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BBI 10/20
• Introduction to Business
UNIT 1:
BUSINESS FUNDAMENTALS
• Chapter 1:
• Economic Basics
WHAT IS A BUSINESS?
A business is an organization that
produces and/or sells goods
and/or services to satisfy the needs,
wants, and demands of consumers.
WHAT IS A BUSINESS?
• There are many ways to classify a
business……
WHAT IS A BUSINESS?
• A For-profit Business
• “an organization that produces or
sells goods or services to satisfy the
needs of consumers for the
purpose of making a profit.”
WHAT IS A BUSINESS?
Profit: money left after all expenses
have been paid.
Expenses: money spent on running the
business (wages, supplies)
WHAT IS A BUSINESS?
• Costs: money spent for the production
of the good or service.
• Businesses try to keep profits up by
keeping costs and expenses down.
WHAT IS A BUSINESS?
• Profit = Revenue – Expenses
• If profit is negative, it is called a loss.
WHAT IS A BUSINESS?
• A business which makes profit may use
the money to:
• - expand/grow operations
• - improve products/services
• - give to owner/shareholders
WHAT IS A BUSINESS?
• Non-profit and Not-for-profit Business.
• NP: does not look to make a profit, but
raises funds for a specific goal
(charities, charitable organizations)
• What are some examples of these?
WHAT IS A BUSINESS?
• NFP: does not seek to make a profit.
Extra moneys it brings in is used to
improve services.
• What are some examples of these?
WHAT IS A BUSINESS?
• Co-operative: A group of people who
come together to meet a set of goals
in a democratically controlled
business.
WHAT IS A BUSINESS?
• SIZE OF BUSINESS
• Small or medium sized business: less than 500
employees/management.
WHAT IS A BUSINESS?
• Forms of Business Ownership
• We will cover this in Chapter 2
WHAT IS A BUSINESS?
• Goods or Services?
• Business either sell goods (physical things you take
home) or provide services (do something) in
exchange for money.
• Some do both.
WHAT IS A BUSINESS?
• Distribution
How are goods and services delivered?
- Bricks and mortar business, telemarketing,
catalogue, virtual store (internet)
- Examples?
WHAT IS A BUSINESS?
• Role in the Community
• What dies the business do for the community?
• Jobs
• What type of jobs does it provide?
THE ROLE OF THE CONSUMER
THE ROLE OF THE CONSUMER
• Producers manufacture goods for consumers.
Companies that attract more consumers can make
more sales and more profit.
• The interaction between producer and consumer,
creates the marketplace.
• Producer ------ Marketplace ------Consumer
THE ROLE OF THE CONSUMER
• Years ago, business dictated what was produced,
and in what quantities.
• Eventually, consumers started to tell manufacturers
their needs and wants, creating competition.
• Consumers also decide when a product will no
longer be produced. When no one wants a
product anymore, it becomes obsolete.
• What are some things you know of that have
become obsolete?
THE ROLE OF THE CONSUMER
• Consumers also influence price. Companies used
to have pricing power (could charge what they
want), but with competition consumers can shop
around for the best deal.
• Consumers also have consumer purchasing power –
as customers they dictate how much they are
willing to pay, but also the level of service.
STARTING A BUSINESS
STARTING A BUSINESS
• People who start their own businesses are called
entrepreneurs.
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Entrepreneurs need:
- self-confidence
- a flair for innovation
- the ability to work alone
- an aptitude for managing others
STARTING A BUSINESS
• Consumers needs and wants:
• Sometimes a business is started to satisfy consumer
needs. Needs are things that are necessary for
survival.
• Ex. You need food and clothing.
STARTING A BUSINESS
• Consumers needs and wants:
• Wants are things that are not necessary for survival,
but add comfort and pleasure to our lives.
• Ex. You want a hamburger, TH shirt…
STARTING A BUSINESS
• Attracting consumer interest:
• It is important to understand how consumers make
buying decisions. This will help decide what to
make, how to market and distribute the product.
• Businesses need to listen to what the consumer
wants. The challenge is then to get those customers
to buy your product.
STARTING A BUSINESS
• Attracting consumer
interest:
• What can
companies do to
attract more
customers?
STARTING A BUSINESS
Attracting consumer interest:
- Sample answers:
- create a new product
- modify an existing product
- more heavily promote a product
- offer purchase incentives (coupons)
- convince consumers they need (want) the
product
• - develop different uses for product
• - offer free samples
• - In-store demonstrations
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STARTING A BUSINESS
• Attracting consumer interest:
•
The task is to come up with a product that
consumers need or want, at a price they’re willing
to pay, in a place that is convenient, and promote
it so they know about it.
MAKING GOOD BUSINESS DECISIONS
MAKING GOOD BUSINESS DECISIONS
• The five-step decision-making model can be used
to help in any business situation.
• 1. Determine what decision has to be made.
• 2. Identify the alternatives.
• 3. Evaluate the advantages and disadvantages of
each.
• 4. Make a decision and take action.
• 5. Evaluate the decision.
MAKING GOOD BUSINESS DECISIONS
• 1. Determine what decision has to be made.
•
• What is the problem? What issue needs to be
resolved?
• 2. Identify the alternatives.
•
Brainstorm as many solutions to the problem as
possible.
MAKING GOOD BUSINESS DECISIONS
• 3. Evaluate the advantages and disadvantages of
each.
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What are the pros and cons of each option?
• 4. Make a decision and take action.
•
Choose the best alternative, and go with it.
MAKING GOOD BUSINESS DECISIONS
• 5. Evaluate the decision.
•
After some time, review the decision. Was it the
best choice? Would you do something differently
or considered something else next time?
ECONOMIC RESOURCES
ECONOMIC RESOURCES
• Economic resources, or factors of production are
how products are made available to consumers.
• Natural Resources
• - materials that come from the earth, water, or air
• - most are non-renewable (oil), or take a long time
to renew (trees)
• - business are limited
ECONOMIC RESOURCES
• Human Resources
• - also called labour or “HR”
• - the people who are involved in the production of
the product.
• - most businesses have an HR department
• Capital Resources
• - the buildings, equipment, vehicles, factories used
• - usually lasts a long time, require large initial
investment
• - money is considered capital too.
ECONOMIC RESOURCES
• Interdependence
• - almost all companies have some dependence on
other companies
• - work on many levels
• Economic Systems
• - a way to deal with the selection, production,
distribution and consumption of products
• - Government and business work together
• - try to make best use of resources, develop
alternatives.
DEMAND, SUPPLY, AND PRICE
SUPPLY, DEMAND AND PRICE
• Demand is the quantity consumers are willing/able
to buy at a particular price.
• Generally:
• Lower price = greater demand
• Called the Law of Demand.
SUPPLY, DEMAND AND PRICE
SUPPLY, DEMAND AND PRICE
• Demand is created by:
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- consumer awareness/interest
- ample supply
- reasonable/competitive price
- easy access
SUPPLY, DEMAND AND PRICE
• Supply is the quantity that a business is willing to
provide for a range of prices people are willing to
pay.
• Generally:
• Higher price = higher supply
• Called the Law of Supply.
SUPPLY, DEMAND AND PRICE
SUPPLY, DEMAND AND PRICE
• Supply is created by a company’s desire to satisfy
consumers’ needs and wants for a price.
• Sometimes, a business will try to create demand for
a product through marketing it well
• Price is determined by many factors, including
demand and supply. Another important factor is
cost of production.