Intro To Business What is Business Formal an
Intro To Business
What is Business? �Formal – an organization that produces or sells goods or services to satisfy the needs, wants, and demands of consumers for the purpose of making a profit
Informal �a) type of ownership – i. e. 2 or more owners, called partnerships �b) the goods it produces or services it offers – i. e. “Ford Company” produces cars, “All Languages” provides translators and interpreters for over 100 languages �c) the different functions it performs in its community – i. e. the “Canadian Cancer Society” offers support and raises funds to help people who have cancer
�d) the types of jobs it provides – i. e. meat packing company provides jobs to farmers, inspectors, truck drivers �Entrepreneurs – people who take a risk and start businesses to solve a problem or to take advantage of an opportunity
Goods and Services �Need – an item that is necessary for survival such as food, clothing or shelter �Want- an item that is not necessary for survival, but it adds pleasure and comfort to life �Goods – monetary ($) value, which may change over time (i. e. sneakers – old pair might not be worth as much as a new pair, but they still might be of some good use and value) �-produced and tangible (can see and touch it)
�Services - $ value �-intangible (can’t touch) i. e. dentist, golfing �- some are unpaid i. e. volunteers doing community service work �Not-for-profit-organizations – a business that does not seek to make a profit i. e. charitable organization that helps people (i. e. food bank)
�Co-branding – two or more businesses under one roof �- advantage – allows businesses to share space, reducing costs of operation and increasing the opportunity for profit �Economic Resources (factors of production) �- the means through which goods & services are made available to consumers
� 3 Kinds: �a) natural resources – raw materials that come from earth, water and soil �b) human resources- (labour) – the people who work to create the goods and services i. e. banker, farmer �**many businesses have established a human resources department to manage their employees
�c) capital resources – i. e. buildings, equipment, tools, trucks, and factories �- usually last for a long time but large expense for business i. e. money is also needed �Producers – individuals or businesses that provide goods or services to meet the needs and wants of a consumer �Consumers – the people who buy goods and services
Demand, Supply & Price �Demand – the quantity of a good or service that consumers are willing and able to buy at a particular price �-we all have different demands �Law of Demand – usually consumers will increase the quantity demanded of a good or service as prices decrease �- as prices increase, the reverse is true
Four Conditions that Create Demand � 1) consumers must be aware of or interested in the good or service (advertise) � 2) having enough supply of the good or service � 3) making prices that are reasonable & competitive � 4) accessibility – must be conveniently located – “location, location”
Factors that Affect Demand � 1) change in consumers’ income (i. e. usually income increases, people buy more, or less groceries and increase in restaurant meals) � 2) change in consumers’ tastes (i. e. fashion industry-fads) � 3) change in expectations of future conditions (i. e. if they expect prices will increase in future, often purchase more now and vice versa) � 4) change in population (i. e. create an increase in need for cars, housing)
Supply �The quantity of a good or service that businesses are willing and able to provide within a range of prices that people would be willing to pay �Law of Supply – the relationship of increasing the quantity supplied as prices increase �Conditions that Affect Supply – affected by the cost of producing it, and, to some extent, by the price people are willing to pay for it
Factors that Affect Supply � 1) change in the number of producers (competition, lower prices) � 2) the price of related goods (i. e. the price of gas goes up, consumers may switch to smaller, more fuel-efficient cars or use more public transit) � 3) a change in technology – as computer chip technology improved, computers more powerful, cost decreased)
Profit & Competition �Goal of Business – to make a profit by supplying goods & services to meet consumer demands �Profit – the income that is left after all costs and expenses are paid �Expenses – those expenditures that are involved in running a business, such as wages
�Costs – the amount of $ required for each stage of production, such as the cost of raw materials Ø As costs and expenses increase, the owner’s profit gets smaller Ø Businesses, therefore, try to keep costs & expenses as low as possible by being efficient and well organized
�Competition – demand supply certainly have an influence on price, but so does competition �- i. e. if only one company offered cars for sale, that company could set the prices and consumers would have to pay if they wanted a car �In reality, however, many companies sell cars & compete for car-buying consumers. This competition helps keep prices at a reasonable level
Key to Business Survival �A business cannot survive unless it produces goods or services that people need or want �Over the years, many products become obsolete (no longer in use), either people no longer want or need products or new and improved products replace them i. e. 8 -track cassettes, manual typewriters
�Businesses are always looking for ways to produce new and better products and to provide better services to consumers �Successful businesses change as the wants and needs of consumers change
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