1. Business: A Definition
The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs
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2. The Organized Effort of Individuals
Combining Resources
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3. Classification of Businesses
Manufacturing businesses
Process various materials
Service businesses
Produce services (e.g., haircuts, legal advice, tax preparation)
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4. Classification of Businesses
Marketing intermediaries
Buy products from manufacturers and resell
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5. Satisfying Needs
People buy goods and services not just to own them, but to satisfy particular needs
Businesses that understand customer needs, and work to satisfy those needs, are usually successful
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6. The Relationship Between Sales Revenue and Profit
Profit is what remains after all business expenses have been deducted from sales revenue. A loss (negative profit) results when a firm’s expenses are greater than its revenues.
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7. Business Profit The purposes of profit Stakeholders
To reward business owners for producing goods and services consumers want
As payment for business owners assuming the risks of ownership
Stakeholders
All of the different people or groups or people who are affected by the policies and decisions made by an organization
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