what is business slides
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Chapter One
What is Business?
2007 The McGraw-Hill Companies, Inc., All Rights Reserved.McGraw-Hill/IrwinIntroduction to Business
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What is Business?
Business
- goal-directed behavior aimed at getting and
using productive resources to buy, make,trade, and sell goods
and services that can
be sold at a profit
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Productive Resources and
Operating Costs
Figure 1.1
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Key Business Terms
Business Model
- a companys plan of action to use
resources to create a product that will giveit a competitive advantage
Competitive advantage
- a companys ability to offer customers aproduct that has more value to them than
similar products offered by other
companies
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Key Business Terms
Sales revenue
- the amount of money or income that a
company generates from the sale of theproduct
Profit
- the total amount of money left over afteroperating costs have been deducted from
sales revenues
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Key Business Terms
Capital
- profit that is kept in a company and
invested in its business Wealth
- the sum total of the resources, assets,
riches, and material possessions owned bypeople and groups in society
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Profit and Profitability
Profitability
- a measurement of how well a company is
making use of its resources relative to itscompetitors
Profit- the difference between sales revenues and
operating costs
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Business as Commerce
Trade
- the exchange of products through the use
of money Barter
- the exchange of one product for another
product
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Transaction Costs Related to
Business
Transaction Costs
- the costs of bargaining, negotiating,
monitoring, and regulating exchangesbetween people in business
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Demand, Supply, and
the Market Price
Diminishing marginal utility
- the principle that the value people receive
from an additional unit of a product declinesas they obtain more of a product
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Demand, Supply, and
the Market Price
Law of demand
- the principle that states as the price of a
product rises, consumers will buy less of it,and as the price of it falls, consumers will
buy more of it
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Demand, Supply, and
the Market Price
Law of supply
- the principle that states that as the price of
a product rises, producers will supply moreof it, and that as the price of it falls,
producers will supply less of it
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Demand, Supply, and
the Market Price
Figure 1.3
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Determining the Market Price
Market
- buyers and sellers
for a particularproduct
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The Invisible Hand of the Market
Invisible hand
- the principle that the pursuit of self-interest
in the marketplace naturally leads to theimproved well-being of society in general
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The Invisible Hand of the Market
Monopoly
- a situation in which one company controls
the supply of a product and can charge anartificially high price for it
Human capital
- a persons stock of knowledge, skills,experience, judgment, personality, and
abilities
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Business Organizations
Organizational structure
- the framework of task and authority
relationships that coordinates people sothey work towards a common goal
Functional activities
- the task-specific operations needed toconvert resources into finished goods and
services sold to customers