1. Objective 1.01 Understand the purpose and the functions of business
1.01 Purpose and Functions of Business
Objective 1.01 Understand the purpose and the functions of business

2. Purpose of Business
Businesses fulfill the needs and wants of consumers.
Consumers use goods and services
Customers purchase goods and services
Businesses sell goods, services or both to consumers
Goods—clothing, cars, computers, CDs
Services—hairdresser, dry cleaner, lawn care, babysitting

3. Motivation to start a business
Profit motive—desire to make money; see the opportunity to make money in the marketplace.
Opportunity to meet wants and needs of consumers
Opportunity to increase competition in the marketplace
Businesses are investment opportunities for individuals—future income

4. Functions of Business
Accounting—recording and reporting financial activity and transactions
Examples
Paying bills
Collecting money from customers
Paying taxes
Preparing employee payroll checks
Reconciling bank statements
Investing cash
Purchasing inventory

5. Functions of Business Management
Makes sure that the entire organization meets its goals and obligations
Effectively works with people in the organization
Uses available resources to accomplish the organizations’ goals

6. Functions of Business Marketing
Process of promoting and presenting a product or service to customers
Based on four “P’s”
Product – what you are selling (whether it is a good or service)
Price (establishing the price of the product)
Placement (placing the product in attractive and convenient sales locations)
Promotion (advertising, public relations, demonstrations, events, etc.)

7. Functions of Business Information Technology
Uses technology to share knowledge, facts, and data to others (co-workers, customers, and suppliers)
Examples
Maintains accounts
Maintains software applications
Maintains processing systems
Maintains hardware for all technology used

8. Functions of Business Operations Considered the “back office”
Involves behind the scenes paperwork required to complete all transactions
Found in both the service and the manufacturing sector

9. Functions of Business Human Resources
Manages “people” relations within the company
Helps workers develop the skills and knowledge needed to be successful on the job
Responsible for hiring and firing of employees
Selects employee benefits and enrolls all employees in the benefits (insurance, retirement, etc.)
Helps employees pursue educational opportunities

10. Needs vs. Wants
Needs – things that are necessary for survival (e.g. water)
*the way in which you fulfill your need may be a want
Want – a luxury item that is not needed for survival (e.g. jewelry)
*depending on factors such as culture, location, job, etc.; certain things that some people consider wants may be needs to other people (e.g. tractor)

11. Product Business vs. Service Business
Product Business – a business whose primary purpose is to sell goods (e.g. Old Navy)
Service Business – a business that is organized primarily for the purpose of providing a service (e.g. Delta Airlines)
Combination Businesses – businesses where the crux of the business is to both sell products and perform services (Arnold Palmer Cadillac)