Week 2. What Does a Business Enterprise Do
Page 1: What Does a Business Enterprise Do? Introduction to Business
Introduction to the topic of business enterprise
Page 2: Outline Definition of Business
Definition of business
Three main factors of production
Homo-economicus and rationality
Page 3: What is the business of business?
The term "business enterprise" refers to various aspects of economic activity
Can be used as a synonym for company, firm, or enterprise
Page 4: What is the business of business?
A business creates economic value by producing goods and services that satisfy customer needs
It optimally manages the factors of production
The aim is to seek profit
Page 5: 1. Satisfying Customer Needs
Need, want, and demand are different concepts
Need is something required or essential due to biology or social reasons
Wants determine the selection of goods and services to meet needs
Demand is the quantity of a good or service that a person is willing and able to purchase
Page 6: 1. Satisfying Customer Needs
Explanation of what a need is
Basic needs and secondary needs
Introduction to Maslow's Hierarchy of Needs
Page 7: 1. Satisfying Customer Needs
Maslow's Hierarchy of Needs as a source for understanding customer needs
Page 8: 2. Adding Value
Businesses create value by producing economic goods and services
Economic benefit/utility, scarcity, and value of exchange are key aspects
Page 9: 2. Adding Value
Utility is the value that consumers experience from a product
Different types of utility: form, time, place, possession/exchange, and information
Page 10: 2. Adding Value
Scarcity distinguishes economic goods from free goods
Economic goods are tradeable in the market and have an opportunity cost
Page 11: 2. Adding Value
Value of exchange is the process of adding value to a product to make it appealing to the next customer in the chain
Definition of market
Page 12: 2. Adding Value
Additional source for understanding the value of exchange in business
Page 13: 2. Adding Value
Discussion on whether education, security, law and order, and the coronavirus can be considered economic goods
Page 14: 3. Factors of Production
Overview of the factors of production: labor, capital, natural resources, entrepreneurs, knowledge/know-how/information
Page 15: Rationality and Homoeconomicus
Managers are assumed to make rational decisions in managing businesses
Rationality is necessary to optimize the use of scarce resources and maximize outputs
Homoeconomicus refers to people who act in line with rational decision-making
Page 16: Review questions
Questions about the differences between need, want, and demand
The role of business in satisfying needs
The importance of rationality assumption in managing a company
Page 17: References
List of references for further reading on the topic of