Introduction to Business
The History of Business
Feudalism
 Definition
 The business or economic system in which one class of people
(aristocrats) control the property rights to all valuable resources,
including people
 Lasted throughout the Middle Ages (A.D. 500 – 1500)
 Based on property rights
 The claims by people to own, use, and sell the rights to valuable resources
 Earliest times based on brute force
 In most societies, ordinary, land-less people had no property rights; they
themselves were simply resource owned by the estate as laborers and slaves
in bondage
 In Russia, the slaves who worked the estates were called serfs
 On large estates, there might be 100,000 serfs whose rights were
determined at the whim of the land owner
Mercantilism
 Definition
 Business or economic system in which merchants and bankers organize the trade
of products across markets and countries until they are put to their most valued
use
 Merchants are traders who notice a discrepancy between the value and price of
a product in one market and its value and price in another; they recognize the
opportunity to profit from the price difference
 Merchants borrowed money to purchase products in a market where they were
plentiful, and then transport them to another market where they can be sold at
a higher price
 History Lesson:
 The attempt by British merchants to artificially control the price of tea led to
what famous event?
The Growth of Enterprise
 The growing supply of profits and capital through
mercantilism (brought about by combining land, labor, and
trade) led to a rapid increase in the productive resource
known as enterprise
 This brought about the advent of bankers
 The people who estimate the risks associated with a new
venture and determine the way profits from a venture should be
shared
 Promote enterprise
Craft Guilds and Occupational
Specialization
 At the time of the signing of the Magna Carta, major changes
were taking place in the world of business
 Craftspeople began to spring up
 Workers or artisans with the skills to produce higher-quality goods and
services
 Craft guilds were formed to protect the property and wealth
of these craftspeople
 These guilds were a group of skilled artisans organized to
control and govern different aspects of a trade
The Industrial Revolution
 Technology led to the next major change in business systems
 Late 18th – early 19th century saw the advent of the Industrial
Revolution
 Marked by improved production and trade brought about by
advances in technology
 The crucial event of the Industrial Revolution was the invention
of the steam engine
Capitalism and the Modern Class
System
 Capitalism is the economic or business system in which private
ownership of resources becomes the basis for the production and
distribution of goods and services
 Capitalists are the people who personally own or control the
physical capital of industrial production such as machinery,
factories, distribution networks, raw materials, and technology
 Today the term capitalist carries a negative overtones because of
the actions of industrialists on the late 19th and early 20th century
who ruthlessly pursued their own self-interests at the expense of
others
Internet Exercise
 Each of the three main kinds of business systems – feudalism,
mercantilism, and capitalism – is associated with a particular
ethical or moral position; for example the rights workers
should have relative to the owners of land and capital.
 10 minutes – research one of the three business systems and
find at least one other ethical or moral position