Introduction to Business by American International University-Bangladesh. http://www.aiub.edu/

1. INTRODUCTION TOINTRODUCTION TO
BUSINESSBUSINESS
FOUNDATIONS OF BUSINESSFOUNDATIONS OF BUSINESS
AND ECONOMICSAND ECONOMICS
CHAPTER # 1CHAPTER # 1
Part 2Part 2

2. Stockholder Vs StakeholderStockholder Vs Stakeholder
StockholderStockholder
 Stockholder is anStockholder is an
individual or companyindividual or company
(including a corporation)(including a corporation)
that legally owns one orthat legally owns one or
more shares of stock in amore shares of stock in a
joint stock company. Thejoint stock company. The
shareholders are theshareholders are the
owners of a corporation.owners of a corporation.
StakeholderStakeholder
 Stakeholders are thoseStakeholders are those
people who stand to gain orpeople who stand to gain or
lose by the policies andlose by the policies and
activities of an organization.activities of an organization.
 Example:Example: Employees,Employees,
Customers, Dealer,Customers, Dealer,
Suppliers, Bankers,Suppliers, Bankers,
Government leadersGovernment leaders

3. Organizational StakeholdersOrganizational Stakeholders
3–3

4. Economic SystemEconomic System
The accepted process by which labor, capital andThe accepted process by which labor, capital and
natural resources are organized to produce andnatural resources are organized to produce and
distribute goods and services in a society.distribute goods and services in a society.

5. Capitalism
An economic system in which all or most of the sources of production
and distribution are privately owned and operated for profit. The
founder of this system is Adam Smith.
Example: USA, Japan, European Union, Canada
Socialism
An economic system based on the premise that businesses should be
owned by the state so that profits can be evenly distributed among the
people. The founder of this system is Karl Marx.
Example: Soviet Union, China
Economic SystemEconomic System

6. Economic SystemEconomic System
 There are three basic types of Economies:There are three basic types of Economies:
1.1. Planned EconomiesPlanned Economies
2.2. Free Market EconomiesFree Market Economies
3.3. Mixed EconomiesMixed Economies

7. Economic SystemEconomic System
1. Planned Economics1. Planned Economics
Economic system in which the government largely decidesEconomic system in which the government largely decides
what goods and services will be produced, who will get thenwhat goods and services will be produced, who will get then
and how that economy will grow.and how that economy will grow.
The government owns the productive resources, financialThe government owns the productive resources, financial
enterprises, retail stores and banks.enterprises, retail stores and banks.
Example: Soviet Union, Cuba, North KoreaExample: Soviet Union, Cuba, North Korea

8. Economic SystemEconomic System
2. Free Market Economics2. Free Market Economics
Economic system in which decision about what to produce andEconomic system in which decision about what to produce and
in what quantities are decided by the market. That is by buyersin what quantities are decided by the market. That is by buyers
and sellers negotiating prices for goods and services.and sellers negotiating prices for goods and services.
Example: USAExample: USA

9. Economic SystemEconomic System
3. Mixed Economics3. Mixed Economics
Economic system in which some allocation of resources areEconomic system in which some allocation of resources are
made by the market and some are made by the government.made by the market and some are made by the government.
This contains elements of both market and planned economicThis contains elements of both market and planned economic
system. There are private enterprises and also is the governmentsystem. There are private enterprises and also is the government
intervention. Both the government and the business enterprisesintervention. Both the government and the business enterprises
produce and distribute goods and services.produce and distribute goods and services.
Example: Bangladesh, UK, India, etc.Example: Bangladesh, UK, India, etc.

10. Some Advantages andSome Advantages and
DisadvantagesDisadvantages
Type of Economy Advantages Disadvantages
The Planned Economy 1. Necessities are produces 1. Large Bureaucracy
2. Essential goods/ services 2. Mistakes in amounts of
eg. Education will be provided goods/ services produced.
for all the community 3. Little consumer choice
3. More equal distribution of 4. No profit motive
income and wealth 5. Little variety of
goods/services
6. Loss of individual
freedom

11. Some Advantages andSome Advantages and
DisadvantagesDisadvantages
Type of Economy Advantages Disadvantages
The Free Economy 1. Consumer choice exists 1. Too many luxuries produced
2. No bureaucracy for the rich/ wealthy.
3. Profit motive exists 2. Essential goods/ services,
4. Many small firms producing eg. education may not be
a variety of goods produced
5. Less government 3. Ignores social costs
interference 4. Monopolies may exist
5. Unemployment in declining
industries
The Mixed Economy Combines the advantages of Combines the disadvantages of
other systems other systems

12. Thank you…Thank you…