Business Test #1

What defines a business

* Size (local, regional, national or global)
* Structure
* Influence

The 7 characteristics that classify a business

1) Profit or non-profit

2) Size

3) Type of business ownership

4) Type of product provided

5) Channels of distribution

6) Role in the community

7) Jobs

For-profit business

Produces or sells good and services to satisfy the needs, wants and demands of consumers for the purpose of making a profit

Revenue (sales)

The money earned for selling goods and services

Cost of goods sold

The money required to purchase or produce the goods and services

Expenses

The payments involved in running a business and the assets that get “used up” operating it.

Profit

The income left after all costs and expenses are paid (usually the owner keeps it)

Profit equation

PROFIT = Revenue – Cost of Goods - Expenses (or loss)

Non-profit

Raise funds for a specific goal. Only charities and charitable organizations are called non-profit and are allowed to raise such funds.

Not-for-profit

Uses any surplus funds to improve the services offered to members. However, they do not distribute profits to members. ie. YMCA

Classification of a small business

* employs fewer than 500 people
* estimated to be over one million in Canada
* provides jobs for more than 60 percent of the Canadian workforce

Forms of business ownership

1) sole proprietorship

2) partnership

3) corporation

4) co-operative

5) franchise

Channels of distribution

* e-commerce
* brick and mortar
* catalogues

Producers

Businesses that make goods or provide services that consumers need or want

Consumers

People that purchase goods and services from producers

Marketplace

Place where producers and consumers come together to buy and sell their goods and services (ex. facebook, farmers market)

Consuming habits of Canadians tell businesses…

* what goods and services consumers want
* when they want them
* where they want them
* how much they are willing to pay for them.

Perceived obsolescence

Advertising and marketing of goods that convinces consumers to throw things away that are still useful. Examples : Clothes, new I-phones, monitors

Planned obsolescence

Goods that are designed to break down quick, for the dump. Examples : DVD Players , BBQ’s , Camera’s , Computers

Entrepreneurs

Individuals who are risk-takers and problem-solvers. They are acutely aware of opportunities in the marketplace and take advantage of these in their businesses

Economic resources

1) Required to produce goods and services

2) Also known as the factors of production

3) There are 3 kinds of economic resources – Natural, Human, Capital.

4) They are limited or scarce

Natural resources

Materials that come from the earth: water, air soil, oil, trees

Capital resources

buildings, equipment, tools, trucks, factories

Human resources

The people who work to create the goods and services, LABOUR and ENTREPRENEURSHIP

Why we need economic resources

* resources are limited.
* How an economy (business and government) deals with the allocation (or distribution) of scarce resources among alternative uses

Interdependence

When businesses rely on the goods and services from a variety of businesses to satisfy consumer needs and wants. (ex: Yamaha: motorcycle and drums)

Demand

The quantity of a good or service that consumers are willing and able to buy at a particular price

Law of demand

its lists the relationship to prices and consumers

* When prices decrease consumers buy more and the quantity demanded goes up
* When price increase consumers buy less and the quantity demanded goes down

Conditions that create demand

Customer Awareness

Supply

Price

Accessibility

Factors that affect demand

Change in consumer income

Change in consumer tastes

Change in future expectations

Change in population

Supply

The quantity of a good or service that businesses are willing and able to provide within a range of prices.

Law of supply

Its relationship to prices and businesses list:

* When prices decrease businesses sell less and the quantity supplied goes down
* When prices increase businesses sell more and the quantity supplied goes up

Conditions that affect supply

the cost of producing or providing a good or service

the price consumers are willing to pay for it

Factors that change Supply

1) Number of producers

2) Changes in price

3) Changes in technology

4) Changing expectations for the future

5) Changing production costs

Solvent

To have all bills due, payed

Pricing Power

The ability for businesses to influence prices

Other term for economic resources

factors of production

Economic system

dealing with selection, production, distrubution etc

How long does it take for somthing to end up in the trash

6 monthes

Costs not captured in the price

Externalization of costs

Voting with your feet

having the ability to not purchase somthing from a business