Intro to Business

Unit Two Business Operations

Chapter 5Business in Our Economy

GOALS

Distinguish between the four basic kinds of businesses.

Recognize seven kinds of activities performed by businesses.

Understand how jobs are created in our economy.

Four Basic Kinds of Businesses1. Extractors

Grows products or takes raw materials from nature.

Examples: farmer who grows cotton to make jeans silver and coal miners fishers; oil pump; produce farm, lumber mill

Four Basic Kinds of Businesses2. Manufacturers

Takes extractor’s products and changes them into a form that consumers can use. Completely produce a product or a part of many stops Jeans: textile mill makes cotton into yarn, yarn into cloth,

plant dyes & prints cloth, clothing manufacturer takes cloth and makes it into jeans.

3 Types of Manufacturing Businesses1. Custom – specially designed (golf clubs)2. Mass Production – large qty of identical products (cars)3. Processing – changes form or materials (grain to flour)

Four Basic Kinds of Businesses3. Marketers

Businesses that move goods from producers to consumers (Wholesalers, Retailers)

Marketing Includes (4 P’s) : Transporting goods (Distribution – Place) Selling goods at reasonable value (Price) Identify, develop and test new products (Product) Packaging goods (attractive/convenient) (Product) Store goods (Warehouses) (Distribution - Place) Design store windows (Promotion)

All of these marketing activities add value to the products by bringing them to where the consumer is, at the time they are wanted, in the assortment wanted, and at the prices consumers are willing to pay.

Four Basic Kinds of Businesses4. Service Businesses

Business which does things for you rather than making a product for you.

Examples: Hair Dresser or Barber Oil Change or Car Wash Tax Preparation Child Care or Pet Care Transportation (Airlines, Bus, Train) Landscaping

Seven Business Activities 1. Generating Ideas

New Product or Improvement on Product

2. Raising Capital Start-up $ or Improvement $ from Loans

3. Buying Goods & Services Resale Products or Business Use Supplies

4. Using Human Resources Recruit, Employ, Train, & Appraise Employees

5. Marketing Goods & Services Activities used to Develop, Place, Price and Promote Products

6. Producing Goods & Services Quality, Timely, Appropriate Quantity, Competitive Cost

7. Keeping Records Decision Making – profit/loss, management, Gov. reporting

Jobs Creation New restaurant opens; hires employees Employee gets paid and buys groceries. Grocer works and get paid. Pays Bills. Collector works. Gets paid. Goes out to eat.

Continuous Cycle

More local sales = more business income = more employees needed for high demands

Businesses attract other businesses

Workbook ~ Page 21

Intro to Business

Unit Two Business Operations

Chapter 6Business Structures

GOALS Understand how ownership differs among

sole proprietorships, partnerships, and corporations.

Grasp the advantages/disadvantages of the three major types of business ownership.

Learn the five functions of managers.

Recognize three specialized forms of business organization.

Types of Business Ownership (Pg 69) Sole Proprietorship

Owned by 1 person (Small Firms) Complete responsibility of business decisions

Partnership Managed by small group (usually 2-3 people) Written agreement of shared profits/losses & decisions Unlimited liability for the debts of their business.

Corporation Number of owners (shareholders) Operated under state Certification of Incorporation Acts as individual on behalf of group shareholders Legal entity – existence separate from its owners

Sole ProprietorshipAdvantages vs. Disadvantages Easy to start a business Owner makes all the decisions Owner is the boss Owners receives all the profit__________________________________________ Capital limited to what owner can supply or borrow Owner is liable (responsible) for all the debts,

even losing personal property if business fails. Long hours and hard work Life of business depends upon owner;

it ends if owner quits or dies.

PartnershipAdvantages vs. Disadvantages Fairly easy to start the business More sources of capital available More business skills available__________________________________________ Each partner liable (responsible) for business

debts made by all partners, even losing personal property if business fails.

Each partner can make decisions; more than 1 boss Partnership ends if a partner quits or dies. Each partner share the profit.

CorporationAdvantages vs. Disadvantages More sources of capital available Specialized managerial skills available Owners liable up to the amount of their

investments Ownership easily transferred through sale of stock;

business not affected by change of ownership__________________________________________ Difficult to start the corporation Owners do not have control of decisions made each

day, unless they are officers of the company Business activities of the corporation limited to

those stated in the certificate of incorporation

Advantages vs. Disadvantages

(Page 78)

Five Functions of Managers (Pg 72)

Managers are employees who are responsible for coordinating the resources within a business.

Five Functions of a Manager Planning

Thinking, gathering, analyzing info to make decisions (goals)

Organizing Process of determining what needs to be done

and when. Assigning jobs and responsibilities.

Five Functions of Managers (Pg 72)

Staffing Activities to find, select, hire, train, appraise & reward staff

Leading Direct/influence staff; meet goals, follow plan/procedure Effective leaders inspire workers to willingly perform their

jobs and accept their share of responsibility for accomplishing the goals of the business.

Good human relations and communications skills

Controlling Comparing what actually happened to what was planned. Did business reach it’s goals? Using standards set up in the planning stage

Three Specialized Forms of

Business Organization (Pg 77) Franchises

A written contact granting permission to sell someone else’s product/service in a prescribed manner, over a certain period of time, and in a specified territory.

http://www.ritasice.com/ http://www.chipotle.com

Franchisee – buys into the franchise, apply for rights Franchisor - parent company/owner, grants the rights

Details: Franchise Agreement – state rights/ duties of both parties Standardized business – same at every location Franchisor collects portion/percentage of sales Examples: fast food, car dealerships, motel chains

Three Specialized Forms of

Business Organization (Pg 77) Cooperatives

Owned by the members it serves and is managed in their interest.

Consumer Cooperative – consumers who buy goods more cheaply together than they could individually.

Producer’s Cooperative – farmers organization that markets products together.

Financial Cooperatives – Credit unions

Profits split among members and portion often kept to expand business.

http://www.pccnaturalmarkets.com/ & https://www.ncga.coop/

Three Specialized Forms of

Business Organization (Pg 77) Non-Profit Organizations

Municipal Corporation – municipality Has own: officials, police, schools, fire dept Provides street repairs, street lighting, other services Buys supplies/equipment like a business to function,

but buys them under the corporate name of city.

Unlike a business organization, services are provided for its citizens with money from taxes levied rather than making a profit.

Non-Profit Examples: Private Colleges, Boy Scouts of America, American Red Cross, FBLA

Intro to Business

Unit Two Business Operations

Chapter 7Manager as Leader

GOALS Discuss the common characteristics of

effective leaders.

Explain the five human relations skills needed by managers.

Identify four types of influence that leaders use.

Describe the two main types of leadership styles.

Leadership Characteristics (Pg 88)

Five Human Relations Skills (Pg 89) Self Understanding

Must understand their own strengths and weaknesses before they can assess staff.

Understanding Others Get to know each person, their skills, abilities, strengths

and weaknesses. Treat everyone alike but use their individual skills Recognizing similarities to build stronger team

Five Human Relations Skills (Pg 89) Communication

Extremely important to communicate on all levels.

Formal – presentation, established and approved Informal – common but not official (passing in the hall)

Internal – within the company External – with people outside the company

Vertical – up and down levels of management Horizontal – across the same levels (tier 2 to tier 2)

Oral – word of mouth Written – notes, letters, reports, emails, instant messenger

Five Human Relations Skills (Pg 89) Team Building

Helps people understand each other and their responsibilities

Managers must identify problems within a group and fix them quickly.

Developing Job Satisfaction Managers influence how employees feel about their job Daily difficulties can lead to employee dissatisfaction Showing concern and support and solving employee

problems help avoid employee dissatisfaction.

Four Types of Influence (Pg 91) Position Influence

Ability to get other to accomplish tasks because of the position the leader holds.

Influences based on employee’s job rating, wages, potential promotion

Reward Influence Ability to give or withhold rewards Rewards - $ or job benefits, recognition, praise

Four Types of Influence (Pg 91)

Expert Influence Arises when group members recognize that the

leader has a special expertise area. Experience equals knowledge

Identity Influence Personal trust & respect members have for leader. Leaders looks out for their best interest, gain support.

Two Main Types of Leadership (Pg 93)

Tactical Management More directive and controlling Manager makes decisions Close contact with employees with working

Strategic Management Less directive and involve employees in decisions Trusts employees to work w/o direct supervision Will seek advice on important decisions

Mixed – mixture of both styles

Intro to Business

Unit Two Business Operations

Chapter 8Producing & Marketing

Goods & Services

GOALS List common marketing activities and

define the marketing concept.

Explain the two steps in marketing planning.

Explain the advantage of small businesses in providing customer service.

Role of Marketing (Pg 102) Product/Service Planning

Assists in design and development by gathering information and testing ideas.

Purchasing Identifies and obtains the product (service)

needed for marketing activities

Financing Makes sure financing and credit are available to

support both the purchase and sale of product.

Role of Marketing (Pg 102) Distribution

Involves getting the products to consumers (methods and locations)

Pricing Sets prices and payment methods

Risk Management Provides security and safety for products and

people and reduces business risk.

Role of Marketing (Pg 102) Marketing Information Management

Obtains and organizes information needed to make marketing decisions.

Promotion Involves communicating with consumers to

encourage purchases.

Two Steps in Marketing Strategy Identify a target market.

Target Market – clearly identified group of consumers with needs (business satisfies need)

Develop a marketing mix Marketing Mix - Combo of marketing elements

designed to meet the needs of target market

Product/Service – anything offered to target market Place/Distribution – location/method of product availability

Price – what the customer pays and method of payment Promotion – communicate/encourage purchases

Customer Service Advantage of small businesses in

providing customer service Personalized attention Know your target market better Specialized products (customize)

Large companies can offer more products but with less personal attention and customization.