Chapter 1 the role of business in economic setting

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this is the 1st chapter of introduction to business

this is the 1st chapter of introduction to business

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  • 1. Chapter 1 the role of business in our economic setting Prepared by: Ms. Ghazala Danish
  • 2. Business • “An organization that provides goods and services to earn or maximize a profit.” • “An organization engaged in producing and selling, at a profit, goods and services that consumer’s needs and wants.”
  • 3. Key points about business • Produce goods and services • Seek profit • Try to satisfy consumer’s needs and wants
  • 4. Produce goods and services • Goods • A commodity, or a physical, tangible item that satisfies human want or need. Such as credit card, beverages, ice creams. • Services • An activities that benefits consumers or other businesses. It is an intangible products such as accounting, banking, consultancy, education, insuranc e, expertise, medical treatment or transportation.
  • 5. Types of business • Require the same functions or activities to be performed to operate the business. • Use the same inputs to produce the final goods and services.
  • 6. Activities of business • • • • • • Creates a product or service Market the product or service to the consumer Account for the financial transaction Hire, train and evaluate employees Acquire financing Process information
  • 7. Management functions of business • • • • • Plan what it wants to accomplish Organize its resources Acquire the people to operate the business Guide the people to operate the business Monitor progress
  • 8. How to operate business Input Process Output
  • 9. Factor of production • Input or resources used to produce goods and services. • The four resources are; • • • • Land Labor Capital Entrepreneurship
  • 10. • Land: • Land is the natural resources that can be used to produce goods and services. • Labor: • Labor is the total human resources required to turn raw materials into goods and services.
  • 11. • Capital: • Capital is the total of tools, equipment, machinery and buildings used to produce goods and services. • Entrepreneurship: • Entrepreneur is an individual who takes initiatives to bundle resources in innovative ways and is willing to bear the risk and/or uncertainty to act.
  • 12. profit • Profit is the amount of money remaining from a firm’s sales revenues after it deduct its total expenses. • It is the reward to the business. • Profit is the ultimate goal of business.
  • 13. Economic system • It is the method a society uses to allocate its resources and meet its needs for goods and services. • Types of Economic system • Capitalism • Communism • Socialism
  • 14. Capitalism • It is an economic system in which both the factors of production and the businesses are owned by private individuals. • It not concern by the government. • Private enterprise system, an economic system in which businesses or enterprises are privately owned.
  • 15. Principles or rights of the private enterprises system • • • • Right to private ownership of property Right to freedom of choice Right to compete Rights to profits
  • 16. Types of capitalism • Two types of capitalism • Pure capitalism • Mixed capitalism
  • 17. Pure capitalism • It is also known as market economy. • It is an economic system in which economic decisions are made freely according to the market forces of supply and demand. • Government does not interfere in the economic system is called laissez-faire or hands off approach.
  • 18. Producing goods and services • A household, in economic terms, is any person or group of people living under the same roof and functioning as an economic unit. • 5 triggers a series of action.
  • 19. Mixed capitalism • An economic system based on a market economy with limited government involvement. • Two primary tool: • Power of tax • Power of spend
  • 20. • Government own entities • Government agencies that regulate the activities of some businesses • Government involves employer employee relations
  • 21. Communism • In which the government controls the factor of production. • Central government planner make all the decision about production and resource allocation. • Supply, demand and competition have no influence in this system.
  • 22. Socialism • It is an economic system in which the government controls the operation and direction of basic industries but private ownership also exists. • Government take a decisions. • The industries normally under control of the government.
  • 23. Mixed economic system • In this economic system, in which there is both private and government ownership and production of goods and services. • There is more than one economic system at work in the country. • Economic system are not static.
  • 24. The performance of economic system • Gross National Product (GNP): • The GNP accounts for all goods and services a country produces, no matter where they were produced. • Gross domestic Product (GDP): • The total market value of all goods and services that a country produces in a year with in its national boundaries.
  • 25. Standard of living • The degree of material wealth in a country. • It shows that how well an individual is doing to satisfy his or her needs for goods and services. • Productivity: • A final measure of economic performance is productivity. • It is the amount of outcome for a given amount of input.
  • 26. Business today and tomorrow • • • • • • • • • Environmental protection International interdependence International business competition Quality Family and work Cultural diversity Technological changes Productivity Social responsibility
  • 27. Why study business • The impact of business • Career choice • Business ownership