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Chapter 6
Business
Ownership and
Operations
Section 6.2
Types and Functions
of Businesses
Read to Learn
Differentiate the six types of businesses.
Describe the five functions of business.
Discuss how the five functions of business relate
to each other.
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Types of
Businesses
•
•
•
•
Producers
Processors
Manufactures
Intermediaries and
Wholesalers
• Retailers and Service
Businesses
Functions of
Businesses
• Production and
Procurement
• Marketing
• Management
• Finance and
Accounting
Producers
A producer may be
found in industries
such as agriculture,
mining, fishing, or
forestry.
Example – Grows the
cotton
producer
a business that gathers
raw goods
Processor
A processor may, for
example, turn crude
oil into gasoline.
Example – turns the
cotton into fabric
processor
a business that changes
raw materials into more
finished products
Manufacturers
Cars, CDs, and
computers are
examples of goods
that are made by a
manufacturer.
Example – uses the
fabric to make a shirt
manufacturer
a business that makes
finished products out of
processed goods
Intermediaries and Wholesalers
An intermediary buys
goods, stores them,
and then resells them.
Example – Sells the
shirt to Gap
intermediary
a business that moves
goods from one business
to another
Intermediaries and Wholesalers
A wholesaler of
clothing may buy
thousands of jackets
from several
manufacturers, divide
the large quantities into
smaller ones, and sell
them to retailers.
wholesaler
a business that moves
good from one business to
another
Retailers and Service Businesses
A record store is an
example of a retailer.
Example – Sells the
shirt to you
retailer
a business that purchases
goods from a wholesaler
and sells them to
consumers, the final
buyers of the goods
Retailers and Service Businesses
Service businesses perform tasks rather
than provide goods.
Service businesses employ about threequarters of the workforce and are rapidly
increasing in numbers.
Functions of Business
The five main functions of business are:
Production and procurement
Marketing
Management
Finance
Accounting
Production and Procurement
Production and
procurement are
closely related
functions of business.
production
the process of creating,
expanding, manufacturing, or
improving goods and
services
procurement
the buying and reselling of
goods and services that have
already been produced
Marketing
Marketing involves
getting consumers to
buy a product or
service.
marketing
the process of planning,
pricing, promoting, selling,
and distributing ideas,
goods, and services
To Advertise or Not
Advertising is used to influence consumers to
buy one product or service over another.
Management
Management is an
important function of
business.
management
the process of achieving
company goals by
planning, organizing,
directing, controlling, and
evaluating the effective
use of resources
Finance and Accounting
Finance requires
analyzing financial
statements to make
future decisions.
finance
the business or art of
money management
Finance and Accounting
Accounting requires
attention to detail and
accuracy.
accounting
maintaining and checking
records, handling bills, and
preparing financial reports
for a business
How the Functions of Business Are
Interdependent
The functional areas of a business depend on
each other.
Sometimes, the functional areas of a business
conflict with each other.
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Example of How Functional Areas Depend on Each Other
A furniture maker’s sales are decreasing.
The accounting and finance department notice decreasing sales.
If the furniture is too highly priced, more efficient procedures will have to be
implemented.
A new marketing plan is created.
The accounting and finance department will monitor the effects of new
marketing efforts.
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Example of How Functional Areas Conflict with Each Other
Management wants to increase sales by 20 percent within three years.
The production department suggests improving quality.
The marketing department requests more funds for projects.
Accounting says there is not enough money for either plan.
The final plan involves ideas from all the functions of business.
1. What is the difference between a producer
and a processor?
A producer gathers or creates raw products.
A processor changes raw products into more
finished products.
2. Identify the five functions of business.
production and procurement, marketing,
management, finance, and accounting
3. Give an example of how the accounting and
finance functions can affect a business’s
marketing and production processes.
If the financials show little profits, new
marketing plans may be developed and new
production procedures may be implemented.
End of
Chapter 6
Business
Ownership and
Operations
Section 6.2
Types and Functions
of Businesses