track employee and sales performance to make decisions Technology is available to make record keeping easy and accurate.

Checkpoint>> What are the six basic activities completed by a business?

TYPES OF BUSINESSES Producers- create the products and services used by individuals and other businesses Responsible for using resources to make something needed by others

Extractors- business that takes resources from nature for direct consumption or developing other products Examples: pumping oil, mining coal, cutting timber

Farmers- cultivate land and use other natural resources to grow crops and raise livestock Manufacturers- get supplies from other producers and convert them into products Business activities start with producers

Intermediaries- businesses involved in selling the goods and services of producers to consumers or other businesses There are two common types of intermediaries: wholesalers and retailers Wholesalers- sell to other businesses, usually in bulk orders Retailers- sell to consumers

Service business- carries out activities that are consumed by its customers Examples: doctors, lawyers, dentists, baby sitters, painters, or furniture movers Fastest growing part of the economy Accounts for more than 60 percent of U.S. employment

Checkpoint>> How does a manufacturer differ from an extractor?

5-1 ASSESSMENT