Introduction to Economics Johnstown High School Mr. Cox Business Operations

What is Business A business is usually defined as a commercial enterprise Some are run by only one person who carry out all of the required functions Others employ thousands of people and provide goods and services to people all over the world Each business can be defined or described by its type of ownership, the goods produced or services offered, the types of jobs provided, or the functions it performs in a community

What do Businesses do? Businesses are started by entrepreneurs who see a need, recognize the opportunity, and go into business to meet that need Business and people need each other – there are many stakeholders – we depend on businesses for products and services, but also for employment Buy inputs – raw materials, labour, machinery and equipment, and land Produce outputs – goods and services Focus on efficient use of resources Generate profit/surplus

What Businesses Do  Who are the stakeholders? – Anyone who has an interest in the success of a business Customers Managers Employees Owners Local Community/Environment Suppliers Government Creditors

What Businesses Do Take InputsProcess/ManufactureOutput Costs – Fixed and VariableRevenue Profit

Business Operations Different Operations within Businesses Marketing –advertising Human Resources – employee services Management – Business operations, production efficiency Accounting and Finance – cash flow (expenditures and revenues) Customer Service – quality assurance for good/service

Industry A group of businesses that all produce similar products is called an industry Example: Automobile manufacturers and automobile parts is the Automobile Industry Separated into three categories – primary, secondary, and tertiary

Industry Those involved in the first stage of development of products Harvest natural resources that are later used to manufacture products Mining, fishing, agriculture, forestry, and oil and gas extraction are all primary industries Large amounts of money is needed for research, equipment and machinery Automation reduces the need for labour Primary Industry

Industry Manufacture raw materials into finished products Gold and silver ores are refined and made into jewellery Crude oil is refined into machine oil, gasoline, and plastics Wheat is milled into flour and baked into breads and cookies Technology innovations has led to automation with computer assisted design Production is increasing using fewer workers Secondary Industry

Industry Provide services to consumers and other businesses Often involves selling or using products produced by secondary industries Tertiary industries are rapidly expanding creating job opportunities in service occupations Due to advances in technology (including electronics, communications, and computer science and aerospace), an aging population, busy consumers with less free time, and consumer demand for higher quality services Tertiary Industry

Other Types of Businesses Corporation - Firm that meets certain legal requirements to be recognized as having a legal existence, as an entity separate and distinct from its owners and possessing rights similar to citizens LLC (Limited Liability Company) - a private limited company. Combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation

Monopoly – a corporation that dominates the market for a particular good or service Natural Monopoly - Situation where one firm can supply a market's entire demand for a good or service at a price lower than two or more firms can. Electricity providers, cable companies, etc Ways Monopolies control the market Patents – Limited legal monopoly granted to an individual or firm to make, use, and sell its invention, and to exclude others from doing so. Trademarks – Distinctive design, graphics, logo, symbols, words, or any combination thereof that uniquely identifies a firm and/or its goods or services, guarantees the item's genuineness, and gives it owner the legal rights to prevent the trademark's unauthorized use. Copyrights - Legal monopoly that protects published or unpublished original work from unauthorized duplication without due credit and compensation.

Cartel – Group of firms or nations who attempt to control price or supply of a commodity (such as oil) through mutual restraint on production. (OPEC) Organization of Petroleum Exporting Countries Trust - Commercial organization managed by appointed trustees (who hold the title to the business' property) for the benefit of one or more beneficiaries.

Business Cycle The fluctuations in economic activity that an economy experiences over a period of time. Expansion/Recovery – Period of economic growth Boom/Peak – The highest point between the end of an economic expansion and the start of a contraction Recession/Contraction – Period of economic decline Depression – Prolonged period of poor economic performance

Indicators of Cyclical Activity (Business Cycle Indicators – BCI) Leading indicators consistently turn before the economy does. New claims for unemployment insurance Value of new orders for consumer goods Coincident indicators turn in step with the economy and track the business cycle's progress. Personal income Manufacturing and trade sales Lagging indicators turn after the economy turns, and play a confirming role. unemployment corporate profits labor cost per unit of output

Labor Unions Began early in early 20 th century Triangle Shirtwaist fire – brought need for safety in the workplace to national attention Led to discussion of collective bargaining Negotiations between employers and unions for working conditions. Includes sick days, healthcare, safety, holiday time, etc. Strength in numbers Workers united in solidarity, strikes cause great harm to businesses

Unions Cont’d National Labor Relations Act (NLRA) “Congress enacted the National Labor Relations Act ("NLRA") in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.” – US Government Works to safeguard employee’s rights Established a board (NLRB) “with the power to safeguard employees' rights to organize and to determine whether to have unions as their bargaining representative. The agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions.” Board of elected representatives that enforce NLRA

Taylor Law – Section of the Public Employees’ Fair Employment Act in NYS grants public employees the right to organize and to be represented by employee organizations of their own choice; requires public employers to negotiate and enter into agreements with public employee organizations regarding their employees' terms and conditions of employment; establishes impasse procedures for the resolution of collective bargaining disputes; defines and prohibits improper practices by public employers and public employee organizations; prohibits strikes by public employees; and establishes a state agency to administer the Law — The Public Employment Relations Board (PERB). Triborough Amendment - prohibits a public employer from altering any provision of an expired labor agreement until a new agreement is reached. Lilly Ledbetter Act – federal law that worked to close the wage gap between men and women, especially those of color Right to Work bills – limit the power of unions and employers to force union membership