©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Characteristics of Business The Nature of Business Changes Affecting Business The Contributions of Business CHAPTER 6

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Nature of Business GOALS ● Explain the nature of business activities. ● Describe the general types of businesses. CHAPTER 6 2

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e What is a Business? ● An organization that produces or distributes a good or service to meet the needs and wants for profit CHAPTER 6 3

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Management of Business Activities ● Production ● Marketing ● Finance CHAPTER 6 4

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Activities ● Production – any and all activities involved with obtaining, producing or providing a good or a service. CHAPTER 6 5

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Activities ● Marketing – how goods and services are exchanged between the producers and the consumers ● Sales ● Advertising ● Customer service CHAPTER 6 6

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Marketing – 4 P’s ● Product – all attributes, both tangible and intangible, that customers receive in exchange for the purchase price CHAPTER 6 7

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Marketing – 4 P’s ● Price – the amount of money given to acquire a product. It must cover costs of producing and marketing and enable the business to make a profit CHAPTER 6 8

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Marketing – 4 P’s ● Place (distribution) – the set of activities required to transport, store and display product and make them available to the customers CHAPTER 6 9

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Marketing – 4 P’s ● Promotion – providing information to consumers that will assist them in making a decision and persuade them to purchase a product or service CHAPTER 6 10

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Activities ● Finance – responsible for all money matters for a business including: ● Balance sheet ● Income statement ● Liquidation statement CHAPTER 6 11

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e What do we mean by Profit? ● Revenue – income earned, such as from sale of goods and services ● Cost of goods sold – the cost to produce the product or buy it for resale ● Operating Costs – the costs of operating a business (rent, utilities, salaries, insurance) CHAPTER 6 12

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e What do we mean by Profit? ● Gross Profit – subtract the cost of goods sold from the revenue ● Net Profit – subtract operating expenses from gross profit CHAPTER 6 13

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Calculating Profit Revenue - Cost of Goods Sold Gross Profit -Operating Costs Net Profit CHAPTER 6 14

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Activities ● Human Resources – all activities involved with acquiring, developing and compensating the people who do the company work ● Very small businesses may not have many HR activities CHAPTER 6 15

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Types of Businesses ● Goods-producing businesses (tangible items) ● Service businesses (intangible items) ● Industry (business that do similar work) CHAPTER 6 16

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e ©2013 Cengage Learning. All Rights Reserved. Expected Employment in Major Industries by CHAPTER 6

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Changes Affecting Business GOALS ● Describe how innovations affect businesses. ● Identify the impact global competition has had on U.S. businesses. ● Discuss ways in which businesses can improve their business practices. CHAPTER 6 18

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Innovation’s Impact on Management ● Innovation—something entirely new ● Effects of innovation CHAPTER 6 19

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Impact of Global Competition on Business Management ● Global competition—the ability of businesses from one country to compete with similar businesses in other countries CHAPTER 6 20

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Focusing Management on the Right Things ● Achieving effectiveness ● Achieving efficiency ● Specialization ● Technology and innovation ● Reorganization of work CHAPTER 6 21

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e The Contributions of Business GOALS ● Identify two ways a nation measures its economic growth and prosperity. ● Describe the benefits of business ownership to the nation and individuals. CHAPTER 6 22

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Growth and Prosperity ● Gross domestic product ● Individual well-being ● GDP must grow at same or greater rate than population to maintain standard of living CHAPTER 6 23

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Ownership ● Popularity of small business ● Entrepreneur – Someone who starts, manages and owns a business ● Growth of franchise business ● Franchise-legal agreement to operate a business under the company’s name and trademark ● Franchisor – the parent company ● Franchisee – the distributor of a franchise product or service CHAPTER 6 24

©2013 Cengage Learning. All Rights Reserved. Business Management, 13e Business Ownership ● Risks of ownership ● Competition ● Prices ● Style changes or new products ● Economic conditions ● Obligations of ownership CHAPTER 6 25