Determining the types of Ag. Business AG.BUS, UNIT 1, LESSON 2-2

Objectives 1. Define business, and describe the basic types of businesses. 2. Identify specific agribusinesses at the local, state, national, and international level, and describe their role in the agriculture industry.

Objectives 3. Define productive resource, and identify examples of productive resources used in the agriculture industry. 4. Identify and describe the four basic categories of resources, and explain why each resource is necessary to produce a product.

Terms Business Manufacturing Productive resource Retail Wholesale

A business is a commercial activity that an individual engages in or establishes with the purpose of making a profit by selling a good or service. A. There are two major types of businesses: Those sell a service.

1. Manufacturing is the process of converting a raw material into a finished product. An example of a manufacturing company is a business that takes raw wood material and turns it into finished (or planed) lumber or wood products, such as veneer or particle board. Another example of a manufacturing company is a meat locker facility that takes the live animal and converts the meat into a usable, wholesale form that can be distributed to other meat-packing facilities or grocery stores.

2. Wholesale refers to the sale of goods in large quantities for resale by another business or company.

3. Retail is the sale of goods from a business to a consumer. This is the final step in the process of taking the originally produced good, manufacturing it into a usable product, selling it to local businesses as a wholesale product, and making the product available to customers.

B. The second major type of business is one that offers a service instead of a good. Examples of businesses that offer a service include custom fertilizer and chemical application; tax and accounting services; repair and maintenance work; or advertising and computer application assistance.

Several important agriculture businesses started on the local and state levels and have progressed to the national and international markets. A. Companies such as John Deere, Kinze®, Pioneer®, and Archer Daniels Midland® (ADM) are all examples of companies and corporations that operate on the international level and employ thousands of people.

B. There are several companies and agriculture businesses that operate within the nation or within a few states in certain areas of the United States. C. Agriculture businesses are located in almost every area; they produce various products for farming or other important areas of agriculture.

A productive resource is any supply, support, or aid that adds value to a business. Examples of productive resources include equipment or machinery that make a particular task easier or more efficient. Other examples are the hiring of a new employee who specializes in a particular area in which the business owner may be lacking or the change of a current product to improve its overall quality.

A. In the grain industry, a productive resource might include the purchase of a sprayer or spray equipment.

B. Another example would be an agriculture advertising company that purchases new computer software that offers more features to its customers.

C. A new business that is currently operated by only one or two people may be more profitable by hiring another person to help. Depending on the specific business, this could increase overall production, expand store hours, or decrease the time spent manufacturing each product.

Four basic types of resources are necessary for any business: natural resources, human resources, capital availability, and technological development. More simply defined, these four factors are……….

A. To produce any type of product, the four basic factors are necessary. For example, in a farming situation, the land is necessary to grow the crops; labor is essential to planting and harvesting the crops; capital is important to purchase the materials and equipment to plant and harvest the crops; and management is necessary to ensure that all important factors of crop production are achieved in a timely manner.

B. The same principles can be applied to a horticulture business. Land is necessary to produce the plants or build a greenhouse; labor is important for planting, watering, and maintaining the products; capital is essential for purchasing the plants, seed, fertilizer, and growing facilities; and management is necessary to ensure that everything is completed in a timely manner and that every task has been performed correctly.

REVIEW What is a business, and what are the basic types of businesses? What are specific agribusinesses at the local, state, national, and international level? What are their roles in the agriculture industry?

REVIEW What is a productive resource? What are some examples of productive resources used in the agriculture industry? What are the four basic categories of resources? How is each resource necessary to produce a product?