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Intro business chapter1_part2


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Intro business chapter1_part2

  1. 1. INTRODUCTION TO BUSINESS Chapter: 1 Foundations of Business and Economics Part II Shafayet Ullah SECTIONS: A7
  2. 2. Definitions Stockholder Vs Stakeholder Stockholder Stockholder is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. The shareholders are the owners of a corporation. Stakeholder Stakeholders are those people who stand to gain or lose by the policies and activities of an organization. Example: Employees, Customers, Dealer, Suppliers, Bankers, Government leaders
  3. 3. Organizational Stakeholders 3–3
  4. 4. Economic System The accepted process by which labor, capital and natural resources are organized to produce and distribute goods and services in a society.
  5. 5. Economic System 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, Europe, Japan, 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: Russia (former), China.
  6. 6. Economic System There are three basic types of Economies: 1. Planned Economies 2. Free Market Economies 3. Mixed Economies 
  7. 7. Economic System 1. Planned Economics Economic system in which the government largely decides what goods and services will be produced, who will get then and how that economy will grow. The government owns the productive resources, financial enterprises, retail stores and banks. Example: Soviet Union, Cuba, North
  8. 8. Economic System 2. Free Market Economics Economic system in which decision about what to produce and in what quantities are decided by the market. That is by buyers and sellers negotiating prices for goods and services. Example: USA
  9. 9. Economic System 3. Mixed Economics Economic system in which some allocation of resources are made by the market and some are made by the government. This contains elements of both market and planned economic system. There are private enterprises and also is the government intervention. Both the government and the business enterprises produce and distribute goods and services. Example: Bangladesh, UK, India, etc.
  10. 10. Some Advantages and Disadvantages Type of Economy The Planned Economy Advantages 1. Necessities are produces 2. Essential goods/ services eg. Education will be provided for all the community 3. More equal distribution of income and wealth Disadvantages 1. Large Bureaucracy 2. Mistakes in amounts of goods/ services produced. 3. Little consumer choice 4. No profit motive 5. Little variety of goods/services 6. Loss of individual freedom
  11. 11. Some Advantages and Disadvantages Type of Economy Advantages Disadvantages The Free Economy 1. Consumer choice exists 2. No bureaucracy 3. Profit motive exists 4. Many small firms producing a variety of goods 5. Less government interference 1. Too many luxuries produced for the rich/ wealthy. 2. Essential goods/ services, eg. education may not be produced 3. Ignores social costs 4. Monopolies may exist 5. Unemployment in declining industries The Mixed Economy Combines the advantages of other systems Combines the disadvantages of other systems