Download - Ch01a-Intro to Basic Bus. Considerations
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BUSINESS
CONSIDERATIONS
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What is BUSINESS ?
BUSINESS= ones work or occupation
Special task or duty
Commerce or trade
Commercial or industrial establishment
*It is the process of producing goods &
services and then distributing them to
those who desire or need them.
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What is BUSINESS ?
In business process, here are several
key ingredients needed to support
economic activity called the FACTORS
OF PRODUCTION.
1) Land (natural resources)
2) Labor (human resource)
3) Capital
4) Entrepreneurship
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FACTORS OF PRODUCTION
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FACTORS OF PRODUCTION
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FACTORS OF PRODUCTION
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FACTORS OF PRODUCTION
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FACTORS OF PRODUCTION
1) Natural resourcesinclude land & that materialthat come from land (timber, mineral deposits, oil
deposits, water).
2) Labor (human resource)mental & physical effort
of all workers regardless of their skill or education
3) Capitalincludes the building, machineries, and
tools used to produce goods & services
4) Entrepreneurshipcapacity & willingness to
develop, organize and manage a business venture
along w/ any of its risks to make PROFIT.
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TYPES OF BUSINESSES
3 BROAD CLASSIFICATIONS OF BUSINESSESTABLISHMENTS :
1) Manufacturing companiesinvolved in the
conversion of raw materials into some
tangible, physical product.Ex : San Miguel Corp., Purefoods, Nestle, Intel
2) Merchandising companiesinvolved in the
selling of finished goods produced by otherbusinesses. This tangible, physical product is
called merchandise.
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TYPES OF BUSINESSES
3 BROAD CLASSIFICATIONS OF BUSINESSESTABLISHMENTS : ( contd.)
Merchandisers could either be :
a) Wholesalecompany that buys its product from the
manufacturer (or another wholesaler) and then sells theproduct to the company that eventually sells it to the
consumer.
ex : Puregold, Macro Inc, Super8
b) Retailcompany that buys its products from a wholesaleror manufacturer and then sells the product to the end
consumers.ex: SM stores, Rustans, The Landmark, Bench, and others
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TYPES OF BUSINESSES
3 BROAD CLASSIFICATIONS OF BUSINESSESTABLISHMENTS : ( contd.)
3) Service companies companies that do not
deal with tangible products, but rather
provides some sort of service as its major
operation.
4) Hybrid companiescompanies that involved
in more than one type of activity.(manufacturing, merchandise, and or service).
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MOTIVES OF GOING INTO
BUSINESS
PROFIT= the primary motive of a
person/group of persons in engaging in
business activity.What is PROFIT MOTIVE ?
The basic idea behind it is that a person will do
something only if the benefit derived from doing it
is greater than the sacrifice required in doing it. A rational person desires to drive the greatest
benefit with the least amount of sacrifice.
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MOTIVES OF GOING INTO
BUSINESS
PROFIT= the excess of benefit
(REVENUE) over sacrifice (COSTS).
GROSS PROFIT - the excess of benefitreceived over the sacrifice made to
complete a sale.
NET PROFITthe amount that remainsafter all costs have been deducted from
the revenue or benefit.
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Basic computational procedure to
determine Profit :
Sales or Revenues XX
Less: Cost of goods/services sold XX
Gross profit XX
Less: Selling and admin expenses XXNet Profit XX
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CHECKLIST FOR STARTING A
BUSINESS
1) Personal Assessment
2) Planning
3) Establishment
4) Implementation
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LEGAL FORMS OF BUSINESS
ORGANIZATION
Proprietorshipowned by a singleperson who has complete control over
business decisions.
Partnershiplegal arrangement in which2 or more persons agree to contribute
capital/services to the business and divide
the profits.
Corporationartificial being created by
law and is a legal entity separate and
distinct from its owners.
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The End
Chapter 1