CHAPTER 1, LESSON 1
THE NATURE OF BUSINESS
BUSINESS MANAGEMENT
PAVONE
NATURE OF BUSINESS ACTIVITIES
• Business – An organization that produces or distributes a good or
service for profit.
• Profit is defined as the difference between earned income and
costs.
• Businesses engage in at least one of three major activities:
• Production
• Marketing
• Finance
NATURE OF BUSINESS ACTIVITIES
• Production – Making a product or providing a service.
• Typically, manufacturing firms are most notable as being
production companies.
• These firms create products or services that consumers or other
businesses purchase to satisfy needs.
• Some examples of production companies are:
• Agricultural companies (food, farming, etc.)
• Producers of raw materials (steels, metals, etc.)
NATURE OF BUSINESS ACTIVITIES
• Marketing – Activities between businesses and customers involved
in buying and selling goods and services.
• Marketing can also include advertising goods and services.
• Different channels of marketing/advertising serve different
purposes; some of these include:
• Test marketing, for businesses to test a good or service on the
general public.
• Promotional marketing, for businesses to advertise their
product to the general public.
• Direct marketing, in which businesses sell directly to
consumers.
NATURE OF BUSINESS ACTIVITIES
• Finance – Deals with all of the money matters involved in running a
business.
• Different areas of finance can include:
• Accounting
• Banking
• Investing
• Allocation
TYPES OF BUSINESSES
• It is important to understand that, like there being different
activities that a business engages in, there are also major different
types of businesses.
• There are three major types of businesses:
• Industrial Business
• Commercial Business
• Service Business
NATURE OF BUSINESS ACTIVITIES
• Industrial Businesses– Produce goods used by other businesses or
organizations to make things.
• Some examples of industrial businesses are:
• Mining companies
• Refining companies
• Construction companies
• Manufacturing companies
• Farms or agricultural companies.
NATURE OF BUSINESS ACTIVITIES
• Commercial Businesses - Engage in marketing, finance and
providing services as primary business activities.
• Some examples of commercial businesses are:
• Wholesalers and retailers (marketing)
• Banks and investment companies (finance)
• Medical offices
• Fitness centers
• Hotels
• Restaurants
NATURE OF BUSINESS ACTIVITIES
• Service Businesses – Type of commercial business that uses
mostly labor to offer mostly intangible products to satisfy
consumer needs.
• Some examples of service businesses are:
• Landscaping companies
• Child or elder care services
• Repair services
• Beauty services (salons, spas, etc.)
NATURE OF BUSINESS ACTIVITIES
• Industry – Refers to all businesses within a category doing similar
work.
• Examples of industries that categorize themselves as a grouped
industry would be:
• Publishing industry – businesses that deal with producing or
selling books, magazines, newspapers, etc.
• Automotive industry – manufacturers of cars, trucks, etc.
• Government industry – provides fire and police protection,
schools, libraries, etc.
1. An organization that produces or distributes
goods or services for a profit is
a. a producer
b. a manufacturer
c. a business
d. an industry
2. A lawn-mowing business is an example of
a. a service business
b. an industrial business
c. a manufacturing business
d. a marketing business
3. Why are service businesses growing faster than
other types of businesses in the United States?
4. How do commercial businesses support the
work of industrial business?
ANY QUESTIONS???