What is a Business
What is a business?
An organization that provides a good or service to earn a profit
What is a non-profit?
business-like establishment that employs people and produces goods and services with the fundamental goal of contributing to the community rather than generating financial gain
Name the factors of production
1. Natural Resources
2. Capital
3. Human Resources
4. Entrepreneurship
Describe the business environment and what it determines.
Business Environment: the setting in which business operates and can determine whether an overall economy thrives or disintegrates
Name the 6 main functions of a business
1. Accounting
2. Finance
3. Management
4. Marketing
5. Operations
6. Sales
What do business' do with their profit?
Reward employees, increase productivity and/or expand into new areas
Who owns non-profits?
publicly owned
Describe natural resources
This factor includes all inputs that offer value in their natural state, such as land, fresh water, wind, and mineral deposits
Most natural resources must be extracted, purified, or harnessed; people cannot actually create them
What does PEST stand for?
1. The Political Environment
2. The Economic Environment
3. The Social Environment
4. The Technological Environment
Name 3 other important departments to a business.
HR, IT, R&D
What makes a business a business?
The pursuit of profit
What aspects makes it a non-profit?
Purpose, ownership, public support
Describe capital
This includes machines, tools, buildings, information, and technology – resources that a business needs to produce goods or services.
What is a PEST analysis?
A strategic tool used by businesses to discover, evaluate, and track outside factors that can impact their business now and in the future
Describe accounting and finance as functions.
Accounting: the process of recording financial transactions pertaining to a business
Finance: the management of money
How do you find profit?
Profit = Revenue - Expense
Describe public support
The income a nonprofit makes must never be distributed to any owners but recycled back into the nonprofit corporation's public benefit mission and activities
Describe human resources
This encompasses the physical, intellectual, and creative contributions of everyone who works within an economy
Describe a PEST analysis
P: Changes in the government policy make up the political environment for a business. The change can be economic, legal or social, or a mix of these factors
E: Changes in general economic conditions affect (and are affected by) supply and demand, buying power, willingness to spend, consumer expenditure levels, and the intensity of competitive behavior
S: The socio-cultural elements include the forces in a society, its cultures, and sub-cultures that bring about changes in perceptions, attitudes, beliefs, norms, customs, and lifestyles
T: Technology is the application of human ingenuity that improves or increases efficiency; this includes everything from physical tools to more efficient processes, to digital and computing capabilities
Describe management and marketing as functions.
Management: the coordination and administration of tasks to achieve a goal
Marketing: the process of creating, promoting, and selling products
Name and give an example of each type of business.
Manufacturing: industrial plants
Service: hair salon
Retail: clothing store
Hybrid: restaurant
How do non-profits generate income?
Donations, grants, mission-related income to fund its socially-oriented activities
Describe how economic freedom affects entrepreneurs
Entrepreneurs are people who take the risk of launching and operating their own businesses, largely in response to the profit incentive
However, entrepreneurs don’t thrive in an environment that doesn’t support them
The key ingredient is economic freedom:
- Freedom of choice (who to hire, what to produce)
- Freedom from excess regulation
- Freedom from too much taxation
Name one example from each factor in a PEST analysis on Apple.
P:
-Import restrictions and tariffs
-Tax regulations
-Vulnerable to political unrest in China
E:
- High unemployment rate
- Market recession
- Inflation
- Increasing labor costs
S:
- iPhone addiction
- Education and business sectors using their devices
- Age range of users expanding into kids and older adults
T:
- Increasing competition from companies like Samsung, Google, and Motorola for smartphones
Describe operations and sales as functions.
The operations function of a business has one overarching goal: to use company resources to efficiently produce products that customers want
Sales: activities related to selling products