2.  A business is a legal entity that is set-up or designed to make goods, sell goods, or provide a service.

3.  Businesses fulfill the needs and wants of consumers. › Needs – Things necessary for existence › Wants – Things that are not necessary for existence but are nice to have › Consumers use goods and services › Customers purchase goods and services  Businesses make or sell goods, provide services or do both for consumers/customers › Goods – items that can be physically weighed or measured. Tangible=touchable (Ex. clothing, cars, computers) › Services – actions or activities performed by a business for a consumer. Intangible=can’t be touched (Ex. dry cleaning, lawn care, babysitting)

4.  Profit motive - desire to make money; see the opportunity to make money in the marketplace.  Opportunity to meet wants and needs of consumers  Opportunity to increase competition in the marketplace  Businesses are investment opportunities for individuals— future income

6.  Main goal is making a profit (earning more revenue than expenses)  Produce and distribute goods and services based on consumer demand or desire  Examples › Apple Computer › Sony › Domino’s Pizza › The Gap

7.  Can earn a profit, but its main goal is to help people, animals or the environment  Cannot be run for the financial gain of the members or directors  Donors’ Contributions are tax deductible  Examples › American Red Cross › Salvation Army › Meals on Wheels › Homeless Shelters › St. Jude’s Children’s Hospital

8.  Sell goods to individual consumers/customers and to other businesses  Retailers/stores and distributors are product businesses  Examples › Old Navy › CD Stores › Best Buy › Dick’s Sporting Goods

9.  Provide services rather than goods  Some service businesses meet needs (medical clinics, law firms)  Some service businesses provide wants (taxi companies, ISPs)  Examples › Barber shop › Dry Cleaners › Copy and Print Shops (Kinko’s) › Car repair shops

10.  Some businesses are both good and service businesses— they sell a good and provide a service.  Examples › Automobile dealerships › Hair salons › Appliance stores › Can you think of others?

12.  Owned by one person  Examples › Floral shops › Bookstores › Farms  Advantages › Easy to start › Owner is his/her own boss › Owner keeps all profits  Disadvantages › Owner must pay for everything needed for the business › Difficult to obtain capital needed to start › Owner might lack business skills › Unlimited liability—owner has full responsibility for company’s debts and can lose entire investment as well as personal assets

13.  Owned by two or more people  Examples › Law firms › Medical practices › Auto Body Repair  Advantages › Relatively easy to start › Easier to obtain capital than in a sole proprietorship › Partners share skills and talents › Partners share risks  Disadvantages › Partnership agreement is needed to start › Partners might not get along well › Partners must share profits › Partnership must be reorganized if one partner quits › Partners share unlimited liability—all partners share the responsibility of a bad decision made by one partner (including debts)

14.  Owned by many people called stockholders, but treated by law as one person (can own property, pay taxes, make contracts)  Examples › Nike › Facebook › Google  Advantages › Corporations can raise money by selling stock › Limited liability—stockholders can only lose what they have invested › Corporation continues when stockholders sell stock › Corporation can always make money by selling more stock  Disadvantages › Corporations are taxed on their profits › Government closely regulates corporation › More difficult to start a corporation › Must obtain a corporate charter from the state in which headquarters is located

15.  Franchise is a contractual agreement to sell a company’s products or services in a specific geographic area  Examples › Taco Bell › Blockbuster › McDonald’s  Advantages › Easy to start › Franchisee can rely on good name and expertise of the parent company › Franchisee can get needed guidance in operating the business from franchisor  Disadvantages › Some franchisors are strict about how the business is run › Franchise is limited in what products or services can be sold › Franchise must operate like every other franchise

17.  Accounting - recording and reporting financial activity and transactions  Management - the process of using available resources to effectively work with people and meet organizational goals.  Marketing - satisfies the needs and wants of consumers through exchange. Based on the 4 P’s (product, price, place, promotion)

18.  Information Technology – the use of technology to share knowledge, facts, and data to others  Operations - involves behind the scenes paperwork required to complete all transactions  Human Resources - manages “people” relations within the company; such as training, hiring and firing of workers.