Intro To Business Formal – an organization that produces or sells goods or services to satisfy the needs, wants, and demands of consumers for the purpose of making a profit a) type of ownership – i.e. 2 or more owners, called partnerships b) the goods it produces or services it offers – i.e. “Ford Company” produces cars, “All Languages” provides translators and interpreters for over 100 languages c) the different functions it performs in its community – i.e. the “Canadian Cancer Society” offers support and raises funds to help people who have cancer d) the types of jobs it provides – i.e. meat packing company provides jobs to farmers, inspectors, truck drivers Entrepreneurs – people who take a risk and start businesses to solve a problem or to take advantage of an opportunity Need – an item that is necessary for survival such as food, clothing or shelter Want- an item that is not necessary for survival, but it adds pleasure and comfort to life Goods – monetary ($) value, which may change over time (i.e. sneakers – old pair might not be worth as much as a new pair, but they still might be of some good use and value) -produced and tangible (can see and touch it) Services - $ value -intangible (can’t touch) i.e. dentist, golfing - some are unpaid i.e. volunteers doing community service work Not-for-profit-organizations – a business that does not seek to make a profit i.e. charitable organization that helps people (i.e. food bank) Co-branding – two or more businesses under one roof - advantage – allows businesses to share space, reducing costs of operation and increasing the opportunity for profit Economic Resources (factors of production) - the means through which goods & services are made available to consumers 3 Kinds: a) natural resources – raw materials that come from earth, water and soil b) human resources- (labour) – the people who work to create the goods and services i.e. banker, farmer **many businesses have established a human resources department to manage their employees c) capital resources – i.e. buildings, equipment, tools, trucks, and factories - usually last for a long time but large expense for business i.e. money is also needed Producers – individuals or businesses that provide goods or services to meet the needs and wants of a consumer Consumers – the people who buy goods and services Demand – the quantity of a good or service that consumers are willing and able to buy at a particular price -we all have different demands Law of Demand – usually consumers will increase the quantity demanded of a good or service as prices decrease - as prices increase, the reverse is true 1) consumers must be aware of or interested in the good or service (advertise) 2) having enough supply of the good or service 3) making prices that are reasonable & competitive 4) accessibility – must be conveniently located – “location, location, location” 1) change in consumers’ income (i.e. usually income increases, people buy more, or less groceries and increase in restaurant meals) 2) change in consumers’ tastes (i.e. fashion industry-fads) 3) change in expectations of future conditions (i.e. if they expect prices will increase in future, often purchase more now and vice versa) 4) change in population (i.e. create an increase in need for cars, housing) The quantity of a good or service that businesses are willing and able to provide within a range of prices that people would be willing to pay Law of Supply – the relationship of increasing the quantity supplied as prices increase Conditions that Affect Supply – affected by the cost of producing it, and, to some extent, by the price people are willing to pay for it 1) change in the number of producers (competition, lower prices) 2) the price of related goods (i.e. the price of gas goes up, consumers may switch to smaller, more fuel-efficient cars or use more public transit) 3) a change in technology – as computer chip technology improved, computers more powerful, cost decreased) Goal of Business – to make a profit by supplying goods & services to meet consumer demands Profit – the income that is left after all costs and expenses are paid Expenses – those expenditures that are involved in running a business, such as wages Costs – the amount of $ required for each stage of production, such as the cost of raw materials As costs and expenses increase, the owner’s profit gets smaller Businesses, therefore, try to keep costs & expenses as low as possible by being efficient and well organized Competition – demand and supply certainly have an influence on price, but so does competition - i.e. if only one company offered cars for sale, that company could set the prices and consumers would have to pay if they wanted a car In reality, however, many companies sell cars & compete for car-buying consumers. This competition helps keep prices at a reasonable level A business cannot survive unless it produces goods or services that people need or want Over the years, many products become obsolete (no longer in use), either people no longer want or need products or new and improved products replace them i.e. 8-track cassettes, manual typewriters Businesses are always looking for ways to produce new and better products and to provide better services to consumers Successful businesses change as the wants and needs of consumers change