Introduction to Business

Introduction to BusinessIntroduction to Business

HOMEWORKHOMEWORK

1. Read Chapters 5 & 6

OBJECTIVEOBJECTIVE

Be able to define the term “Business”

““Business”Business”

An activity that satisfies economic needs by planning,

organizing, & controlling resources to produce & market

goods & services

BusinessBusiness

An activity . . . that satisfies . . . economic wants & needs . . . by planning, organizing,

BusinessBusiness

& controlling . . . resources . . . to produce . . . & market . . . goods & services.

“Business”(Revisited)

An activity that satisfies economic needs by planning,

organizing, & controlling resources to produce & market

goods & services

BusinessActivity

For the businesses listed below, explain how each meets the definition of business:– McDonald’s– Nichols Hardware– Food Lion– Google– (Your Choice)

OBJECTIVEOBJECTIVE

Be able to describethe three functions of business

Three Functions of BusinessThree Functions of Business

Production

Marketing

Management

Three Functions of BusinessThree Functions of Business

Production - Creating, growing, manufacturing, or improving products

Marketing - Activities that move goods/services from producers to consumers

Management - Achieving company goals by directing its resources

(Make $ or else!!!)

OBJECTIVEOBJECTIVE

Be able to define the term utility & describe all of the different

types of utilities

UTILITYUTILITY

Defined as “value added”

UTILITY TYPESUTILITY TYPESHow we “add value”How we “add value”

Form Place Time Information Possession

UTILITY TYPESUTILITY TYPESHow we “add value”How we “add value”

Place:- By putting a product where the

consumer can get it easily Time:

- By making an item available when the consumer needs it

Oil, for example

Form:- changing item’s shape or creating item

UTILITY TYPESUTILITY TYPESHow we “add value”How we “add value”

Information:- By letting people know

how the item will benefit them

Possession:- By allowing people to

own the productOil, for example

UTILITY TYPESUTILITY TYPESHow we “add value” to the computerHow we “add value” to the computer

Place:- By putting a product where the

consumer can get it easily Time:- By making a product available

when the customer needs it

Form:- By changing an item’s shape or creating an item

UTILITY TYPESUTILITY TYPESHow we “add value” to the computerHow we “add value” to the computer

Information:- By letting people know

how the item will benefit them

Possession:- allowing people to own

the product

OBJECTIVEOBJECTIVE

Be able to describe the “social responsibilities” of a business including

its ethical treatment of customers

Social Responsibility & EthicsSocial Responsibility & Ethics

Social Responsibility- What a business “should” do in the eyes

of the majority of the population Ethics

- Guidelines for “good” or acceptable behavior in the eyes of the majority of the population

Areas of Social ResponsibilityAreas of Social Responsibility

Consumption of Natural Resources– Use of resources & recycling efforts

Environmental Issues– Damage to & protection of the environment

Worker Issues– Treatment (handicapped, health-care, etc.)– Pay (amounts, docking, profit-sharing,

telecommuting, etc.)

Areas of Social ResponsibilityAreas of Social Responsibility

Consumerism - “Using legal, moral, & economic pressure on business protect the consumer’s rights ”– To be protected against fraud, deceit, &

misleading statements & to be educated in wise financial decisions

– To be protected from unsafe products– To have a choice in products & services– To have a say in product/marketing decisions

LEGAL CONSIDERATIONSLEGAL CONSIDERATIONS

Statutory Law - Laws that are written by congress or other ruling bodies & then enforced by law enforcement institutions (police, FBI, etc.)

LEGAL CONSIDERATIONSLEGAL CONSIDERATIONS

Common Law - Laws that are based on the actions of a “reasonable person,” often determined in court. (negligence, for example)

OBJECTIVEOBJECTIVE

Be able to define “Entrepreneurship” and

identify its advantages & disadvantages

ENTREPRENEURSHIPENTREPRENEURSHIP

Owning & operating your own business

ENTREPRENEURSHIPENTREPRENEURSHIPOwning & Operating Your Own BusinessOwning & Operating Your Own Business

Advantages Disadvantages

Discussion

ENTREPRENEURSHIPENTREPRENEURSHIPOwning & Operating Your Own BusinessOwning & Operating Your Own Business

Advantages–Freedom–Satisfaction–$$$$$–Self-Esteem

Disadvantages–RISK!!!–Loss of income–Long & irregular

hours–Need for self-

discipline

OBJECTIVEOBJECTIVE

Be able to describe the most common personality traits of

successful entrepreneurs

ENTREPRENEURSENTREPRENEURS

Personality Traits of Successful Entrepreneurs:

(Discussion)

ENTREPRENEURSENTREPRENEURS

Personality Traits of Successful Entrepreneurs– confidence– skill– risk-taker– competitive– determined– hardworking

ENTREPRENEURSENTREPRENEURS

Personality Traits of Successful Entrepreneurs– flexible– disciplined– healthy– experienced– goal-oriented– people-person

OBJECTIVEOBJECTIVE

Be able to describe the three major types of business ownership &

discuss their advantages & disadvantages

SOLE PROPRIETORSHIPSOLE PROPRIETORSHIP

Owned & operated by one person (Usually highly skilled)– employs 95% of the

workforce– examples include plumbers,

dentists, beauticians, small shop owners, etc.

PARTNERSHIPPARTNERSHIP

Two or more people legally agree to share the ownership & responsibilities of a business

CORPORATIONCORPORATION

A charted (legal) entity that operates apart from the owners– the corporation will often

sell stock– the stockholders will elect

a board of directors to run the company

CORPORATIONSCORPORATIONS(Discussion)(Discussion)

Doctors will often incorporate their practice; Why?

(Discussion)

SOLE PROPRIETORSHIPSOLE PROPRIETORSHIP

Advantages Disadvantages

(Discussion)

PARTNERSHIPSPARTNERSHIPS

Advantages Disadvantages

(Discussion)

CORPORATIONSCORPORATIONS

Advantages Disadvantages

(Discussion)

SOLE PROPRIETORSHIPSOLE PROPRIETORSHIP Advantages

– easy to start– decisions are easy

to make– low taxes– fewer gov.

regulations– you get all the

money!!

Disadvantages– capital ($) is

limited– can’t have

“group-think”– no help

available w/ other skills

– big Risk

PARTNERSHIPSPARTNERSHIPS Advantages

–more ideas & opinions to consider

–you have help to run the business

– the risk is shared–more capital

available

Disadvantages– more ideas & opinions

to consider (?)– harder to make

decisions– personally at risk– death of a partner

causes problems

CORPORATIONSCORPORATIONS

Advantages– liability is limited to

your investment– it is easy to raise

more capital (sell more stock)

– it is easy to get into & out of the corporation (sell or buy stock)

Disadvantages– often a complex

& changing ownership picture making decisions difficult

– highly regulated– higher tax rates

OTHER FORMS OF BUSINESS OTHER FORMS OF BUSINESS OWNERSHIPOWNERSHIP

Franchise:– a legal agreement to operate a business in

the name of a recognized company. .

Advantages DisadvantagesFranchisor offers help Expensive to buyPlanning already done Limited creativity

OTHER FORMS OF BUSINESS OTHER FORMS OF BUSINESS OWNERSHIPOWNERSHIP

Subchapter S Corporation:– A small business taxed like a sole

proprietorship or partnership but w/ limits:»No more than 35 stockholders»Incorporated in the US»Max. 20 % of income comes from

investments»Max. 80% of revenue comes from overseas

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