Objective 1.01 Understand the purpose and the functions of business 1.01 Purpose and Functions of Business Objective 1.01 Understand the purpose and the functions of business

Purpose of Business Businesses fulfill the needs and wants of consumers. Consumers use goods and services Customers purchase goods and services Businesses sell goods, services or both to consumers Goods—clothing, cars, computers, CDs Services—hairdresser, dry cleaner, lawn care, babysitting

Motivation to start a business Profit motive—desire to make money; see the opportunity to make money in the marketplace. Opportunity to meet wants and needs of consumers Opportunity to increase competition in the marketplace Businesses are investment opportunities for individuals—future income

Functions of Business Accounting—recording and reporting financial activity and transactions Examples Paying bills Collecting money from customers Paying taxes Preparing employee payroll checks Reconciling bank statements Investing cash Purchasing inventory

Functions of Business Management Makes sure that the entire organization meets its goals and obligations Effectively works with people in the organization Uses available resources to accomplish the organizations’ goals

Functions of Business Marketing Process of promoting and presenting a product or service to customers Based on four “P’s” Product – what you are selling (whether it is a good or service) Price (establishing the price of the product) Placement (placing the product in attractive and convenient sales locations) Promotion (advertising, public relations, demonstrations, events, etc.)

Functions of Business Information Technology Uses technology to share knowledge, facts, and data to others (co-workers, customers, and suppliers) Examples Maintains e-mail accounts Maintains software applications Maintains processing systems Maintains hardware for all technology used

Functions of Business Operations Considered the “back office” Involves behind the scenes paperwork required to complete all transactions Found in both the service and the manufacturing sector

Functions of Business Human Resources Manages “people” relations within the company Helps workers develop the skills and knowledge needed to be successful on the job Responsible for hiring and firing of employees Selects employee benefits and enrolls all employees in the benefits (insurance, retirement, etc.) Helps employees pursue educational opportunities

Needs vs. Wants Needs – things that are necessary for survival (e.g. water) *the way in which you fulfill your need may be a want Want – a luxury item that is not needed for survival (e.g. jewelry) *depending on factors such as culture, location, job, etc.; certain things that some people consider wants may be needs to other people (e.g. tractor)

Product Business vs. Service Business Product Business – a business whose primary purpose is to sell goods (e.g. Old Navy) Service Business – a business that is organized primarily for the purpose of providing a service (e.g. Delta Airlines) Combination Businesses – businesses where the crux of the business is to both sell products and perform services (Arnold Palmer Cadillac)