Business StudyBy: Budi ChristantoChapter I: The need for and Nature of Business Activity Business study is one of the pure-science study where we face a hugeproblem which is: “There’s insufficient goods to satisfy our needs and wants”.We have faced this problem a long time, and we also have a shortage of productswhich isn’t enough to satisfy our needs and wants. That’s why we need to implythe opportunity cost.Opportunity Cost: Decision to purchase one item, where me must give up othergoods as they can’t all be purchase. In this chapter, they also teach us about business activities, which is:producing goods and services. We also need to concern about factors ofproduction, which are: Labor, Capital, Land, and Enterprises. Those are neededto build a company.Goods and services are also divided into some points.Consumer Goods: - Durable: food, drinks, goods that can be finished in a short time. - Non Durable: Laptop, computer, cars, goods that can’t be finished. Can be in form of services alsoConsumer Services: Non-tangible products that’s sold to publicCapital Goods: Goods that is used as capital.
We also learn about the classification of business activities (primaryindustries, secondary, tertiary, and also quaternary) and also the changes inbusiness activities from time to time. - Primary Industries: Industries that deal directly with raw materials - Secondary industries: Deals with packaging, or transforming the raw materials into good materials. - Tertiary Industries: Services company that sell the products. - Quaternary Industries: Industries that deals with researches, consultation, making the other 3 industries better.Changes in Business Activities: - Industrialization Revolution: A process of socio-economic changes that transform from agriculture and industrial community.Public and Private SectorsPublic Sector: Sector or company that is accountable to and controlled bycentral or local government.Private Sector: Sector or company that is controlled by individuals or groups ofindividuals.Private sector Organization: - Sole trader: One and only trader, don’t cooperate with others. - Partnership: Work in partner or group of 3-4 (usually 2) - Limited Companies: Companies with limited share, responsibility, liability. - Public limited Companies: Stock listed in stock exchange, citizens are able to be the stock holders.
- Private limited companies: Not listed in stock exchange, own by relatives or closed friends.Company using .Tbk at the back can allow people or citizens to gain shareholders.Economic Formula:INCOME – EXPENSES: Profit (If the result is positive) Loss (if the result isnegative)Other Forms of Business Organization - Cooperative: Form of business organization with a little profit (or even no profit) when the customer is the cooperative member of the organization, the price is cheaper. - Franchise: Make contract between companies. Usually famous products. - Holding Companies: Make companies using same name, but different product to sell. - Join Ventures: Companies that join together to gain more profit. We also learn about public sector and also privatization. Public sector, is aplace or sector that is owned by one government (TMII, Airport). Whileprivatization, is one way where companies that is owned by government butthen it’s bought by private sector.
Chapter I: Business Activity and Economy Structure Economic Structure:Planned EconomyEconomic system that is controlled by government. Mostly used by communistcountry. This economic activity is used to make things that’s asked by thegovernment. Controlled by government.Advantages: - Capital is supplied by government - No need to afraid of wasted materials - Planned really good and tidy - Can determine which goods are supplied - No competitionDisadvantages: - Requires a lot of information in order to function well - Cannot create innovation (not innovative) - CorruptionFree Market EconomyEconomic system where one individual (company) control the economic systemitself. Government doesn’t interfere with the company.Advantages: - A lot competition - Because of the competition, makes the company become more innovative
- No one control it - Free to produce goodsDisadvantages: - Poor at predicting (surpluses and shortages) - Need to find capital by itself - Need to pay taxes (reducing profit)Mixed Market EconomyMixed economic system between free market economy and planned market.Some decision are made by the company itself, and some is made by governmentor central authority.Advantages: - Able to gain capital from government - Able to promote their product to societies - Company mostly control their marketDisadvantages: - Taxes - Mostly all of the disadvantages in free market economy exist in hereNature and Scope of International Trading Links Every countries need a international trading system, no countries can standalone, no country have all of the natural resources they need. Besides, the worldtrade in recent years has been very rapid.
Advantages of International Trading: - Much wider choice of goods and services. - Creates more competition, where able to keep costs and prices down and make better innovation and high quality products as possible. - Able to build up political and social links between themselves.Disadvantages of International Trading: - Loss of output and jobs from domestic or local firms that can’t compete each other. - Decline, due to import. - New company may can’t stand against the competitions.Free Trade: No Restriction or trade barriers exists that able to prevent or limit tradebetween countries.Trade Barriers: - Tariffs: Taxes imposed - Voluntary export limits: exporting country agrees to limit the quantity of certain goodsGlobalisationIs one of the way where all people in a country feel free to have any culture andgoods that another country have.