Summary of Introduction to Business
Chapter 1: Motives and Functions of a Business
1. The goal of a business: * Businesses are established to serve the need of customers. A business can provide products or services. * The goal of a business is to make profits. a. Where the profits come from? * Revenue is generated when selling products or services. * Expenses are incurred when paying employees and purchasing machinery or facilities. * The difference between the revenue and expenses is the profit: Revenue – expenses = profit. * The profits earned depend on three conditions: Demand, customer attraction, and low expenses. b. Profit as a motive to understand business:
Developing strong business skills helps you: * Obtain a better job. * Find your job more enjoyable. * Perform better, resulting in a satisfying career path. * Identify business performing well to invest and enjoy higher return. c. How profit motive is influenced by the Government: * In US, people are free to start their own business: free-market economy. * In some countries, the government owned the businesses, and businesses are not profit-oriented customers do not enjoy better product and services and it’s hard to start a new business. d. Nonprofit business: * Nonprofit organization: an organization that serves a specific cause and is not intended to make profit. * The profits generated are reinvested in the business. It is not taxed, but still run like a business.
2. Resources used to produce products or services: a. Natural resources: Any resource that can be used in their natural form. The most commonly used is land. b. Human resources: People who are able to perform work for a business, physically or mentally. c. Capital: Machinery, equipment, tools and physical facilities used by a business. * Technology: knowledge or tools used to produce products and services. It helps businesses produce products and services more quickly and at a
1. The goal of a business: * Businesses are established to serve the need of customers. A business can provide products or services. * The goal of a business is to make profits. a. Where the profits come from? * Revenue is generated when selling products or services. * Expenses are incurred when paying employees and purchasing machinery or facilities. * The difference between the revenue and expenses is the profit: Revenue – expenses = profit. * The profits earned depend on three conditions: Demand, customer attraction, and low expenses. b. Profit as a motive to understand business:
Developing strong business skills helps you: * Obtain a better job. * Find your job more enjoyable. * Perform better, resulting in a satisfying career path. * Identify business performing well to invest and enjoy higher return. c. How profit motive is influenced by the Government: * In US, people are free to start their own business: free-market economy. * In some countries, the government owned the businesses, and businesses are not profit-oriented customers do not enjoy better product and services and it’s hard to start a new business. d. Nonprofit business: * Nonprofit organization: an organization that serves a specific cause and is not intended to make profit. * The profits generated are reinvested in the business. It is not taxed, but still run like a business.
2. Resources used to produce products or services: a. Natural resources: Any resource that can be used in their natural form. The most commonly used is land. b. Human resources: People who are able to perform work for a business, physically or mentally. c. Capital: Machinery, equipment, tools and physical facilities used by a business. * Technology: knowledge or tools used to produce products and services. It helps businesses produce products and services more quickly and at a