1. Characteristics of Business
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Indicate what you think an industrial business is and a commercial business means.
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Characteristics of Business

2. Chapter 1 Characteristics of Business
©2008 Thomson/South-Western

3. Lesson 1.1 The Nature of Business
Objectives
Explain the nature of business activities.
Describe the general types of businesses.
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Characteristics of Business

4. Characteristics of Business
Business and Profit
Business — an organization that produces or distributes a good or service for profit
Profit — difference between earned income and costs
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5. Characteristics of Business
THE NATURE OF BUSINESS
Business activities – Engages in at least 3
Production: involves making a product or providing a service.
Manufacturing firms create products that customers purchase to satisfy needs, whereas service firms use the skills of employees to offer activities and assistance to satisfy customers needs.
Marketing: includes the activities between business and customers involved in buying and selling goods and services
Finance: deals with all the money matters involved in running a business.
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6. Characteristics of Business
Types of Businesses
Two Major kinds of Businesses
Industrial business: produce goods used by other businesses or organizations to make things.
Ex: companies that mine coal or ore and that extract oil and gas from the earth. (This provides resources for use by other companies and consumers) Farmers and other agricultural producers are also considered industrial businesses because they grow crops and raise livestock needed for the food we eat and used in the manufacture of a variety of products we use every day.
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7. Characteristics of Business
Types of Businesses
Two major kinds of businesses
Industrial businesses
Commercial businesses: are engaged in marketing (wholesalers & retailers), in finance (banks and investment companies), and in providing services (medical offices, fitness centers, and hotels) as their primary business activities.
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8. Type of Commercial Business
Service businesses: a type of commercial business that use mostly labor to offer mostly intangible products to satisfy consumer needs.
What is an intangible product?
What are examples of service businesses?
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9. Characteristics of Business
Industry
Industry is a term often used to refer to all businesses within a category doing similar work.
Ex: publishing industry, automotive industry, and even the government can be considered an industry, because it provides fire and police protection, libraries and schools, and many other services required by the citizens the government serves.
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10. Characteristics of Business
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Characteristics of Business

11. Characteristics of Business
Review Questions
An organization that produces or distributes goods or services for a profit is
A producer
A manufacturer
A business
An industry
Answer: A Business
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Characteristics of Business

12. Characteristics of Business
Review Questions
A lawn-mowing business is an example of
A service business
An industrial business
A manufacturing business
A marketing business
Answer: A service business
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13. Characteristics of Business
Review Questions
How do commercial businesses support the work of industrial businesses?
Commercial businesses use the resources that industrial businesses have mined or extracted from the earth.
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14. Assignment
With a partner, look up four different jobs that you are interested in and determine if they are an industry business or a commercial business (remember a service business is part of commercial businesses). Indicate why it is either commercial or industrial. Also state what ”industry” it is. (Remember that “industry” is a word used to refer businesses that do similar work). After you have completed this indicate other jobs that are in the same industry. Make your work nice and neat please !

15. Objectives/Exit Ticket
Explain the nature of business activities.
Describe the general types of businesses.
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16. Lesson 1.2 Changes Affecting Business
Objectives
Describe how innovations affect businesses.
Identify the impact global competition has had on U.S. businesses.
Discuss ways in which businesses can improve their business practices.
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17. Characteristics of Business
Innovation
Innovation: something entirely new
Innovations affect the kinds of products and services offered for sale by other businesses.
Ex: Clothes used to just be made from natural fibers, such as cotton. Chemical researchers developed synthetic fibers, such as rayon, nylon, and polyester. Now consumers have more choices in clothing and other fabric products.
Innovations also affect business operations.
Ex: Computers help businesses design and manufacture products as well as keep track of billing, inventory, & Customer Info.
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18. Impact of Global Competition on Business
Global competition: the ability of businesses from one country to compete with similar businesses in other countries.
One of the biggest challenges facing American businesses today is competing in the global economy.
Identify two major types of changes that present challenges to business.
U.S. businesses face increased global innovation and competition.
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19. Focusing on the Right Things
Businesses often study their own operations to determine whether they are doing the right things and doing the right things well.
Two terms are used to describe best business practices.
Achieving effectiveness — making the right decisions about products or services to offer and the best ways to produce and deliver them
Achieving efficiency — producing products and services quickly, at low cost, without wasting time and materials
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20. Achieving Effectiveness
Knowing what customers want is critical to business success and to achieving effectiveness.
Since there are so many choices for most products, which have been produced by many businesses, consumers can usually choose among the products offered by both domestic and foreign goods.
Domestic goods: products made by firms in the U.S
Foreign goods: products made by firms in other countries.
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21. Achieving Effectiveness Cont.
Businesses today focus efforts on gathering information from consumers, studying their buying habits, testing new products with prospective customers, and adding new features to existing products.
Customers today are increasingly concerned about the quality of products they buy.
The concept TQM (Total Quality Management) is a commitment to excellence that is accomplished by teamwork and continual improvement of work procedures and products

22. Achieving Efficiency
Not only must firms do the right thing, such as offering high-quality products, but they must also produce their products efficiently.
Efficiency is measured by output– the quantity produced within a given time.
Productivity, on the other hand, refers to producing the largest quantity in the least amount of time by using efficient methods and modern equipment.

23. Characteristics of Business
Achieving Efficiency
Efficiency is achieved in three ways:
Specialization of effort
workers becoming specialized at a certain task, which improves quality while increasing the amount produced
Better technology and innovation
Includes equipment, manufacturing processes, and materials from which products are made.
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24. Characteristics of Business
Achieving Efficiency
Reorganization of work activities
Third and most challenging way to increase efficiency.
Empowerment is letting workers participate in determine how to perform their work tasks and offer ideas on how to improve the work process of the company.
Empowerment dramatically changed the role of the worker.
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25. Characteristics of Business
Questions
Why must companies be concerned about both effectiveness and efficiency?
Customers expect high quality at low cost, and global competition requires both effectiveness and efficiency.
The ability of businesses from one country to compete with similar businesses in other countries is known as
Global competition
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26. Characteristics of Business
Questions Cont.
Which of the following is NOT one of the ways companies can achieve efficiency?
Specialization of effort
Reducing prices charged to customers
Better technology and innovation
Reorganization of all work activities
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27. Characteristics of Business
Assignment
Work on the “Focus On” on page 13
Your answers should be well thought out and in lined with what we have learned so far.
I am looking for certain things while I am reading your answers.
You need to write the question and the your answer nice and neatly underneath it. DO not write sloppy.
This assignment is due at the end of class.
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28. Objectives/Exit Ticket
Describe how innovations affect businesses.
Identify the impact global competition has had on U.S. businesses.
Discuss ways in which businesses can improve their business practices.
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Characteristics of Business

29. Characteristics of Business
BellWork
What factors contribute to business?
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Characteristics of Business

30. Lesson 1.3 The Contributions of Business
Objectives
Identify two ways a nation measures its economic growth and prosperity.
Describe the benefits of business ownership to the nation and individuals.
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31. The Contributions of Business
Business growth and prosperity
The United Stated is a very prosperous nation, which is mostly due to business growth.
Lets take a look at the two ways in which a nation measures its economic wealth and its benefits to citizens.
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32. Gross Domestic Product
Gross domestic product (GDP) (chief measure of a nation’s economic wealth)— total market value of all goods and services produced in a country in a year.
Whenever a products or services are purchased, the total dollar amount is reported to the federal government.
Income that escapes being recorded in the GDP is referred to as the underground economy.
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33. Individual Well-Being
Individual well-being (second measure of a nation’s wealth) — home ownership, consumer products, self-improvement, savings
What does GDP measure?
The total market value of all goods and services produced in a country in a year.
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34. COUNTRIES WITH LARGEST GDPs
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35. The Contributions of Business
Entrepreneurship: someone who starts, manages, and owns a business
Business ownership
Popularity of small businesses
Growth of franchise businesses
Risks of ownership
Obligations of ownership
Intrapreneurship
Studying business principles and management
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36. Popularity of Small Businesses
Small business is a term used to describe companies that are operated by one or few individuals.
Considered the largest amount of businesses being operated in the U.S.
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37. Growth of Franchise Business
A popular way to launch a small business
Franchise: a legal agreement in which an individual or small group of investors purchases the right to sell a company’s product or service under the company’s name and trademark.
Two parties to a franchise agreement:
Franchisor: the parent company of a franchise agreement the provides the product or service
Franchisee: the distributor of a franchised product or service
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38. Risk of Ownership
The success of a business depends greatly on managerial effectiveness.
Risk: the possibility of failure
Risk is one of the characteristics of business that all entrepreneurs face
Risk involves competition from other businesses, changes in prices, changes in style, competition from new products, and changes that arise from economic conditions.
One out of every four to five businesses fails within three years

39. Obligations of Ownership
Anyone who starts a business has a responsibility to the entire community in which the business operates.
A business that fails creates an economic loss that is shared by others in the community.
A business that is successful have economic and social responsibilities.

40. Intrapreneurship
Is an employee who is given funds and freedom to create a special unit or department within a company in order to develop a new product, process, or service.
Enjoy running the operations with little to no interference from upper management.
Employees benefit because they risk neither their salaries nor their savings to launch a new business.

41. Studying Business Principles and Management
Whether you plan to operate a business of your own, move into a top management position in a large company, or work as a valuable and valued employee for a company, you benefit from being well informed about the production, marketing, and financial activities of the business.
What is the main difference between an entrepreneur and an intrapreneur?
Someone who starts, manages, and owns a business (entrepreneur). Employee who is given funds and freedom to create a special unit

42. Characteristics of Business
Question
An example of income that would be included in the underground economy but not included in the GDP is
Small-business profits
Income generated by oil and gas production
Income from the sale of services
Cash paid for work that is not reported on taxes
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43. Characteristics of Business
Assignment
Complete “Case In Point 1-1 – 1-2” on pages 25 and 26 or the end of chapter review on pages 23 & 24 (complete #s 1- 27)
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Characteristics of Business

44. Objectives/Exit Ticket
Identify two ways a nation measures its economic growth and prosperity.
Describe the benefits of business ownership to the nation and individuals.
Chapter 1
Characteristics of Business