BUSINESS: An organization that produces and/or sells goods and/or services to satisfy the needs and wants of consumers.

-A business can be

as small as a hot dog vendor on a street corner or as large as a major corporation such as Microsoft.

-Everyone is involved in the business world to some extent since we all make, buy, sell or exchange goods and services.

The business world contains 2 major groups:

• PRODUCERS:  Make the goods or provide the services.

• CONSUMERS:  Buy goods and use the goods or services to fill a need or want.

Goods vs Services

GOODS: These are the items that you can purchase, possess and use.

  Example:  Binder, Computer, Potatoes, Car

SERVICES: Not physical objects, but are helpful acts in exchange for pay.  Useful labour that

is non-tangible and is a benefit to the Consumer.

  Example:  Hair cut, Consultation, and Repairing Car, internet.

**Businesses can

provide both goods and services

Example:   Chevy dealers will sell and repair cars.

Producers of Goods are divided into 2 groups:

MANUFACTURERS-the company or business that produces the goods.

SUPPLIERS-provides the consumer with the good or service

Example:

furniture manufacturer produces couches and furniture store supplies them to the consumers to be purchased.

Producers supply Goods and/or services to consumers like yourself and/or to businesses:

*Goods that consumers purchase directly to satisfy their needs and wants are called CONSUMER GOODS (ie: food& clothing).

*Goods that business purchase for producers is called INDUSTRIAL GOODS (ie: flour bought to make bread).

*The consumer who purchases a good for his/her personal use is called the ULTIMATE CONSUMER (ie: buy bread to eat).

*The business that uses the goods itself is called the INDUSTRIAL CONSUMER (ie: restaurant buys bread to make sandwiches to sell).

Factors of Production:

1. Human Resources - Education/training, Health, Problem Solving

2. Natural Resources - Land, Water, Animal, Trees, Mineral LimeStone

3. Capital -  Money to start and keep going through startup

4. Technology / Innovation - Knowledge

Business --an organization that produces and/or sells goods and/or services to satisfy the needs and wants of consumers

Profit—The income that is left after all costs and expenses are paid.  Revenue - Expenses

Expenses—The expenditures that are involved in running a business ie: wages.

Costs —The amount of money required for each stage of production ie: raw materials

Profit:

Profit allows a company to invest money back into the business to fund expansion and

growth.  It also allows the owner to spend money on personal wants and needs.

Solvent - If a business does not make a profit but makes enough money to cover all of it’s

expenses, the business is “Solvent”.

Competition:

The price of a product is very dependent on Competition. Businesses that compete will lower

prices to try to attract consumers away from other stores so competition will help keep prices at reasonable levels.

Consumer benefits of competition

include

•  lower prices;

•  higher quality goods & services

• and
  development and introduction of new products.

Direct Competition: A business that provides similar goods or services to the same market

In-Direct Competition: Business that fill the same need but in different way. 

Need food…option  McDonalds vs Zehrs

Demand

The quantity of goods or services that consumers are willing to buy at a particular price.

Law of Demand: The consumers will increase the quantity of demand of a good/service as the price decreases.

Factors that affect Demand

1. Consumer’s income

•  An increase in the income level allows people to increase spending (ie: buy a 2nd TV)

• A decrease in the income level will decrease the spending

• 2. Change in consumer tastes—ie:   Fashion  Music.

3. Change in expectations of future conditions

•  If consumers expect the price of an item
  to increase, they will buy the item now.

•  If
  consumers expect the price of an item to decrease, they will buy the item
  later

4. Change in Population—ie: An increase in the

population age (>55) will increase the need for retirement homes.

 What is Supply?

The quantity of goods or service that businesses are willing to provide within a range of prices that people are willing to pay.

Law of Supply:  Increasing Prices will result in Increase of supply.

Factors that affect Supply:

1.    Change in the number of producers

· An increase in the amount of profit a company can obtain by selling a product, the more companies that will become

interested in producing the product.

· A decrease in the amount of profit a company can obtain by selling a product will cause a decrease in the amount of

companies that will become interested in producing the product.

2. Price of related goods—If gas is expensive, people may sell their large cars and buy smaller fuel-efficient

cars.

3. Change in Technology—ie: Smaller cell phones & Laptops

4. Change in Expectations—Forecasting trends

5. Change in Cost of Production—the less expensive the cost of input costs. ( raw materials, fuel )

PRICE

Price is mainly determined by:

   Supply and Demand

·    If Demand for a product is high and the Supply of the product is low, the price will INCREASE.

·  If Demand for a product is low and the Supply of the product is high, the price will  DECREASE.

The cost of producing the good or  service—ie: If the cost of producing a product is low, then the company can afford to sell the item at a lower price.

Obsolete:   no longer in use or no longer useful.  VCR, Typewriter, computer diskette.  

Maslow’s hierarchy of needs.

a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid.

From the bottom of the hierarchy upwards, the needs are physiological (food and clothing), safety (job security), love and belonging needs (friendship), esteem, and self-actualization.

Needs lower down in the hierarchy must be satisfied before individuals can attend to higher needs.

DECISION-MAKING MODEL

 In order for businesses to survive it is important that they are aware of the wants/needs of

consumers and the changing technology and trends.  Businesses that do not adapt will risk

becoming obsolete.

Successful

businesses will use a Decision-making model to solve problems.

Steps in the Decision Making Model: 

CYCLE

1.   DEFINE THE DECISION TO BE MADE:

      Get to the ‘root’ of the problem.

     What is the problem Who? What? When? Where? How?

2. IDENTIFY THE ALTERNATIVES:

    Brainstorm for all possible alternatives including the ‘silly’ ones (these may be the last option)

3. EVALUATE THE PROS & CONS OF EACH ALTERNATIVE

     Use a table format for this

4. MAKE A DECISION & TAKE ACTION

      Make an informed decision based upon the pros & cons of each alternative.

 5.    EVALUATE THE DECISION

      Reflect and review your decision to make sure that you made the right choice. If the solution did not work, go back to the alternatives and see if there is another option.