1.1 Nature of Business

What is a Business?What is a Business?Any organization that uses resources to Any organization that uses resources to produce a good or service.produce a good or service.

What is added-value?What is added-value?

Changing or altering a natural resource or Changing or altering a natural resource or a semi-finished good to make it morea semi-finished good to make it moredesirable.desirable.

What do businesses do?What do businesses do?

Businesses identify needs of consumers Businesses identify needs of consumers then purchase resources (or inputs) to then purchase resources (or inputs) to

produce outputs.produce outputs.

Making Profit?Making Profit?Usually business aims to make money.Usually business aims to make money.

Land (& natural resources) Fields for factories/ energy for power

Labor Employees needed to run machines, sell, etc.

Capital Plant/machinery/computers, $

Enterprise/Entrepreneurship People to invest/manage/innovate/take risks

These are also referred to as “Factors of Production”

Goods and Services that satisfy the needs

and wants of customers.

“goods” something tangible—touchable “service” usually intangible—people do

things for you

Consumer GoodsConsumer Goods•Consumer goods are sold to general public.Consumer goods are sold to general public.

Can be Durable or Non-durable.Can be Durable or Non-durable.

Durable GoodDurable GoodConsumer goods that can be used over time, Consumer goods that can be used over time, repeatedly.repeatedly.

ExamplesExamples of:of: Televisions, T-shirt, books, cars Televisions, T-shirt, books, cars

Non-Durable GoodNon-Durable Good•Consumer goods that can only be used once.Consumer goods that can only be used once.Examples of:Examples of: Food, drinks, and candy Food, drinks, and candy

Capital GoodCapital Good•Goods used by industry to produce other goods Goods used by industry to produce other goods and servicesand services

ExamplesExamples of:of: machinery, cranes, dump trucks machinery, cranes, dump trucks

Consumer ServiceConsumer Service

•Non-tangible product that sold to the consumerNon-tangible product that sold to the consumerExamples of:Examples of: hotel rooms, airplane ticket, insurance hotel rooms, airplane ticket, insurance

Business Functions (Departments) Marketing Finance Human Resource Management

Operations Management

Marketing Identifies consumer wants based on market research

Product/Price/Place/Promotion plus 3 more…

How and where to promote How to sell and distribute

Finance

Flow of money in and out of business

Provides financial information to management

Key division to all companies

Human Resource Management Identifies workforce needs of

business Recruits potential employees Selects and trains staff Motivational systems to retain staff

and encourage productivity Employment contracts Redundancy and redeployment of

staff

Operations Management

Insures resources are available for production

Maintains production levels Maintains quality levels Oversees production efficiency

Interrelationship

All four business functions must work together!

Sectors of Industry Primary Sector – deal with natural

resources Farming, fishing, natural resource extraction

Secondary Sector – deal with manufacturing and processing Assembly, baking, clothing, construction

Tertiary Sector – provide services Retailing, transportation, insurance, banking,

tourism, telecommunications AND Quarternary Sector-IT