Business in Our Economy 10/23/14

Do Now Where do jeans come from?

Four kinds of Businesses Extractors Manufacturers Marketers Service Businesses

Extractors A business that grows products or takes raw materials from nature Farmer who grows and sells cotton Silver, Copper, or Coal Miners King Crab Fishermen in Alaska Oil Co. in Texas Californian winery that grows their own grapes Lumber mills in Washington

Extractors Some products are ready for sale when extracted –Clams in New England –Potatoes in Idaho –Pecans from Georgia

Manufacture What does the word Manufacture mean? –The process of converting raw materials, components, or parts into finished goods MOST products need to be processed before consumers purchase them This changes their form and adds value to the product

Manufacturers Takes an extractor’s products or raw materials and changes them into a form that consumers can use They “add value” to the raw material Some manufacturers are only part of the picture

Added Value

Three types of manufacturers Custom manufacturing Mass Production Processing

Custom Manufacturing Building a specific and unique product to meet the needs of ONE customer

Mass Production A large number of identical products are assembled using a continuous, efficient procedure.

Processing Changes the form of materials so they can be consumed or used to manufacture other products

Marketers A business that moves goods from producers (extractors/manufacturers) to consumers Activities Marketers Perform –Transporting products –Selling products –Identify, develop, test new products –Packaging products –Storing products –Promoting products

Marketers Marketers make products available WHEN, WHERE and at WHAT prices consumers want Without marketers you would have to get products directly from producers –You’d have to travel to South America for a banana –You’d have to travel to Florida for an Orange Buying products that way is inefficient and expensive

Service Businesses A business firm that does things for you instead of making or marketing products –Can be business to business –Or business to person Advertising Agency »Landscaper »Barber Shop

7 Business Activities Whether a large corporation, or a small start up business, all companies perform seven basic activities Get into groups of 3 Each group will be responsible for ONE business activity In your group, read and take notes on your activity Understand everything there is to know about it You will share your activity with 6 others and take notes on the activities the others share with you

7 Business Activities G enerate Ideas R aise Capital B uy Goods and Services U se Human Resources M arket Goods and Services P roduce Goods and Services K eep Records

Generating Ideas A business begins with someone’s idea for a good or service that will meet consumers’ needs and wants Companies must continue to be innovative, developing new ideas and products to stay relevant in our economy VS Many firms have research and development personnel who work full time creating, researching, and developing new ideas that hopefully result in new products and services

Raising Capital In order to operate, businesses need capital resources –Start-up money to begin a business From the owner, loans, or personal investors –Capital to grow a business (buy equipment, build new buildings or acquire a new business) Usually through loans or investors (stock)

Buying Goods and Services Companies have to buy goods and services both for resale and for personal use Manufacturers purchase raw materials to produce their products Retailers buy finished products from manufacturers to sell in their stores Retailers buy registers, display cabinets, signs Companies buy advertising space, or cleaning services

Using Human Resources Businesses need people to operate All companies use some sort of system for carrying out activities that attract, employ, and develop human resources –Recruiting or finding workers –Interviewing and testing applicants –Selecting employees –Training and developing new and experienced workers –Evaluating job performances

Marketing Goods and Services Businesses must produce and sell a needed product or service to succeed in the marketplace 5 P’s –Product –Place –Price –Promotion –People Businesses use marketing to increase their effectiveness and the profits they make

Producing Goods and Services Goods and services must be produced on time, at a competitive cost, and at the appropriate quantity and quality in order for the firm to be successful

Keeping Records All business must have some sort of record keeping system Records of –Sales, returns, debts, repairs, rent, salaries Records are important for 1.Determining whether a business is making or losing money 2.Providing information for management decisions 3.Supplying data for government reports (taxes etc.) and investor reports

Exit icket Tweet to An APPROPRIATE acronym for the 7 business activities that all companies perform HW 1-16 chapter 5 pg. 64 Quiz on Thursday