1.1 Nature of Business

 What is a Business? Any organization that uses resources to produce a good or service.  What is added-value? Changing or altering a natural resource or a semi-finished good to make it more desirable.

 What do businesses do? Businesses identify needs of consumers then purchase resources (or inputs) to produce outputs.  Making Profit? Usually business aims to make money.

 Land (& natural resources)  Fields for factories/ energy for power  Labor  Employees needed to run machines, sell, etc.  Capital  Plant/machinery/computers, $  Enterprise/Entrepreneurship  People to invest/manage/innovate/take risks These are also referred to as “Factors of Production”

Goods and Services that satisfy the needs and wants of customers.  “goods” something tangible—touchable  “service” usually intangible—people do things for you

Consumer Goods Consumer goods are sold to general public.Consumer goods are sold to general public. Can be Durable or Non-durable. Durable Good Consumer goods that can be used over time, repeatedly. Examples of: Televisions, T-shirt, books, cars Non-Durable Good Consumer goods that can only be used once.Consumer goods that can only be used once. Examples of: Food, drinks, and candy

Capital Good Goods used by industry to produce other goods and servicesGoods used by industry to produce other goods and services Examples of: machinery, cranes, dump trucks Consumer Service Non-tangible product that sold to the consumerNon-tangible product that sold to the consumer Examples of: hotel rooms, airplane ticket, insurance

Business Functions (Departments)  Marketing  Finance  Human Resource Management  Operations Management

Marketing  Identifies consumer wants based on market research  Product/Price/Place/Promotion plus 3 more…  How and where to promote  How to sell and distribute

Finance  Flow of money in and out of business  Provides financial information to management  Key division to all companies

Human Resource Management  Identifies workforce needs of business  Recruits potential employees  Selects and trains staff  Motivational systems to retain staff and encourage productivity  Employment contracts  Redundancy and redeployment of staff

Operations Management  Insures resources are available for production  Maintains production levels  Maintains quality levels  Oversees production efficiency

Interrelationship  All four business functions must work together!

Sectors of Industry  Primary Sector – deal with natural resources  Farming, fishing, natural resource extraction  Secondary Sector – deal with manufacturing and processing  Assembly, baking, clothing, construction  Tertiary Sector – provide services  Retailing, transportation, insurance, banking, tourism, telecommunications AND Quarternary Sector-IT