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Chapter 1 Characteristics of Business

Chapter 1 Characteristics of Business. Nature of Business Types of Business Impact of Global Competition in Business Business Growth & Prosperity Entrepreneurship Intrapreneurship. Nature of Business. Business - an organization that produces or distributes a good or a service for profit.

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Chapter 1 Characteristics of Business

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  1. Chapter 1Characteristics of Business • Nature of Business • Types of Business • Impact of Global Competition in Business • Business Growth & Prosperity • Entrepreneurship • Intrapreneurship

  2. Nature of Business • Business - an organization that produces or distributes a good or a service for profit. • Profit - the difference between earned income & costs

  3. Three Major Activities of Business • Production - making a product or providing a service. • Marketing - deals with how goods and services are exchanged • between producers and consumers • Finance - deals with the money matters related to running a business

  4. Types of Businesses • Industrial Businesses - produce goods that are often used by other businesses or organizations to make things (Metal, ore, buildings) • Commercial businesses - are engaged in marketing, finance and in furnishing services. • Services - intangible products that result from a high degree of labor (accounting, hair dressers) • Industry - used to refer to all businesses within a category (accounting, publishing etc....)

  5. Activity #1: List at least three companies that would be considered to be a part of each industry.

  6. Impact of Global Competition on Business • Global Competition - the ability of organizations to compete with other businesses in other countries. • Domestic Goods - products made by firms in U.S. • Foreign Goods - products made by firms in other countries

  7. Effectiveness Vs. Efficiency • Effectiveness - when the right decisions are made in deciding which products or services to offer customers. • The Japanese taught us Total Quality Management (TQM) which is a company-wide commitment to excellence that is accomplished by teamwork & continuous improvement. • Efficiency - producing the needed goods and services quickly and at a low cost. • Managers should strive to be effective and efficient at the same time

  8. Methods to Improve Efficiency • Specialization - when workers specialize, they become experts. • Mass Production - using up-to-date equipment and assembly line methods to produce large quantities of identical goods. • Advanced Technology /Innovation -better quality goods are built at a faster pace and at a lower cost. • Reorganization - (produces greatest results) • Downsizing - cutting back on the size of the firm and products provided. • Empowerment - letting the workers decide on how to perform their work tasks and offer ideas on how to improve the work process

  9. Business Growth & Prosperity • Gross Domestic Product -(GDP) is the total market value of all goods produced and services provided in a country in one year. The rate of growth and the GDP indicate the economic strength of the country. • Underground economy - transactions that are not recorded usually because they are unlawful or paid in cash. • Individual well-being of its citizens - Study family income to show standard of living.

  10. Entrepreneurship • Entrepreneur - one who starts, manages, and owns a business. • Small business - any business that is operated by one or a few individuals. Usually retail and fewer than 100 employees • Franchise - a legal agreement between a company and a distributor to sell a product or service under special conditions. Greater chance of success. • Franchisor - parent company • Franchisee - the entrepreneur

  11. Activity #2: Franchises • www.franchise.com • Alphabetical Directory • Find 10 Franchises that you would be interested in and find out information regarding: • A Brief description of the company • Franchise Fees • Cash Required • Total Investments • Total Net Worth

  12. EntrepreneurshipRisks and Obligations • Risk - the possibility of failure, competition from other businesses, changes in prices, or changes in the economic environment. • If risks are high, so are the chances of failure. 1 out 4 businesses fail within 3 years. • Responsibility lies with the entrepreneur to serve the stakeholders. • Stakeholders - customers, employees, management, competitors, investors, and the public.

  13. Intrapreneurship • Intrapreneur is an employee of the organization who is given the funds and the freedom to create a special unit or department within the company in order to develop a new product, process or service • Advantages - upper management does not interfere, low risk, employers benefit by keeping creative employees, customers benefit with new products at a faster pace.

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