Buisness Unit 1

unit 1

What is a business?

 An organized effort to provide a good or a service

4 core pillars:

Value and Creation, The Market, Sustainability and Profit, Risk and Reward

pillar 1: Value and Creation

-Have meaning towards the product or service

pillar 2: The Market

-provide value for exchange

-affected by SUPPLY and DEMAND

pillar 3: Sustainability and Profit (meaning of revenue, expenses, profit)

-Revenue: total money received

-Expenses: excess costs

-Profit: the total money after expenses (crucial for growth)

pillar 4: Risk and Reward

-no guaranteed success

-better to start younger

Needs VS Wants

Need: Things you need for survival (food, water, air, medicine, clothes, place to live, iPhone)

Needs VS Wants

Want: Not needed for survival but make life more enjoyable (Isabelle Marant shoes, a Birkin, mani pedi)

*WANTS and NEEDS differ based on you being….

the CONSUMER or the OWNER

CONSUMER NEEDS VS WANTS

Value? Fair Pricing VS Deal

Reliability? Functionality VS Automation

Access? Availability VS Convenience

Trust? -Honesty VS Social Proof

Support? Problem Resolution VS Personalization

 

OWNER NEEDS VS WANTS

Finance? Positive Cash Flow VS High Profit Margins

Operations? Reliable Systems VS Automation

Marketing? Customer Awareness VS Brand Loyalty

Human Capital? Competent Help VS Top-Tier Talent

Strategy? Market Relevance VS Scalability

Sectors of an Industry: 3

Primary, Secondary, Tertiary

Sectors of an Industry: PRIMARY

-Extract natural resources for agriculture, mining, forestry and fishing

-Adapt to sustainable and environmental responsibilities

Sectors of an Industry: SECONDARY

-Combines raw materials with assembling tangible finished products

-The factory moment

Sectors of an Industry: TERTIARY

-service industry focusing on services rather than goods

EXAMPLE

• primary? Wheat being grown in fields and being farmed then sold to a manufacturer

• secondary? Wheat is then brought to a wheat factory and being packaged up and manufactured into flour and being sold to a baker

• tertiary? Flour is then used in bread or pastries and sold in bakeries and grocery stores

true or false??? THE PRICE INCREASES THE MORE HANDS THAT TOUCH

true

for-profit business?

a company that operates to earn financial gain and distribute profits to its owners, shareholders, or investors

non-profit business (or organization)?

operates exclusively for social, educational, scientific, or community welfare purposes rather than to generate private profit for owners or shareholders

TYPE OF BUISNESS OWNERSHIP

this is a border of lessons

Unincorporated structure (3 points)

• Business and owner are legally the same entity

Ex: say I bake cookies at a bake sale and I register as an unincorporated company, I and my company are liable for any issues

• Quick and inexpensive to set up with minimal government wok

• High risk as YOU and your COMPANY are viewed as the same person

Corporate Structure (3 points)

• Legal separation between the PERSON and COMPANY

• Limited liability protection (owners lose what they invest)

• Higher setup costs

Limited Liability Company?

Separates owners personal wealth from corporate allegations

Types of for-profit business: 3 of them

SOLE PROPIETORSHIP

PARTNERSHIP

LOOKING AT CORPORATIONS

SOLE PROPIETORSHIP:

• Good for solo business

• Lowest cost

• You are the company (no separation)

• Low risk

• Difficult to raise money, invest your own money

• Long working hours

PARTNERSHIP

• Shared capital and skills

• Partnership agreement

• Joint liability (both people fully responsible)

• More people can do more things

• More ideas

• More money

• More conflicts

LOOKING AT CORPORATIONS (private)

Private Corporation

• Shares are held by a small group

• Shares cant be bought or dol on public stock exchange

LOOKING AT CORPORATIONS (public)

Public Corporation

• Shares are traded or sold publicly (more money)

• Can raise massive capital by selling shares

what is a chain?

a single corporation and operates business in different locations

what is a franchise

is when a big company gives you official permission to open your own store using their famous name and products.

Acquisition?

when one company buys another company

Crown

Corporation?

owned by the federal, provincial and municipal governments, their function is to provide a special service to the public

Limited

liability?

the extent to which shareholders are responsible for a company’s debt. it is the same as their financial involvement.

Corporation?

a legal entity that exists independently of its owners, who are called corporate shareholders.

Co-operative?

business owned and operated by a group of people with a strong common interest.

Merger?

when 2 companies unite to form one company

Partnership?

a form of business organization in which two or more people own and operate a business together.

Home based

Business?

many new and part-time businesses that are operated from one’s residence.

socially responsible?

the duty to care for others whose actions can be affected in a damaging way.

Ethics?

the standards of conduct that society believes people should follow.

Franchisor?

the party that sells the rights to use the business name and sell a product or a service in a given territory.

Small business?

a business that is independently operated, does not dominate in its field and meets size limitations in terms of employees and annual sales.

Unlimited

liability?

A condition in which a person is responsible for paying all the debts or liabilities of the business.

globalization?

doing business internationally

sole proprietorship?

a business owned and operated by one person.

Public corporation?

this type of corporation does not have restrictions on its number of shareholders. Shares are bought and sold on public stock exchanges.

shareholders?

the people who buy shares in a company

what is Collateral? (think its similar to loan shark interest)

a valuable item you promise to give the bank if you cannot pay back money you borrowed

Private corporation?

the shares of this company are not offered for sale to the public. this type of corporation can have up to 50 shareholders.

what is the board of directors?