business in our economy chapter five introduction to business
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Business in Our Economy
Chapter FiveIntroduction to Business
Four Kinds of BusinessExtractorsManufacturersMarketersService
businesses
Manufacturer Takes the
extractor’s products or raw materials and changes them into a form that consumers can use.
Marketer A business that moves
goods from producers to consumers. These activities are called marketing.
Includes transporting, selling, development and testing of new products, packaging, and store displays.
Service Businesses A business that does
things for you instead of making or marketing products.
Service businesses are the fastest growing part of our business world.
By 2006 3 out of 4 workers will work for a service business.
Extractors A business that grows
products or takes raw materials from nature.
Most food products and raw materials need some processing before the consumer can use them.
Three Types of Manufacturing Custom manufacturing—building a specific and
unique product to meet the needs of one customer.
Mass production—a large number of identical products are assembled using a continuous, efficient procedure. The standard in U.S. manufacturing for almost a century. (Henry Ford)
Processing– changes the form of materials so they can be consume or used to manufacture other products. Ex. Turning crude oil into gasoline.
Seven Business Activities Generating Ideas Raising Capital Buying Goods and Services Using Human Resources Marketing Goods and Services Producing Goods and Services Keeping Records
Generating Ideas The first step in a
business is thinking of a product or service.
The product or service must meet consumers’ needs or wants.
New ideas must be generated in order to survive.
Raising Capital Businesses need capital
(money) to operate. Start-up money must be
found to start a business.
Examples: Owner’s personal funds, loans from banks, or investors.
Existing businesses must continue to raise money.
Buying Goods and Services Businesses buy
goods and services for resale and their own use.
Examples: products for resale, supplies,equipment, and advertising space.
Using Human Resources Businesses cannot
operate without people. Businesses must
recruit, interview, test, train, and perform job appraisals.
Some businesses have human resource departments to perform the above functions.
Marketing Goods and Services Many marketing
activities are done before the product is produced—design and development, and market research.
Getting the word out to consumers about the product.
Producing Goods and Services You must make the
product or perform the service.
Must be produced at the scheduled time, in the correct quantity and quality.
You “do” the business.
Keeping Records All businesses must keep
records. Many use computers to
keep records. Businesses must keep
records because To determine if a profit or
loss has been made. Provide information to
management. Supply data and information
to the government for taxes and other requirements.
The Impact of New Businesses on a Community
Provide jobs--Pays wages to its employees who spend the money in the community—the spending chain.
Pay taxes—support local government, schools, and police services.
Make purchases of goods in the community. Attract other businesses—when one
business settles into a community other businesses often come to support it.
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