Unit 4 Basic Business Concepts

1. Unit 4Basic Business Concepts

2. Where do you fit in the marketplace? • What are all the different target markets you belong to?

3. Unit 4 Vocabulary • Management • Mission Statement • Nonprofit Organizations • Organizing • Planning • Price Gouging • Private Sector • Production • Public Sector • Retailers • Stockholder • Telecommuting • Whistle-blowing • Wholesalers • Accounting • Ad Council • Better Business Bureau • Controlling • Corporate Social Responsibility (CSR) • Derived Demand • Domestic Business • Ethics • Finance • Flextime • For-profit Business • Green Marketing • Global Business • Industry

4. How are business and marketing systems implemented, modified and improved to facilitate business activities? Unit 4 Essential Question

5. Essential Question 1 Basic Business Concepts • What is the role of business in society?

6. Business Ethics • Ethics: Guidelines for good behavior – knowing what is right and wrong. • Ethics and Consumerism • Consumerism: involves the relationship of marketing to those who buy a company’s goods or services.

7. Business Ethics • Consumer’s Bill of Rights • To be informed and protected against fraud, deceit, and misleading statements, and to be educated in the wise use of financial resources. • To be protected from unsafe products. • To have a choice of goods and services. • To have a voice in product and marketing decisions made by government and business.

8. Ethics in Marketing • Ethics in Marketing • Self Regulation • Ethical companies are proactive • Ethical companies join organizations like the Better Business Bureau that help to create an ethical business environment. • Ethical companies adopt and follow the American Marketing Association (AMA) Code of Ethics.

9. Ethics in Marketing • Ethical Issues • Price Gouging: Pricing products unreasonably high when the need is great or when consumers do not have other choices. • Privacy of consumer data bases. • Bribes and kickbacks. • High-pressure selling tactics. • Failure to follow through on promises made to close a sale.

10. Essential Question 2 Basic Business Concepts • What are the various types of business activities?

11. Business Classifications • Size • Large– Corporations and similar businesses where sales are in the multimillions of dollars. • Small • Generally businesses operated by a few individuals. • About 95% of all U.S. businesses. • Employ over half of the private-sector (non-government) work force.

12. Business Classifications • Scope • Domestic:A business that sells its products only in in its own country. • Global: A business that sells its products in more than one country. • The growing trend among small and large businesses is globalization due to: • The internet. • Faster transportation. • Ease in conducting financial transfers.

13. Business Classifications • Purpose • For-profit Business: – Primary purpose of the business is to earn a profit (make money). • Nonprofit Organizations: Income remaining after expenses goes for the charitable cause outlined in the organizations charter. • Ex: Red Cross, DECA, Boy/Girl Scouts of America

14. Business Classifications • Sector Orientation • Public Sector: Nonprofit organizations that are also government agencies. • Ex: Public Schools, Social Services, etc. • Private Sector: Businesses not associated with government agencies.

15. Business Classifications • Industry and Markets • North America Industry Classification System (NAICS) defines an industry: a group of establishments primarily engaged in producing or handling the same product or group of products or in rendering the same service.

16. Business Classifications • Industry and Markets • Business are also classified due to the market served • Consumer Market • Industrial Market • Service Market • The industrial market is based on demand derived for consumer goods and services. This is known as derived demand.

17. Derived Demand • If consumer demand for computers increases then the demand for components will increase. This increased demand for components was derived from the increased demand for computers.

18. Business Segments • Extractors: Businesses that take something from the earth or sea.

19. Business Segments • Construction or Manufacturing: Businesses that build structures or produce goods for sale.

20. Business Segments • Wholesalers or Retailers: • Wholesalers: Obtain goods from manufacturers and resell them to industrial users, other wholesalers, and retailers. • Retailers: Obtain goods from wholesalers or directly from manufacturers and resell them to the consumer.

21. Business Segments • Consumer Services: Includes dry cleaning, hair styling, entertainment, transportation, insurance, lawn-care, child care, and housekeeping. • Service Related Businesses: • Business Services: Includes accounting, marketing, management, insurance, shipping, and finance.

22. Business Segments • Professional Services: Includes doctors, dentists, lawyers, and accountants. • Service Related Businesses: • Internet-related Services: Includes Web casting, Web site design, and Web advertising.

23. Essential Question 3 Basic Business Concepts • What are the different types of business ownership?

24. Sole Proprietorship • Sole Proprietorship: The owner is the only one responsible for the business’s activities. • Easiest and most popular form of business to create. • Accounts for 76% of all businesses.

25. Partnerships • Partnership: More than one person shares the business decisions and outcomes. • General Partners: Partners that take full responsibility for the management of the business. • Law requires that at least one partner is a general partner.

26. Corporation • Corporation: A business that is chartered or registered by the state.

27. Essential Question 4 Basic Business Concepts • What is the concept of management?

28. The Functions of Business • Regardless of the type of business, there are four main functions involved in an organization’s operation. • Production and Procurement • Production: The process of creating, expanding, manufacturing, or improving on goods and services. • Procurement: Buying and reselling goods that have already been produced.

29. The Functions of Business • Marketing • All activities from the time a product leaves the producer or manufacturer until it reaches the final user are considered marketing activities. • All marketing activities support the buying and selling functions.

30. The Functions of Business • Finance and Accounting • Finance: The function of business that involves money management. • Accounting: The discipline that keeps track of the company’s financial situation. • Balance sheet reports a company’s assets, liabilities, and owner equity. • Profit and loss statements reflect the ongoing operations and include income, costs and expenses.

31. The Functions of Business • Management • Management: The process of achieving company goals by the effective use of resources through planning, organizing, and controlling.

32. Management • The basic functions of managing are planning, controlling, and organizing. • Planning: involves establishing company objectives and strategies to meet those objectives. • Controlling: involves overseeing and analyzing budgets and financial reports to determine the most cost effective measures for a company to follow. • Organizing: involves specific operations, scheduling, delegating responsibilities, and maintaining records.

33. Management • All three functions involve decision making and follow the decision making process when making complicated decisions. 1. Define the problem 2. Identify the options available 3. Gather information and determine the consequences of each option 4. Choose the best option 5. Take action 6. Evaluate the results

34. Management • In order to evaluate the effectiveness of the management functions, the company must establish standards by which they can be measured. • The standards are adopted which are consistent with the company’s established goals. • The goals are created to meet the overall mission of the firm. • The mission is summarized in the company’s mission statement: a brief description of the ultimate goals of the company.

35. Essential Question 5 Basic Business Concepts • What is the role of stockholders (both public and private) in management policies?

36. Stockholders Role • There are four basic forms of business organization • Sole Proprietorship • Partnership • Corporation • Limited Liability Company (LLC) • Only corporations have shareholders: owners of a corporation; the degree of ownership is determined by the number of shares of the company owned.

37. Stockholders Role • There are two main categories of corporations • Public Corporations: created by federal, state, and local governments such as incorporated cities, schools, transit, and sanitation districts. • Private Corporations: created by private persons. • Publicly Held: corporation whose shares are owned by a large group of people and are traded on the stock exchange. • Closely Held: corporation owned by a few people or a family and not traded on the stock exchange.

38. Stockholders Role • In a publicly held corporation, stockholders elect a board of directors to run the company and thus have little say in the management of the business. • In a closely held corporation, the stockholders are also usually the board of directors and have major input in the management of the business.

39. Essential Question 6 Basic Business Concepts • What are the various trends and developments in marketing?

40. Demographic Trends • Age Trends: Trends based on generational analysis. • Baby Boomers: People born after World War II and before 1965. • Generation X: People born between 1965 and 1980. • Generation Y / Millennials: People born after 1980 and are characterized as technology experts.

42. Demographic Trends

44. Demographic Trends • Ethnic Trends: The growing diversity of the U.S. population makes this area a necessity. • The white population is the largest ethnic market and the only one that is declining. • The next three largest ethnic markets are African-Americans, Hispanics, and Asian-Americans.

46. Demographic Trends • Income: • Disposable Income: Money left after taxes are taken out. Also known as take-home or net pay. • Discretionary Income: Money left after paying for basic living expenses such as food, shelter, clothing, etc.

47. Geographic Trends (2000) -1 -2 -1 CN -1 -2 • Moving from Midwest and North East. • Moving to South, Southwest, and West. +1 -1 -1 -1 +1 +1 +1 +2 -1 +2 -1 +2 +2

48. Geographic Trends (2010) +1 -2 -1 MA -1 -1 • Moving from Midwest and North East. • Moving to South, Southwest, and West. -1 NJ +1 -2 -1 -1 +1 -1 +1 +1 +1 +4 -1 +2

49. Psychographic Trends • Having fun: Enjoying one’s leisure time. • Eating that comes naturally: Food products with natural ingredients. • Exercising at any age: Younger people exercise to stay physically fit. Older people exercise as a social activity.

50. Psychographic Trends • Shopping for value: Seeking quality and value products. • Green marketing: Business considering the environment in their marketing decisions • Family Life Cycle:Evolution of the family from single adult to newly married, full nest, empty nest, and sole survivor.