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Module 1 – Overview of
Business
What Is…?
• Business
– An organization that provides goods and
services to earn profits
• Profit
–
The positive difference between revenues
and expenses
Factors of Production
Labor
Capital
Knowledge workers
Information
Resources
Entrepreneurs
Knowledge
Physical
Resources
Types of economies
Planned Economy:
An economic system in which the government owns
and operates all sources of production
Socialism is a planned economic system in which
the government owns and operates selected
sources of production
Market Economy:
An economic system in which buyers and sellers
interact based on freedom of choice
Planned Economy
“Circular Flow in Market Economy”
SUPPLY
OUTPUT MARKETS
DEMAND
Goods
Services
FIRMS
• Supply products in
output markets
• Demand resources in
input markets
DEMAND
Copyright ©2003 Prentice Hall, Inc.
70%!
INPUT MARKETS
Labor
Capital
Entrepreneurs
Physical Resources
Information Resources
HOUSEHOLDS
• Demand products in
output markets
• Supply resources in
input markets
SUPPLY
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Mixed Economies
Planned and Market
• The economies of most countries
include both planned and market
elements
• Worldwide trend toward more market
elements
– Or is it?????
State Capitalism
Post 2007
•State capitalism
–a system in which the state dominates
markets primarily for political gain
–autocratic states reap the benefits of
capitalist enterprise while maintaining a vicegrip on political freedom
•“capitalism for the wealthy”
Supply & Demand
Supply:
The willingness and ability of producers to
offer a good or service for sale
Law of Supply:
Producers will supply (offer) more of a product for
sale as its price rises and less as its price drops
Supply & Demand
Drive the US Economic System
Demand:
The willingness and ability of buyers to purchase a
good or service
Law of Demand:
Buyers will demand (purchase) more of a product
as its price drops and less as its price increases
Demand & Supply
$20 -
Price of Pizzas
18 -
Supply Curve
16 14 12 10 -
864-
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Quantity of Pizzas Supplied
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Demand & Supply
$20 -
Price of Pizzas
18 -
Demand Curve
16 14 12 10 -
864-
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1000 -
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Quantity of Pizzas Demanded
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Demand & Supply
$20 -
Price of Pizzas
18 -
Demand Curve
Supply Curve
16 14 12 -
Equilibrium Price
10 -
864-
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Quantity of Pizzas per Week
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Business cycle
Balance sheet recession
Productivity
–The amount a system produces compared to
the resources needed to produce it
–typically measured as a ratio of output per
labor-hour
–Key to improving “standard of living”
Recessions & Depressions
Recession:
Aggregate output declines, unemployment
increases
Depression:
Severe and long-lasting recession
Introduction to Business Studies
Marketing
Objectives and Strategy
Offshoring vs. outsourcing
Supply Chain
Make/Model
Domestic-parts content Assembly location
Ford Taurus
Lincoln MKS
Toyota Sienna
GMC Savana 1500
Chevrolet Express
1500
Buick Lucerne
Chevrolet Malibu
Honda Odyssey
Toyota Avalon
Toyota Tundra
Toyota Venza
Source: NHTSA, automaker data (2009 models)
90 percent
85 percent
85 percent
82 percent
Chicago
Chicago
Princeton, Ind.
Wentzville, Mo.
82 percent
Wentzville, Mo.
81 percent
80 percent
80 percent
80 percent
80 percent
80 percent
Detroit
Kansas City, Kan.
Lincoln, Ala.
Georgetown, Ky.
San Antonio
Georgetown, Ky.
Human Resources
Production/Operations
Management
Accounting and Finance
External Influences