Business in Our Economy Chapter Five Introduction to Business

Four Kinds of Business  Extractors  Manufacturers  Marketers  Service businesses

Manufacturer  Takes the extractor’s products or raw materials and changes them into a form that consumers can use.

Marketer  A business that moves goods from producers to consumers. These activities are called marketing.  Includes transporting, selling, development and testing of new products, packaging, and store displays.

Service Businesses  A business that does things for you instead of making or marketing products.  Service businesses are the fastest growing part of our business world.  By out of 4 workers will work for a service business.

Extractors  A business that grows products or takes raw materials from nature.  Most food products and raw materials need some processing before the consumer can use them.

Three Types of Manufacturing  Custom manufacturing—building a specific and unique product to meet the needs of one customer.  Mass production—a large number of identical products are assembled using a continuous, efficient procedure. The standard in U.S. manufacturing for almost a century. (Henry Ford)  Processing– changes the form of materials so they can be consume or used to manufacture other products. Ex. Turning crude oil into gasoline.

Seven Business Activities  Generating Ideas  Raising Capital  Buying Goods and Services  Using Human Resources  Marketing Goods and Services  Producing Goods and Services  Keeping Records

Generating Ideas  The first step in a business is thinking of a product or service.  The product or service must meet consumers’ needs or wants.  New ideas must be generated in order to survive.

Raising Capital  Businesses need capital (money) to operate.  Start-up money must be found to start a business.  Examples: Owner’s personal funds, loans from banks, or investors.  Existing businesses must continue to raise money.

Buying Goods and Services  Businesses buy goods and services for resale and their own use.  Examples: products for resale, supplies,equipment, and advertising space.

Using Human Resources  Businesses cannot operate without people.  Businesses must recruit, interview, test, train, and perform job appraisals.  Some businesses have human resource departments to perform the above functions.

Marketing Goods and Services  Many marketing activities are done before the product is produced—design and development, and market research.  Getting the word out to consumers about the product.

Producing Goods and Services  You must make the product or perform the service.  Must be produced at the scheduled time, in the correct quantity and quality.  You “do” the business.

Keeping Records  All businesses must keep records.  Many use computers to keep records.  Businesses must keep records because  To determine if a profit or loss has been made.  Provide information to management.  Supply data and information to the government for taxes and other requirements.

The Impact of New Businesses on a Community  Provide jobs--Pays wages to its employees who spend the money in the community— the spending chain.  Pay taxes—support local government, schools, and police services.  Make purchases of goods in the community.  Attract other businesses—when one business settles into a community other businesses often come to support it.