Chapter 2: Business Basics

Unit 1: Marketing Basics

Learning Goals

Differentiate between economic needs and wants

Describe the three uses of money Explain how a business makes a profit Describe the three forms of business

ownership Describe the difference between a for-profit

corporation and a not-for-profit organization Identify the four functions of business and

give an example of each

Day 1 Response Journal

What do you NEED to be able to live?

Create a list.

***Save As Feb 9 in your Response Journal Folder***

Economic Needs and Wants

A _________ is something that is necessary for survival E.g. air, water, food, clothing

and shelter Includes things you need to

function in society• E.g. you need schoolbooks,

school clothes (uniform) and transportation to and from school

A __________ is something you desire, but could function without Examples???

Need

Want

Economic Needs and Wants

Everyone has needs and wants Some cannot be satisfied by buying

something E.g. you cannot buy friendship

Needs and wants that you can satisfy by buying something are called ____________________________

_______________________________ are the items you buy to satisfy economic needs and wants

Economic Needs & Wants Economic Goods & Services

The Exchange

Read the example on page 19 paragraph 6

To _____________ is to trade something of vales for something you want

You may exchange money for a;

Soft drink (a good)

A concert ticket (a service)

A cause – donate to a local animal shelter (an idea)

Exchanges are the basis of all business

Exchange

Money

____________ is a consistent item that people accept in exchange for goods or work

Without money, modern business could not exist

Money is used in three ways; 1. As a medium of exchange2. As a unit of value3. As a store of wealth

Money

1. Medium of Exchange

Read the example on page 21 paragraph 2 Money is a convenient medium of exchange

Paper money and coins are easy to carry

2. Unit of Value

Money can express the exact ________ of an item Value is how much something is worth

The dollar is the unit of value in Canada The dollar is used to express the value of

goods and services the same way km are used to express distance

The value of a product expressed in dollars is the __________

Marketers use price to set the value of a product

Value

Price

3. Store of Wealth

Money is easy to __________ It enables you to keep and store wealth in

a compact, easy, long-lasting form Money is considered a store of wealth

because it enables you store (in other words save) money until you need it

Store

What Is Business?

_______________ is the general term for activities involved in the development and exchange of products The term business also refers to a person or group

of people who are involved in the development and exchange of products

A business can be large (e.g. General Motors) or small (e.g. a lemonade stand)

Business

What Is Business?

Other terms that are often used to refer to a business include;FirmCompanyOrganizationCorporationEnterprise

What Is Business?

Business is the engine that powers economies around the world

Money flows; From businesses to workersFrom the workers back to the businessesBusiness provides; Goods and services you use every dayWages (money) people use to buy goods and services

What Is Business?

Making a Profit

The main goal of most businesses is to make a __________

Profit is the money that a business has left over after all the expenses and costs of running the business are paid

A business makes a profit by marketing products that customers want and are able and willing to buy Customers want and are willing to buy products that

meet their needs Therefore, businesses make a profit by satisfying the

needs and wants of their customers

Profit

Making a Profit

Sales Costs andExpenses Profit

Day 1 Assigned Work

Students please complete the following; K & U Questions #1 & 2 on page 27Thinking Question #1 on page 27Application Questions #1 on page 28

Day 2 Response Journal

What do you think are the advantages and disadvantages of owning your own business?

Create a list for each.

***Save As Feb 10 in your Response Journal Folder***

Forms of Business Ownership

There are 3 main forms of business ownership;

1.Sole Proprietorship

2.Partnership

3.Corporation

Forms of Business Ownership

A sole proprietorship is a business owned by ________ person who

Gets all profits Bears all risks

E.g. Dr. Stephan Morrison, Dentist

A partnership is a business owned by a small number of people, usually ______ or ________

Partners share profits and risks E.g. Dueck, Sauer, Jutzi & Noll Law Firm

One

TwoThree

What Is a Corporation?

A _______________ is a legal entity established for the purpose of do business Exists separately from the people who own it Therefore, the owners are not responsible for the

actions of a corporation Owned by shareholders/stockholders

• A ________ or ________ is the right to partial ownership in a corporation

• The corporation sells stock, and the people who buy the stock become the owners of the corporation

Examples; Ford, Microsoft and Rogers

Corporation

Share Stock

What Is a Corporation?

As a legal entity, a corporation can; Buy propertyManufacture productsEarn moneyLose moneySue Be sued

A corporation offers __________________ to its shareholders. Therefore …

When sued, the corporation pays the damages, the shareholders (owners) do not pay

Limited Liability

For Profit or Not-for-Profit?

In general, there are two types of business organizations;

1.For-Profit Goal of a for-profit corporation is to make a

profit for its owners It is assumed that a business is for profit,

unless otherwise stated

2.Not-for-Profit Goal of a not-for-profit is to benefit society

What Is a Not-for-Profit Organization?

A not-for-profit organization …Is a legal entityIs established to provide a benefit to societyCan make a profit

However, any profit made must be reinvested in the organization to support its cause or benefit

Also called non-profit organizations

What Is a Not-for-Profit Organization?

Examples of benefits or causes that many Not-for-Profits support include;

Raising money for medical research• E.g. Canadian Cancer Society

Protecting the environment• E.g. World Wildlife Fund

Providing services to children in need• E.g. Ronald McDonald House Charities

Canada

The Functions of Business

___________ is a general term for a category of activities

Businesses carry out numerous activities every day These activities are grouped into 4 functions;

1. Production• Making products

2. Finance• Handling money

3. Marketing • Focusing on customers

4. Management• Planning, coordinating, monitoring

Function

Production

Production is any activity related to the __________ of a product (good, service or idea)

Typically, when we think of production we think of factories and assembly lines of people putting together cars, TVs, etc.

However, production also includes; Farming Mining Construction Manufacturing

For services, production is often the service itself, for example, cutting and styling someone’s hair

Making

Finance

The finance function of business includes all activities involving ____________

Finance involves; Planning

• Developing a budget; a spending plan

Loan repayment Accounting

• Paying bills• Receiving payments• Keeping track of all money that enters or leaves

the business

Money

Marketing

Marketing helps the entire business focus on the needs and wants of the customer

Marketing includes; Learning about customers (research) Pricing Promotion (includes advertising) Selling

Management

Management includes all activities required to plan, lead, organize and control a business

Read the example in paragraph 3 on page 26 Managers look at the big picture and lead workers in

a direction that makes the business better Management activities include;

Planning Coordinating Monitoring Supervising

Day 2 Assigned Work

Students please complete the following; K & U Question #8 on page 27Thinking Questions #4 - 7 on page 27Communication Question #1 on page 28