Goals of 6.2 Differentiate the six types of businesses. Describe the five functions of business. Discuss how the five functions of business relate to each other.

Types and Functions of Businesses Types of Businesses Functions of Businesses Producers Processors Manufactures Intermediaries and Wholesalers Retailers and Service Businesses Production and Procurement Marketing Management Finance and Accounting

Types of Businesses - Producers A producer may be found in industries such as agriculture, mining, fishing, or forestry. producer a business that gathers raw goods. Raw goods are materials gathered from their original state from natural resources.

Types of Businesses - Processor A processor may, for example, turn crude oil into gasoline. Processed goods are made from raw goods that require further processing. processor a business that changes raw materials into more finished products

Types of Businesses - Manufacturers Cars, CDs, and computers are examples of goods that are made by a manufacturer. manufacturer a business that makes finished products out of processed goods

Types of Businesses - Intermediaries An intermediary buys goods, stores them, and then resells them. intermediary a business that moves goods from one business to another

Types of Businesses - Wholesalers A wholesaler of clothing may buy thousands of jackets from several manufacturers, divide the large quantities into smaller ones, and sell them to retailers. wholesaler a business that moves large amounts of goods from one business to another Is a type of an intermediary.

Types of Businesses - Retailers A grocery store is an example of a retailer. retailer a business that purchases goods from a wholesaler and sells them to consumers, the final buyers of the goods

Types of Businesses – Service Service businesses perform tasks rather than provide goods. Some service businesses meet needs such as medical clinics and law firms. Others provide conveniences such as taxi companies, nail salons. Service businesses employ about three-quarters of the workforce and are rapidly increasing in numbers.

Functions of Business The five main functions of business that are involved in the operation of ALL types of businesses are: Production and procurement Marketing Management Finance Accounting

Functions of Business: Production and Procurement Production and procurement are closely related functions of business. Retailers procure goods from producers for resale. Wholesalers buy goods from producers to resell to retailers and other wholesalers. production the process of creating, expanding, manufacturing, or improving goods and services procurement the buying and reselling of goods and services that have already been produced

Functions of Business: Marketing Marketing involves getting consumers to buy a product or service. Marketers make decisions based on market research of trends and consumer habits. marketing the process of planning, pricing, promoting, selling, and distributing ideas, goods, and services

To Advertise or Not Advertising is used to influence consumers to buy one product or service over another.

Functions of Business: Management Management is an important function of business. management the process of achieving company goals by planning, organizing, directing, controlling, and evaluating the effective use of resources

Functions of Business: Finance Finance requires analyzing financial statements to make future decisions. finance the business or art of money management

Functions of Business: Accounting Accounting requires attention to detail and accuracy. accounting maintaining and checking records, handling bills, and preparing financial reports for a business

How the Functions of Business Are Interdependent The functional areas of a business depend on each other. Sometimes, the functional areas of a business conflict with each other.

Example of How Functional Areas Depend on Each Other A furniture maker’s sales are decreasing. The accounting and finance department notice decreasing sales. If the furniture is too highly priced, more efficient procedures will have to be implemented. A new marketing plan is created. The accounting and finance department will monitor the effects of new marketing efforts.

Example of How Functional Areas Conflict with Each Other Management wants to increase sales by 20 percent within three years. The production department suggests improving quality. The marketing department requests more funds for projects. Accounting says there is not enough money for either plan. The final plan involves ideas from all the functions of business.

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