Functions of Business & Economic Resources. Functions of Business What goes on behind the scenes?

Functions of BusinessFunctions of Business

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Economic ResourcesEconomic Resources

Functions of BusinessFunctions of Business

What goes on behind the scenes?What goes on behind the scenes?

Functions of BusinessFunctions of Business

Main Functions of BusinessMain Functions of Business ProductionProduction MarketingMarketing FinanceFinance Human ResourcesHuman Resources ManagementManagement

Additional important function for some Additional important function for some businesses businesses and secondary for others:and secondary for others:

1.1. Research and Development (R&D)Research and Development (R&D)

1. Production1. Production

Process of converting a business’s resources into Process of converting a business’s resources into goods and services.goods and services.

Different types of resources are necessary and may Different types of resources are necessary and may vary depending on the type of business.vary depending on the type of business.

Examples:Examples:

1.1. Law cutting business would take its workers, tools, Law cutting business would take its workers, tools, equipment and business money and use them to cut equipment and business money and use them to cut the lawns of its customersthe lawns of its customers

2.2. A doctor’s office will have different equipment from an A doctor’s office will have different equipment from an auto mechanic’s shop or a gas station or restaurant.auto mechanic’s shop or a gas station or restaurant.

Factors of Production/Factors of Production/Economic ResourcesEconomic Resources

Resources which make products and Resources which make products and services available to consumers.services available to consumers.

1. Natural or Land Resources1. Natural or Land Resources2.2. Human or Labour ResourcesHuman or Labour Resources3.3. Capital ResourcesCapital Resources4.4. InformationInformation5.5. EntrepreneurshipEntrepreneurship

Natural ResourcesNatural Resources

Materials that come from the earth, water, Materials that come from the earth, water, and air.and air.

Natural ResourcesNatural Resources

Most natural resources are non-Most natural resources are non- renewable and are limited, or renewable and are limited, or they may take decades to they may take decades to replenish. replenish.

What does this mean for business?What does this mean for business?What does this mean for consumers?What does this mean for consumers?What does this mean for society?What does this mean for society?

Human Resources/LabourHuman Resources/Labour

The people who work to create, deliver, service, and sell The people who work to create, deliver, service, and sell the goods and services.the goods and services.

Includes all the mental and physical workIncludes all the mental and physical work

Examples include: farmers, factory workers, construction Examples include: farmers, factory workers, construction workers, website designers, investment bankers, teachers, workers, website designers, investment bankers, teachers, nurses, lawyers, etc.nurses, lawyers, etc.

Many business have a Human Resources Department to Many business have a Human Resources Department to manage its labour.manage its labour.

Wages and salaries is usually the largest expense of any Wages and salaries is usually the largest expense of any company.company.

Capital ResourcesCapital Resources

The money to start the business andThe money to start the business and needed for the purchase of equipment, needed for the purchase of equipment, tools, computers, etc, to keep the tools, computers, etc, to keep the business running. business running.

For example: buildings, equipment, tools, trucks, For example: buildings, equipment, tools, trucks, furniture, are all examples of capital resources.furniture, are all examples of capital resources.

InformationInformation

Using computers and otherUsing computers and other technology, businesses tracktechnology, businesses track information about their operations,information about their operations, customers, and competitors.customers, and competitors.

Managing information is especiallyManaging information is especially important for internationalimportant for international

corporations which have officescorporations which have officesand plants around the world.and plants around the world.

EntrepreneurshipEntrepreneurship

The individuals whoThe individuals who bring all the factors of bring all the factors of production together to production together to start a business. start a business.

Includes individualsIncludes individuals who have the skills and who have the skills and determination to start determination to start and operate a business and operate a business

2. Marketing2. MarketingMarketing DefinedMarketing Defined

All the business activity used to plan, price, promote,All the business activity used to plan, price, promote, and distribute goods or services to satisfy consumer and distribute goods or services to satisfy consumer needs and wants. needs and wants.

4 P’s of Marketing4 P’s of Marketing 1. Product1. Product 2. Price2. Price 3. Promotion (includes advertising)3. Promotion (includes advertising) 4. Place (Distribution)4. Place (Distribution)

Mrs. Banks’ 5Mrs. Banks’ 5thth P P 5. People (Customers)5. People (Customers)

Marketing involves a great deal of research (MarketMarketing involves a great deal of research (Market Research) Research)

3. Finance3. Finance

Managing money is referred to as finance.Managing money is referred to as finance.

Keeping accurate records on all the moneyKeeping accurate records on all the money coming into the business and all the money coming into the business and all the money going out is very important. going out is very important.

Why?Why?

Large companies will have an accountingLarge companies will have an accounting department to handle the finances of the department to handle the finances of the business. business.

4. Human Resources4. Human Resources

A Human Resource Department is A Human Resource Department is responsible for:responsible for:

1. Determining job requirements1. Determining job requirements 2. Recruiting and interviewing2. Recruiting and interviewing

potential new employees potential new employees 3. Selecting the right people for3. Selecting the right people for

the job. the job. 4. Training and developing the4. Training and developing the

employees. employees. 5. Assessing employee5. Assessing employee

performance performance 6. Managing employee 6. Managing employee

wages/salaries and benefits (dental wages/salaries and benefits (dental plans, life insurance, pension plans plans, life insurance, pension plans etc) etc)

The People

Owner(s)

Managers

Supervisors

Staff Employees

5. Management5. Management

Includes the planning, Includes the planning, organizing, and controlling of all organizing, and controlling of all business activities.business activities.

Managers set short and long-Managers set short and long-term goals of the companyterm goals of the company

Organize employees and Organize employees and employee responsibilitiesemployee responsibilities

Need strong leadership, Need strong leadership, communication, interpersonal communication, interpersonal and problem solving skills.and problem solving skills.

6. Research and Development (R&D)6. Research and Development (R&D)

Invest capital and other resources into researchingInvest capital and other resources into researching

and developing new technologies, processes, and and developing new technologies, processes, and products that will: products that will:

1. improve how current technologies, processes, or1. improve how current technologies, processes, or products work or function (make them cheaper to products work or function (make them cheaper to produce, cleaner on the environment, work faster, produce, cleaner on the environment, work faster, provide more benefits to the consumer, etc); provide more benefits to the consumer, etc);

2. create new ways to fight and/or cure disease; and2. create new ways to fight and/or cure disease; and

3. address other societal needs, concerns, wants3. address other societal needs, concerns, wants and demands and demands

Business InterdependenceBusiness Interdependence

Businesses rely on other businesses to provide Businesses rely on other businesses to provide resources to them in order to run their business.resources to them in order to run their business.

A car manufacturer (GM) relies on other A car manufacturer (GM) relies on other business and vice versa for their raw materials business and vice versa for their raw materials and capital resources.and capital resources.

(i.e. plastics, electronics, and (i.e. plastics, electronics, and various components of cars GM various components of cars GM needs for their cars.)needs for their cars.)

Business InterdependenceBusiness Interdependence

Example:Example: A large clothing manufacturing company needs:A large clothing manufacturing company needs:

1. cotton (natural resource)1. cotton (natural resource) 2. machinery or replacement parts2. machinery or replacement parts

(capital resource) (capital resource) 3. accounting services (human3. accounting services (human

resources) resources) The clothing manufacturer relies on other businesses to The clothing manufacturer relies on other businesses to

provide these products and services.provide these products and services.

Additional Sources UsedAdditional Sources Used

1.1. Liepner, Michael E. et al. Liepner, Michael E. et al. Exploring Business For the Exploring Business For the 2121stst Century Century. Toronto:McGraw-Hill Ryerson Limited, . Toronto:McGraw-Hill Ryerson Limited, 20012001

2.2. Wilson, Jack et al. Wilson, Jack et al. The World of BusinessThe World of Business (5 (5thth ed.) ed.) Toronto: Nelson Education Ltd., 2007Toronto: Nelson Education Ltd., 2007