1. Identify a local business for each of the following categories:
Bell Ringer Activity
Identify a local business for each of the following categories:
Producers Intermediaries
Processors Retailers
Manufacturers Service
Wholesalers

2. Read to Learn
Differentiate the six types of businesses.
Describe the five functions of business.
Discuss how the five functions of business relate to each other.

3. The Main Idea
There are many different types of businesses. The five functions of business are involved in every one.

4. Functions of Businesses
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Types of Businesses
Functions of Businesses
Producers
Processors
Manufactures
Intermediaries and Wholesalers
Retailers and Service Businesses
Production and Procurement
Marketing
Management
Finance and Accounting

5. Producers
A producer may be found in industries such as agriculture, mining, fishing, or forestry.
producer
a business that gathers raw goods

6. A processor may, for example, turn crude oil into gasoline.
a business that changes raw materials into more finished products

7. Manufacturers
Cars, CDs, and computers are examples of goods that are made by a manufacturer.
manufacturer
a business that makes finished products out of processed goods

8. Intermediaries and Wholesalers
An intermediary buys goods, stores them, and then resells them.
intermediary
a business that moves goods from one business to another

9. Intermediaries and Wholesalers
A wholesaler of clothing may buy thousands of jackets from several manufacturers, divide the large quantities into smaller ones, and sell them to retailers.
wholesaler
a business that moves good from one business to another

10. Retailers and Service Businesses
A record store is an example of a retailer.
retailer
a business that purchases goods from a wholesaler and sells them to consumers, the final buyers of the goods

11. Retailers and Service Businesses
Service businesses perform tasks rather than provide goods.
Service businesses employ about three- quarters of the workforce and are rapidly increasing in numbers.

12. Functions of Business
The five main functions of business are:
Production and procurement
Marketing
Management
Finance
Accounting

13. Production and Procurement
Production and procurement are closely related functions of business.
production
the process of creating, expanding, manufacturing, or improving goods and services
procurement
the buying and reselling of goods and services that have already been produced

14. Marketing involves getting consumers to buy a product or service.
the process of planning, pricing, promoting, selling, and distributing ideas, goods, and services

15. Management is an important function of business.
the process of achieving company goals by planning, organizing, directing, controlling, and evaluating the effective use of resources

16. Finance and Accounting
Finance requires analyzing financial statements to make future decisions.
finance
the business or art of money management

17. Finance and Accounting
Accounting requires attention to detail and accuracy.
accounting
maintaining and checking records, handling bills, and preparing financial reports for a business

18. How the Functions of Business Are Interdependent
The functional areas of a business depend on each other.
Sometimes, the functional areas of a business conflict with each other.

19. Example of How Functional Areas Depend on Each Other
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Example of How Functional Areas Depend on Each Other
A furniture maker’s sales are decreasing.
The accounting and finance department notice decreasing sales.
If the furniture is too highly priced, more efficient procedures will have to be implemented.
A new marketing plan is created.
The accounting and finance department will monitor the effects of new marketing efforts.

20. Example of How Functional Areas Conflict with Each Other
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Example of How Functional Areas Conflict with Each Other
Management wants to increase sales by 20 percent within three years.
The production department suggests improving quality.
The marketing department requests more funds for projects.
Accounting says there is not enough money for either plan.
The final plan involves ideas from all the functions of business.