1. The Nature of Business What is a business?
Individuals or organizations trying to earn a profit by providing products that satisfy people's needs.
1-1

2. The Nature of Business What is a product?
A good or service with tangible and intangible characteristics that provide satisfaction and benefits
1-2

3. Products Tangible Goods & Services
Automobile
Computer
Loaf of bread
Television
Services
Dry cleaning
Photo processing
Checkup at doctor’s
Movie star performance
1-3

4. The Primary Goal of Business
Earn a Profit
The difference between what it costs to make and sell a product and what a customer pays for it.
1-4

5. The Primary Goal of Business
PROFIT --
The reward for the risks that businesses take in providing products.
1-5

6. Non-Profit Organizations
Not all organizations are businesses.
Nonprofit organizations provide goods and services but do not have the fundamental purpose of earning profits.
1-6

7. Maintaining Profitability
Quality products
Efficient operations
Social responsibility
Business ethics
Management skills
Planning
Organizing
Controlling
Leading
Marketing Expertise
Products
Price
Promotion
Distribution
1-7

8. Stakeholders
Customers, employees, investors, government regulators, community and society. Those that have a stake in the success and outcomes of a business are considered stakeholders.
1-8

9. The People & Activities of Business
1-9

10. The People & Activities of Business
Management – Focus on employees
Coordinating employee’s actions
Organizing people for efficiency
Motivating employees toward business goals .
1-10

11. The People & Activities of Business
Management – Production and Manufacturing
Plan activities
Organize staff
Control tasks .
1-11

12. The People & Activities of Business
Marketing – Focus on satisfying customers
Determine what products customers want
Plan and develop products
Determine distribution
Determine place
Determine promotion
1-12

13. The People & Activities of Business
Marketing & Promotion
Advertising
Personal selling
Sales promotion
Publicity
1-13

14. The People & Activities of Business
Finance – Primary responsibility of owners
Obtaining money
Using money effectively
Accountants, stockbrokers, bankers
1-14

15. The Economic Foundations of Business
Distribution of resources for the production of goods and services within a social system.
Resources --
Natural resources (land, forests, minerals, water)
Human resources (labor)
Financial resources (capital)
1-15

16. Factors of Production --
Natural, human, and financial resources used to produce goods and services --
1-16

17. Economic Systems Central issue of economics –
How a society distributes its resources to produce goods and services
Central issue of economics –
How to fulfill an unlimited demand for goods and services with a limited supply of resources
1-17

18. Economic Systems Three Important questions –
How a society distributes its resources to produce goods and services
Three Important questions –
What types and quantities of goods/services will satisfy consumer needs?
How will goods/services be produced? By whom? With what resources?
How are goods/services distributed to consumers?
1-18

19. Comparison of Communism, Socialism, and Capitalism
1-19

20. Economic Systems Communism
A society in which the people without regard to class, own all the nation’s resources.
China
North Korea
Cuba
1-20

21. Economic Systems Socialism
System in which the government owns and operates basic industries but individuals own most businesses.
Sweden
India
Israel
1-21

22. Economic Systems Capitalism
Free Enterprise – individuals own and operate majority of businesses providing goods and services
United States
Japan
Australia
Canada
1-22

23. Economic Systems Pure Capitalism Modified Capitalism
Free Market -- All economic decisions made without government intervention (pure capitalism)
Government intervenes and regulates business to some extent (modified capitalism)
1-23

24. Economic Systems Mixed Economies
No country practices pure capitalism or pure socialism/communism. Economic systems contain various elements of government intervention
1-24

25. Supply & Demand
Distribution of resources and products determined by supply and demand
Demand -- number of goods/services consumers buy at given price at a specific time
Supply -- number of products businesses will sell at different prices at a specific time
1-25

26. Forces of Supply & Demand
Price at which number of products supplied equal amount of products consumers are willing to buy at a specific time = equilibrium price
1-26

27. Nature of Competition
Rivalry among businesses for consumers’ dollars.
Pure competition – many small businesses in same product market
Monopolistic competition – small number of businesses little difference in products
Oligopoly– very few businesses selling a product
Monopoly- one business selling a product
1-27

28. Economic Cycles and Productivity
Expansion and Contraction
Economic Expansion – economy is growing and consumers are spending money
Economic Contraction – spending declines, layoffs, economy slows down
1-28

29. Economic Cycles
Inflation– condition characterized by continuing rise in prices
Recession– decline in production, employment, and income
Unemployment– % population wants to work but unable to find jobs
Depression– unemployment very high; consumer spending low; business output sharply reduced
1-29

30. Evaluating Economy
GDP: the sum of all goods and services produced in a country during a year
1-30