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The American Private Enterprise System

The American Private Enterprise System. Part IV. How to Do Business. Overview of How to Do Business. Business Organizations- produce or manufacture, distribute, or sell goods and services Production of Basic Commodities- basic- raw goods and materials consumers- coal and oranges

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The American Private Enterprise System

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  1. The American Private EnterpriseSystem

  2. Part IV How to Do Business

  3. Overview of How to Do Business • Business Organizations- produce or manufacture, distribute, or sell goods and services • Production of Basic Commodities- basic-raw goods and materials consumers- coal and oranges • Processing and Manufacturing- make basic commodities more useful to consumers • Marketing- selling and transporting products • Business Services- selling services instead of products to people or businesses

  4. How Does Business Produce? • Basic Natural Resources • Labor • Capital • Management • Government • Capital Goods

  5. What Business Does for a Community?? • Provides our basic needs: • Food • Shelter • Clothing • Transportation • Communication • Services

  6. Starting a Business Entrepreneur A person with a new idea who took a risk in the hope of making PROFIT

  7. Problems of Productivity Productivity Output per worker per hour • Flood of inexperienced workers • Failure of firms • Implementation of technology

  8. A Topsy Turvey Investment World • Core- financial system that puts money to work to make more money • Our economy relies on financial markets to funnel peoples savings into industrial expansion • Inflation • Double Digit Interest Rates • Stocks and Bonds • Raising the Money

  9. In the Driver Seat • Board of Directors • Officers of the Company • Major stockholders • Outsiders who can provide useful connections with law firms, banks, investment houses, and customers

  10. Stock Market • “Hub of the Investment World” • More than 40 Million individuals own shares in the U.S. corporations (valued at $1 Trillion) • Stocks can provide: • Dividend- profits a firm distributes to its shareholders • Capital gain- investor reaps when a stock is sold for more than the original PRICE

  11. Stock Prices • Bear Market- prices are FALLING • Bull Market- prices are RISING • Influenced by: • Value of firms assets • Earning prospects • Investor demand

  12. How the Market Works? • Buying and Selling Bonds • Less Risky than Stocks • Invest savings • Bond certificate • Hedging Bets • Buying or selling a stock at a current market price prior to the future date

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