1. Business in the Free Enterprise Introduction to Business & Marketing

2. Business in the Private Sector I CAN... Describe three general types of business in the private sector Define the North American Industry Classification System (NAICS) Identify three types of customers businesses serve

3. Types of Businesses For-profit business Generates revenue Sole purposes—be productive and generate money for its owners Not-for-profit organization Exists to serve some public purpose Money used to support a cause

4. Public Sector or Private Sector Governmental organizations are part of the public sector. (Purpose is to serve) – Schools, Military, IRS Private sector consists of all other organizations that provide goods and services – Producers – Intermediaries – Service businesses

5. Businesses in the Private Sector ProducersIntermediariesService Business Organic farmer Logging contractor Automobile manufacturer New car dealership Floral supply wholesaler Grocery store Tax accounting firm Beauty salon Currency exchange

6. Producers Businesses that create goods and services They create products that can be used by individuals, businesses, and government. Extractors (businesses or people that take natural resources from the land) are an example of producers Extractors sell natural resources (raw materials) to manufacturers

7. Producers Manufacturers are businesses that use supplies from other producers to make products. Generally use assembly lines to mass produce identical products Farmers are a type of producer

8. Intermediaries (people and businesses that sell goods and services to customers) Wholesalers A business that purchases large quantities of products directly from producers and sells in smaller quantities to retailers Often called distributors Retailers Businesses that buy products from wholesalers or directly from producers, and sell to consumers to make a profit Consumers are also called end users

9. Service Businesses Earns profits by providing consumers with services that meet their needs and wants Don’t sell products Perform activities and provide expertise for their customers 70% of all nonfarm jobs are in service industries

10. Apply Your Knowledge (You Do) Row 1 Make a list of four natural resources Give examples of products that are created from each resource What role do producers, intermediaries, and service businesses play in creating the products you listed?

11. Apply Your Knowledge (You Do) Row 2 Create a chart listing ten businesses in your community. Identify which businesses are for-profit and which are not-for-profit. For each business, indicate if it is part of the public sector or the private sector.

12. Apply Your Knowledge (You Do) Row 3 Identify an example of a non-profit organization with which you are familiar. What services does this organization provide? How does this organization raise funds?

13. North American Industry Classification System (NAICS) Businesses are classified by industry (group of businesses that produce the same type of goods or services) A numeric system used to classify businesses and collect economic statistics Developed by US, Canada, and Mexican governments for trade purposes

14. NAICS Classification Codes

15. Types of Customers Consumer market Business market Government institutions Customers Business-to- Consumer (B2C) Business-to- Business (B2B) Government and Institutions

16. Consumer Market Consists of customers who buy products for their own use Business that sell primarily to individual consumers are in the business-to-consumer (B2C) market

17. Business Market Consists of customers who buy products for use in a business Businesses that sell primarily to other businesses are in the business-to-business (B2B) market

18. Government and Institutions Government market includes national, state, and local governmental offices and agencies Institutions are nonprofit organizations

19. Section 4.1 Review (You Do, We Do) 1.List three major types of business in the private sector. 2.What is the difference between businesses in the public and private sectors? 3.Name two examples of intermediary businesses. 4.Which countries collaborated to develop NAICS? 5.Identify the three categories of customers businesses serve.

20. Guess That Term! 1.For-profit business 2.Not-for-profit business 3.Producer 4.Extractor 5.Manufacturer 6.Intermediary 7.Wholesaler 8.Retailer

21. Guess That Term! 1.Service business 2.North American Industry Classification System (NAICS) 3.Consumer market 4.Business-to-consumer (B2C) 5.Business market 6.Business-to-business (B2B) 7.Government market 8.institution

22. Word Studies Proprietorship Liability Partnership Corporation Stock Dividend Board of directors S Corporation Limited liability company (LLC) Cooperative Some of these words should be in your binder. If so, attach. If not, start from scratch.

23. Forms of Business Ownership Proprietorship Partnership Corporation

24. Partnership Agreement Includes... Date of the agreement Names of the partners Name and location of the business Nature of the business activity Duties of each partner Investment of each partner Division of profit and losses Plan for dissolving the partnership Signatures of the partners

25. Advantages of Corporations Limited liability Ability to raise capital Continued life Transferring ownership Professional management

26. Disadvantages of Corporations Expensive to form Many governmental regulations Double taxation

27. Alternative Forms of Ownership S Corporations Limited Liability Companies Cooperatives

28. Check Your Understanding (You Do, We Do) 1.Identify the three basic forms of business ownership. 2.What is unlimited liability? 3.List five details commonly found on a partnership agreement. 4.What are some disadvantages of the corporation form of business ownership? 5.List three alternative forms of business ownership.

29. Apply Your Knowledge (They Do) Compare the forms of business ownership discussed in this chapter What characteristics do they have in common? How are the ownership structures different? Create a chart that compares the features of the forms of business ownership.

30. Apply Your Knowledge (You Do) A group of students plans to start a delivery service. Which business ownership structure should they choose? Consider the size of the business, the type of business activities performed, and the number of owners. Write a paper explaining your answer.

31. Chapter Test Questions (You Do) Type questions and response(s) 1.Describe three general types of business in the private sector. 2.Describe the role of service businesses. Give an example of a service business. 3.What is the purpose of the North American Industry Classification System? 4.Explain the difference between the consumer market and the business market. 5.Describe the three basic forms of business ownership. 6.What are some advantages and disadvantages of a proprietorship? 7.Explain the difference between a general partnership and a limited partnership. 8.Describe how corporations are established. 9.What are common guidelines that apply to naming an LLC business? 10.Explain how the participation of members impacts the effectiveness of a co-op.