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Exploring Business v. 2.1. By Karen Collins. Chapter 1 . The foundations of business. chapter objectives. Identify the main participants of business, the functions that most businesses perform, and the external forces that influence business activities.
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Exploring Business v. 2.1 By Karen Collins
Chapter 1 The foundations of business
chapter objectives • Identify the main participants of business, the functions that most businesses perform, and the external forces that influence business activities. • Define economics and identify factors of production. • Explain how economists answer the three key economics questions. • Compare and contrast economic systems. • Describe perfect competition, and explain how supply and demand interact to set prices in a free market system. • Describe monopolistic competition, oligopoly, and monopoly. • Understand the criteria used to assess the status of the economy. • Discuss the government’s role in managing the economy.
Course objectives • Learn about the functional areas of business • See how these areas fit together • Explore critical issues affecting businesses • Discuss majors and career options
business • As opposed to not-for-profit organizations, which spend all revenue on operating costs. • any activity that provides goods or services for the purpose of making a profit
BUSINESS TODAY • Internet/Social Networks • Technology • Global Expansion • Diverse Workforce • Corporate/Management Behavior • Overcome financial crisis
FUNCTIONAL AREAS OF BUSINESS: MANAGEMENT • planning, organizing, staffing, directing, and controlling a company’s resourceS TO achieve its goals
FUNCTIONAL AREAS OF BUSINESS: OPERATIONS • converting resources into goods or services, ensuring that products are of high quality
FUNCTIONAL AREAS OF BUSINESS: MARKETING • All of the organizational activities involved in identifying customers’ needs and designing, pricing, promoting and delivering products to meet those needs
FUNCTIONAL AREAS OF BUSINESS: ACCOUNTANTS • measure, summarize, and Communicate financial and managerial information
Economics • study of the production, distribution, and consumption of goods and services
The circular flow of inputs and outputs Outputs: Goods and Services Pay revenue for outputs • HOUSEHOLDS: • Buy products from firms • Provide inputs to firms • BUSINESSES: • Produce and sell products to households • Buy inputs from households Pay incomes for inputs Inputs: Labor, Capital, Land, Entrepreneurship
Economists’ questions • What goods and services should be produced? • How should goods and services be produced? • Who receives the goods and services produced?
The spectrum of economic systems Planned Systems Free Market Systems Capitalism Communism Socialism • High degree of government control • High level of social services • Low degree of government control • Low level of social services
Perfect competition Many Sellers Standardized Product Many Consumers
Supply and demand Supply Price EQUILIBRIUM POINT Demand Units
Monopolistic competition Many Sellers Differentiated Product Consumers Group A Consumers Group C Consumers Group B
OLIGOPOLY Seller A Seller B Similar Product Consumer Group A Consumer Group C Consumer Group B
MONOPOLY Seller Consumer B Consumer C Consumer A Consumer E Consumer D
Measuring World Economic Goals • Growth—Gross Domestic Product • High Employment—Unemployment Rate • Price Stability—Consumer Price Index
Gross Domestic Product • the market value of all goods and services produced by the economy in a given year includes only those goods and services produced domestically
BUSINESS CYCLE PROSPERITY RECOVERY RECOVERY GDP % Change RECESSION DEPRESSION Time
Economic indicators • Lagging economic indicators: measures that report the status of the economy a few months in the past. • Leading economic indicators: predict the status of the economy months into the future (e.g. Consumer Confidence Index, Unemployment Claims). • statistics that provide valuable information about the economy
