Chapter 5 Intro to Business Business in the Economy Business in the Economy

Four Kinds of Business  Extractors-a business that grows products or takes raw materials from nature. Farmers Farmers Silver/coal miners Silver/coal miners Fishermen Fishermen Sometimes the extractor’s products are ready to be sold just as they come from the earth or sea. (i.e. fish from the sea, potatoes from the ground)

2nd of the 4 kinds of Businesses  Manufacturers-takes the extractor’s products or raw materials and changes them into a form that consumers can use. Manufacturers -some manufactures are only a part of the total activity of producing goods from the extractor’s products. -together, extractors and manufacturers are industries that change the form of resources from their natural states into products for consumers.

Manufacturers-cont.  Custom Manufacturing -building a specific and unique product to meet the needs of one customer. Golf courses Golf courses Dentures Dentures  Mass Production-a large number of identical products are assembled using a continuous, efficient procedure. Automobile assembly lines (thank you Henry Ford) Automobile assembly lines (thank you Henry Ford) Beverage bottling plants. Beverage bottling plants.  Processing-changes the form of materials so they can be consumed or used to manufacture other products.

(3) Marketers  The services of many businesses are often needed before goods actually reach consumers.  A business that is involved with moving goods from producers to consumers is called a marketer.  The activities of marketers are called marketing.  Marketing includes more than just transporting and selling products.  Marketers also help to:  Identify  Develop  And test new products to see whether consumers will like them and buy them.  Marketing adds value to products by bringing them to where the consumer is, at a time they are wanted, in the assortment wanted, and at prices the consumer is willing to pay.

Service Business  A business firm that does things for you instead of making or marketing products is called a Service business.  Service businesses are the fastest growing part of our business world.  By the year 2006, it is expected that three out of four jobs will be in businesses that provide services to others.  Examples of service businesses: Moving companies that move you from one state to another. Moving companies that move you from one state to another. Airlines that fly you from one place to another. Airlines that fly you from one place to another. Style your hair Style your hair Wash your car Wash your car Do your income taxes Do your income taxes Board your pet Board your pet Clean your teeth. Clean your teeth. Daycare (more multiple workers per household) Daycare (more multiple workers per household)

James Vicary, an advertising expert, went into a 1950s movie theater to test his devious new tool for persuading others: subliminal advertising. During the movie he allegedly flashed the commands "EAT POPCORN" and "DRINK COKE" so fast that the unsuspecting audience couldn't consciously see the words. Vicary claimed Coke sales jumped 18.1% and popcorn sales leaped 57.7%. On that day, subliminal advertising was born.

Study hard.. do what your teacher tells you to do.. behave!

Business Activities  Generating Ideas-once a business is established to sell a good or service, it must continue to develop ideas in order to survive. Businesses compete with other firms that sell the same or similar products. Businesses compete with other firms that sell the same or similar products. Many firms have research and development departments (R and D) who work full time creating and testing new products. Many firms have research and development departments (R and D) who work full time creating and testing new products.  Raising Capital-start-up money is critical and must be found to start the business. It can come from many sources. Established businesses must continue to raise capital throughout the life of the firm. Established businesses must continue to raise capital throughout the life of the firm. Most money obtained from loans or from people who wish to invest in the business.Most money obtained from loans or from people who wish to invest in the business.  Buying goods and services-businesses buy goods and services both for resale and for their own use. Businesses that manufacture products need to buy raw materials to produce their products. Businesses that manufacture products need to buy raw materials to produce their products.

Business Activities-cont.  Using Human Resources-all firms need to have a system for carrying out activities that attract, employ, and develop human resources. These include: Recruiting (finding workers) Recruiting (finding workers) Interviewing and testing applicants Interviewing and testing applicants Selecting employees Selecting employees Training and developing both new and experienced employees Training and developing both new and experienced employees Appraising job performances Appraising job performances These activities are often carried out by a human resources, or personnel department. ****Mitsubishi story!!  Marketing Goods and Services-activities directed toward providing the kind of product or service desired by consumers. Assists in the design and development of products and services that will meet the needs of prospective customers. Assists in the design and development of products and services that will meet the needs of prospective customers.

Business Activities-cont.  Producing Goods and Services-the heart of a successful business is the production of quality products and services. The good or service must be produced at the scheduled time The good or service must be produced at the scheduled time In the appropriate quantity and quality In the appropriate quantity and quality And at a competitive cost And at a competitive cost  Keeping Records-all businesses must have some kind of a record keeping system, probably utilizing computer technology. Many records must be completed and compiled in reports to enable the owner or manager to know how the business is doing. Many records must be completed and compiled in reports to enable the owner or manager to know how the business is doing. How much has been soldHow much has been sold How much what they sold costHow much what they sold cost What was returnedWhat was returned How much they owe to othersHow much they owe to others Records are important for: Records are important for: Determining whether a business lost or made moneyDetermining whether a business lost or made money Provide information for management decisionsProvide information for management decisions Provide date for government reports and taxesProvide date for government reports and taxes

Impact of a New Business on a Community  Pays wages to employees  Workers spend this money for goods and services  New People come to a community  Local builders will hire more workers and buy more materials  Businesses also tend to attract other businesses which creates more jobs  Others: