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.