1. Principles of Business, Marketing, and Finance
Producers in a Private Enterprise System
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Basic Economic Problem
Scarcity
Unlimited wants and needs
Limited resources
Choices must be made
Explain how all individuals and societies face scarcity. The free enterprise system must make decisions about what will be produced with limited resources.
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3. Questions Economies Must Answer
What goods and services will be produced?
How will they be produced?
For whom will they be produced?
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Economic Systems
Controlled Economy
Mixed Economy
Market Economy
Controlled economy-government answers the three economic questions. Free economy (market economy)-resources are owned by individuals rather than the government. Mixed economy-decisions are made independently with no attempt at government regulation or control
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5. America’s Private Enterprise System
Based on independent decisions by businesses and consumers with only a limited government role regulating those relationships
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6. America’s Private Enterprise System
Characteristics of Private Enterprise
resources of production are owned and controlled by individual producers
Producers use the profit motive to decide what to produce-use of resources to obtain the greatest profit
Individual consumers make decisions about what will be purchased to satisfy needs
Consumers use value in deciding what to consume
Government stays out of exchange activities between producers and consumers unless it is clear that individuals or society are harmed by the decision
Producers must listen to consumer demands to stay in business.
The free enterprise system does not want a lot of government involvement.
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Consumers
Explain how consumers and their buying behavior decide what is produced in a free enterprise system.
Individuals who purchase products and services to satisfy needs
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Demand
a relationship between the quantity of a product consumers are willing and able to purchase and the price
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Producers
businesses that use their resources to develop products and services to consumers for profit
Supply-relationship between the quantity of a product that producers are willing and able to provide and the price
Determine the needs and demands of consumers
Producers must decide how they will use their limited resources. A farmer must determine which crops to grow, car manufacturers must determine the quantity of different types of automobiles to produce.
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Government
least amount of involvement in free enterprise system
some regulations
use taxes for services
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11. Business Customer Classifications
Producers-1.2 million businesses
farms and ranches
mining companies
oil refineries
manufacturers of business and consumer products
construction-largest production category-over 700,000 companies
small-less than $10,000 a year on purchases
large-employ several hundred thousand people worldwide and may easily spend $10 million in one day on purchases
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Business Customer Classifications
Resellers
Service Businesses
Government
Non-Profit Organizations
Resellers-wholesale and retail businesses who connect producers with consumers. Service Businesses-growing faster than any category of business in the U.S. Government-federal, state and local government agencies provide services to citizens and develop and enforce laws and regulations. Nonprofit Organizations-serve the community with no profit motive.
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Forms of Production
Extraction and cultivation
-products are obtained from nature or grown using natural resources
Processing
-changing and improving the form of another product
Manufacturing
-combines raw materials and processed goods into finished product
Ask students to give examples of producer involved with extraction and cultivation.  Ask students what processes are required to produce a pair of cotton jeans. Explain the variety of producers used in the process. Explain how large home builders construct tract homes which use a mass production concept and how custom builders design a different home for each customer. Then explain why the custom process is more expensive than the mass production process.
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14. Manufacturing Process
Several manufacturers are part of the total activity needed to produce goods that are purchased by consumers or other businesses.
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15. Types of Manufacturing Procedures
Mass Production
-assembly process that makes a large number of identical products using a continuous, efficient procedure
Ex: Cars
Custom Manufacturing
-building a specific and unique product to meet the needs of one customer
Ex: Nike ID Shoes
Materials Processing
-changing the form of raw materials so they can be consumed or used to make other products
Ex: Finished Steel
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Where Was It Produced?
Select an finished product of your choice and produce a PowerPoint explaining the production of that item.
It must include:
The name of the product, the company that produces it and where company is located.
Research to determine the major raw materials and natural resources that are used in the production of the product.
The country or countries that are the major sources of the production or supply of those materials.
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