Chapter 2: Business Basics Unit 1: Marketing Basics Chapter 2: Business Basics Ch2

Learning Goals Differentiate between economic needs and wants Describe the three uses of money Explain how a business makes a profit Describe the three forms of business ownership Describe the difference between a for-profit corporation and a not-for-profit organization Identify the four functions of business and give an example of each Ch2

Day 1 Response Journal What do you NEED to be able to live? Create a list. ***Save As Feb 9 in your Response Journal Folder*** Ch2

Economic Needs and Wants A _________ is something that is necessary for survival E.g. air, water, food, clothing and shelter Includes things you need to function in society E.g. you need schoolbooks, school clothes (uniform) and transportation to and from school A __________ is something you desire, but could function without Examples??? Need Want Ch2

Economic Needs and Wants Everyone has needs and wants Some cannot be satisfied by buying something E.g. you cannot buy friendship Needs and wants that you can satisfy by buying something are called ____________________________ _______________________________ are the items you buy to satisfy economic needs and wants Economic Needs & Wants Economic Goods & Services Ch2

The Exchange Read the example on page 19 paragraph 6 To _____________ is to trade something of vales for something you want You may exchange money for a; Soft drink (a good) A concert ticket (a service) A cause – donate to a local animal shelter (an idea) Exchanges are the basis of all business Exchange Ch2

Money ____________ is a consistent item that people accept in exchange for goods or work Without money, modern business could not exist Money is used in three ways; As a medium of exchange As a unit of value As a store of wealth Money Ch2

1. Medium of Exchange Read the example on page 21 paragraph 2 Money is a convenient medium of exchange Paper money and coins are easy to carry Ch2

2. Unit of Value Money can express the exact ________ of an item Value Value is how much something is worth The dollar is the unit of value in Canada The dollar is used to express the value of goods and services the same way km are used to express distance The value of a product expressed in dollars is the __________ Marketers use price to set the value of a product Value Price Ch2

3. Store of Wealth Money is easy to __________ Store It enables you to keep and store wealth in a compact, easy, long-lasting form Money is considered a store of wealth because it enables you store (in other words save) money until you need it Store Ch2

What Is Business? _______________ is the general term for activities involved in the development and exchange of products The term business also refers to a person or group of people who are involved in the development and exchange of products A business can be large (e.g. General Motors) or small (e.g. a lemonade stand) Business Ch2

What Is Business? Other terms that are often used to refer to a business include; Firm Company Organization Corporation Enterprise Ch2

What Is Business? Business is the engine that powers economies around the world Money flows; From businesses to workers From the workers back to the businesses Business provides; Goods and services you use every day Wages (money) people use to buy goods and services Ch2

What Is Business? Ch2

Making a Profit The main goal of most businesses is to make a __________ Profit is the money that a business has left over after all the expenses and costs of running the business are paid A business makes a profit by marketing products that customers want and are able and willing to buy Customers want and are willing to buy products that meet their needs Therefore, businesses make a profit by satisfying the needs and wants of their customers Profit Ch2

Making a Profit $ $ $ = - Costs and Expenses Sales Profit Ch2

Day 1 Assigned Work Students please complete the following; K & U Questions #1 & 2 on page 27 Thinking Question #1 on page 27 Application Questions #1 on page 28 Ch2

Day 2 Response Journal What do you think are the advantages and disadvantages of owning your own business? Create a list for each. ***Save As Feb 10 in your Response Journal Folder*** Ch2

Forms of Business Ownership There are 3 main forms of business ownership; Sole Proprietorship Partnership Corporation Ch2

Forms of Business Ownership A sole proprietorship is a business owned by ________ person who Gets all profits Bears all risks E.g. Dr. Stephan Morrison, Dentist A partnership is a business owned by a small number of people, usually ______ or ________ Partners share profits and risks E.g. Dueck, Sauer, Jutzi & Noll Law Firm One Two Three Ch2

What Is a Corporation? A _______________ is a legal entity established for the purpose of do business Exists separately from the people who own it Therefore, the owners are not responsible for the actions of a corporation Owned by shareholders/stockholders A ________ or ________ is the right to partial ownership in a corporation The corporation sells stock, and the people who buy the stock become the owners of the corporation Examples; Ford, Microsoft and Rogers Corporation Share Stock Ch2

What Is a Corporation? As a legal entity, a corporation can; Buy property Manufacture products Earn money Lose money Sue Be sued A corporation offers __________________ to its shareholders. Therefore … When sued, the corporation pays the damages, the shareholders (owners) do not pay Limited Liability Ch2

For Profit or Not-for-Profit? In general, there are two types of business organizations; For-Profit Goal of a for-profit corporation is to make a profit for its owners It is assumed that a business is for profit, unless otherwise stated Not-for-Profit Goal of a not-for-profit is to benefit society Ch2

What Is a Not-for-Profit Organization? Is a legal entity Is established to provide a benefit to society Can make a profit However, any profit made must be reinvested in the organization to support its cause or benefit Also called non-profit organizations Ch2

What Is a Not-for-Profit Organization? Examples of benefits or causes that many Not-for-Profits support include; Raising money for medical research E.g. Canadian Cancer Society Protecting the environment E.g. World Wildlife Fund Providing services to children in need E.g. Ronald McDonald House Charities Canada Ch2

The Functions of Business ___________ is a general term for a category of activities Businesses carry out numerous activities every day These activities are grouped into 4 functions; Production Making products Finance Handling money Marketing Focusing on customers Management Planning, coordinating, monitoring Function Ch2

Production Production is any activity related to the __________ of a product (good, service or idea) Typically, when we think of production we think of factories and assembly lines of people putting together cars, TVs, etc. However, production also includes; Farming Mining Construction Manufacturing For services, production is often the service itself, for example, cutting and styling someone’s hair Making Ch2

Finance The finance function of business includes all activities involving ____________ Finance involves; Planning Developing a budget; a spending plan Loan repayment Accounting Paying bills Receiving payments Keeping track of all money that enters or leaves the business Money Ch2

Marketing Marketing helps the entire business focus on the needs and wants of the customer Marketing includes; Learning about customers (research) Pricing Promotion (includes advertising) Selling Ch2

Management Planning Coordinating Monitoring Supervising Management includes all activities required to plan, lead, organize and control a business Read the example in paragraph 3 on page 26 Managers look at the big picture and lead workers in a direction that makes the business better Management activities include; Planning Coordinating Monitoring Supervising Ch2

Day 2 Assigned Work Students please complete the following; K & U Question #8 on page 27 Thinking Questions #4 - 7 on page 27 Communication Question #1 on page 28 Ch2