1. Bell Work
Give me an example of a time where you had to make an important and or difficult decision.
What was the outcome? How did you decide?

2. Financing and Producing Goods
Chapter 10
Financing and Producing Goods

3. Investing in the Free Enterprise System
Chapter 10 Section 1
Investing in the Free Enterprise System

4. Turning Savings into Investments
Financing business operations and growth is an important part of the free-enterprise system.
Financing: obtaining funds or money capital for business expansion
People deposit funds into financial institutions, which make these funds available to businesses.
The movement of these funds creates economic growth and expansion.

5. Revenue vs. Profit
Revenue is the total amount of income generated by the sale of goods or services related to the company's primary operations BEFORE costs are taken into account.
Profit is the amount of income left over AFTER expenses are made (wages, rent, taxes, etc) /what-difference-between-revenue-and-profit.asp

6. Before You Pursue Financing
Cost-benefit analysis- weigh cost against benefits
5 Steps of cost-benefit analysis:
Estimate costs of expansion
Calculate expected income
Calculate expected profits
Calculate cost of loans
Undertake an activity up to the point at which the additional benefit equals the additional cost.

8. Why People are Willing to Finance Investments
People who finance investments seek rewards.
Interest earned on loan
Savers unintentionally finance business growth when they deposit funds in a savings account or CD.
Dividends from the stock
Personal stake in the company
The same individual is sometimes both the borrower and the lender.

9. Renting new stores and training new workers are some of the _____
Renting new stores and training new workers are some of the _____. A) costs of expansion B) expected revenues C) expected profits D) sources of financing

10. Renting new stores and training new workers are some of the _____.
A) costs of expansion
B) expected revenues
C) expected profits
D) sources of financing

11. Obtaining funds or money capital for business expansion is known as _____. A) financing B) cost-benefit analysis C) revenues D) stock

12. Obtaining funds or money capital for business expansion is known as _____.
A) financing
B) cost-benefit analysis
C) revenues
D) stock

13. Pursuing Investment Financing
Resources go where they generate the highest expected value.
Businesses compete for scarce financial resources.
There are many methods of financing:
Bonds
Stocks
Loans
The internet

14. New ways to invest… https://www.kickstarter.com/ https://wefunder.com/

15. Successful campaigns from Kickstarter

16. Success Criteria I can list five steps to cost-benefit analysis
I can determine the difference between revenue vs. profit

17. Bell Work
List at least three things you may need to borrow money for (think loans).
Do you think it is better to borrow money for the short term or long term?

18. Types of Financing for Business Operations
Chapter 10 Section 2
Types of Financing for Business Operations

19. Three Kinds of Financing
Debt financing can be divided in to three categories: short-term, intermediate-term, and long-term financing.
Debt Financing: raising money for a business through borrowing

20. Short-term Financing
Short-term financing is when the term of the loan is less than one year.
Used for short-term needs.
Includes:
Trade Credit
Unsecured Loans
Secured Loans
Line of Credit
Example:
During a growing season, a farmer may have to borrow money to buy seed, repair equipment, and pay workers.

21. Intermediate-term Financing
Intermediate-term financing is when the term of the loan is 1 to 10 years.
Used when a company want to expand through land, buildings, or equipment.
Includes:
Loans
Leasing
Example:
Expanding a business by opening another shop or store.

22. Long-term Financing
Long-term financing is when the term of the loan is longer than 10 years.
Used for major expansion.
Includes:
Bonds
Stocks
Example:
Buying expensive, long-lasting machines to replace outdated ones.

23. Short-term Types of Financing Long-term Trade credit loans loans
Intermediate
Line of credit
leasing
Types of Financing
Long-term
bonds
stocks

24. T-P-S
Why do you think that only large companies finance long-term debt by selling bonds? Why would people want to buy a bond from a large company vs. small company?

25. Choosing the Right Financing
Financial managers try to obtain capital at a maximum cost to the company by choosing the best mix of financing.
The length of a loan that a company takes or a corporation's decision regarding whether to sell bonds or issue stock depends on 4 factors.
Interest Costs/Rates
Financial Condition of the Company
Market Climate
Control of the company

26. Interest Costs
When interest rates in general are high, a business may be reluctant to take out a loan.
Higher interest rates make companies more likely to take out short-term loans in hopes that interest rates will drop.

27. Financial Condition of the Company
A company or corporation whose sales and profits are stable or are expected to increase can safely take on more debt, but only if its current debt is not too large.
Financial managers use cost-benefit analysis to determine if the potential profits will cover the cost of financing expansion.

28. Market
Financial managers need to be aware of the market climate when determining whether to sell bonds or issue stock to raise financing.
If economic growth in the overall market appear to be slow, investors may prefer the fixed rate return of bonds or preferred stock to the unknown return on common stock.

29. Control of the Company
Bonds and most preferred stock do not give voting rights to shareholders.
When debating issues of financing, financial managers may have to gain approval from the owners of common stocks before taking action.

30. Success Criteria
I can list and describe three types of financing for business operations.
I can list factors affecting financing decision.

31. The Production Process
Chapter 10 Section 3
The Production Process

32. Steps in Production Operations
After businesses obtain the necessary financing, they can begin production.
Production: process of changing resources into goods that satisfy the needs and wants of individuals and businesses.
Businesses may produce consumer goods or capital goods.
Consumer Goods: goods produced for individuals and sold directly to the public to be used as they are

33. Steps in Production Operations
The production process for goods involves:
Planning
Purchasing
Quality Control
Inventory Control
Product Design (Chapter 11)

34. Steps in Production Operations

35. Planning
Planning includes choosing a location for the business and scheduling production.
Planning consists of a business deciding where to locate the company and how to get its products to consumers.
Scheduling production operations involves setting start and end times for each step in the production process.

36. Purchasing
In order to do business, a company needs raw materials to produce goods or offer a service.
Purchasers must find the answers to questions such as:
Is this the best price?
Are theses goods made well? Will they last?
Does this supplier offer such services as equipment repair?
Who pays shipping and insurance costs, and how will goods be shipped?
How much time is there between ordering goods and receiving them?

37. Quality Control Quality Control involves overseeing:
The freshness of a good
Strength or workability
Construction or design
Safety
Adherence to federal or industry standards.
Quality control systems can be as simple as testing one item per thousand produced or testing each product as it is finished.

38. Inventory Control
Almost all manufacturers and many service businesses need inventories of the materials they use in making their products or offering their service.
Manufacturers and businesses also keep stockpiles of finished goods on hand for sale.

39. How Iphone is Made-China

40. Technology and Production
Technology has changed the methods of production since the Industrial Revolution of the late 1700s.
Technological impacts on the methods of production include:
Mechanization
The Assembly Line
Division of Labor
Automation
Robotics

41. Mechanization Mechanization: combined labor of people and machines.
With the introduction of machines in factories, entrepreneurs replaced skilled handiwork with machines run by unskilled workers.
Output per labor hour greatly increased with mechanization.

42. The Assembly Line
Assembly Line: production system in which the good being produced moves on a conveyor belt past workers who perform industrial tasks in assembling it
Because the assembly line results in more efficient use of machines and labor, the costs of production drop.

43. Division of Labor
Division of Labor: breaking down of a job into small tasks performed by different workers
Assembly line production is only possible with interchangeable parts made in standard sizes and with division of labor.

44. Division of Labor

45. Automation
Automation: production process in which machines do the work and people oversee them
Automation is very common in American society.
Traffic signals
Doors
Teller machines

46. Robotics
Robotics: sophisticated, computer-controlled machinery that operates an assembly line
In some industries, robotics regulate every step of the manufacturing process- from the selection of raw materials to processing, packaging, and inventory control