BUSINESS MANAGEMENT PAVONE CHAPTER 1, LESSON 1 THE NATURE OF BUSINESS

NATURE OF BUSINESS ACTIVITIES Business – An organization that produces or distributes a good or service for profit. Profit is defined as the difference between earned income and costs. Businesses engage in at least one of three major activities: Production Marketing Finance

NATURE OF BUSINESS ACTIVITIES Production – Making a product or providing a service. Typically, manufacturing firms are most notable as being production companies. These firms create products or services that consumers or other businesses purchase to satisfy needs. Some examples of production companies are: Agricultural companies (food, farming, etc.) Producers of raw materials (steels, metals, etc.)

NATURE OF BUSINESS ACTIVITIES Marketing – Activities between businesses and customers involved in buying and selling goods and services. Marketing can also include advertising goods and services. Different channels of marketing/advertising serve different purposes; some of these include: Test marketing, for businesses to test a good or service on the general public. Promotional marketing, for businesses to advertise their product to the general public. Direct marketing, in which businesses sell directly to consumers.

NATURE OF BUSINESS ACTIVITIES Finance – Deals with all of the money matters involved in running a business. Different areas of finance can include: Accounting Banking Investing Allocation

TYPES OF BUSINESSES It is important to understand that, like there being different activities that a business engages in, there are also major different types of businesses. There are three major types of businesses: Industrial Business Commercial Business Service Business

NATURE OF BUSINESS ACTIVITIES Industrial Businesses– Produce goods used by other businesses or organizations to make things. Some examples of industrial businesses are: Mining companies Refining companies Construction companies Manufacturing companies Farms or agricultural companies.

NATURE OF BUSINESS ACTIVITIES Commercial Businesses - Engage in marketing, finance and providing services as primary business activities. Some examples of commercial businesses are: Wholesalers and retailers (marketing) Banks and investment companies (finance) Medical offices Fitness centers Hotels Restaurants

NATURE OF BUSINESS ACTIVITIES Service Businesses – Type of commercial business that uses mostly labor to offer mostly intangible products to satisfy consumer needs. Some examples of service businesses are: Landscaping companies Child or elder care services Repair services Beauty services (salons, spas, etc.)

NATURE OF BUSINESS ACTIVITIES Industry – Refers to all businesses within a category doing similar work. Examples of industries that categorize themselves as a grouped industry would be: Publishing industry – businesses that deal with producing or selling books, magazines, newspapers, etc. Automotive industry – manufacturers of cars, trucks, etc. Government industry – provides fire and police protection, schools, libraries, etc.

1. An organization that produces or distributes goods or services for a profit is a. a producer b. a manufacturer c. a business d. an industry

2. A lawn-mowing business is an example of a. a service business b. an industrial business c. a manufacturing business d. a marketing business

3. Why are service businesses growing faster than other types of businesses in the United States?

4. How do commercial businesses support the work of industrial business?

ANY QUESTIONS???