THE
NATURE OF
BUSINESS
CHARACTERISTICS OF BUSINESS
NATURE OF BUSINESS
ACTIVITIES
• An organization that produces or distributes a good or service
for profit is called a business
• Profit is the difference between earned income and costs
• Every business engages in at least three major activities
• Production
• Marketing
• Finance
NATURE OF BUSINESS
ACTIVITIES
• Production:
• Involves making a product or providing a service
• Manufacturing firms create products that customers
purchase to satisfy needs
•
Examples: Nike, Apple, Ford
• Service firms use the skills of employees to offer activities
and assistance to satisfy customer needs
•
Examples: doctors’ offices, airlines, restaurants, home
repair businesses
NATURE OF BUSINESS
ACTIVITIES
• Marketing:
• Includes the activities between business and customers
involved in buying and selling goods and services
NATURE OF BUSINESS
ACTIVITIES
• Finance:
• Deals with all of the money matters involved in running a
business
CHECKPOINT
What is the difference between a manufacturing firm and a
service firm?
(Write down your answer before going to the next slide)
CHECKPOINT
What is the difference between a manufacturing firm and a
service firm?
Manufacturing firms create products that customers purchase to
satisfy needs. Service firms use the skills of employees to offer
activities and assistance to satisfy customer needs.
TYPE OF BUSINESSES
• Generally, there are two major kinds of businesses –
industrial and commercial
• Industrial businesses produce goods used by other
businesses or organizations to make things
• Companies that mine coal, construct buildings,
manufacture airplanes, grow crops, and raise livestock are
examples
TYPES OF
BUSINESSES
• Commercial businesses are engaged in marketing
(wholesalers and retailers), in finance (banks and investment
companies), and in providing services (medical offices, fitness
centers, and hotels) as their primary business activities
•
Service businesses are a type of commercial business that
use mostly labor to offer mostly intangible products to satisfy
consumer needs (like a lawn mowing service)
TYPES OF
BUSINESSES
• Industry is a word often used to refer to all businesses within a
category doing similar work
• For example, the publishing industry includes any business
that deals with producing and selling books, magazines,
newspapers, and other printed documents prepared by
authors
CHECKPOINT
List an example of an industrial business, a commercial
business, and a service business
(Write down your answer before going to the next slide)
CHECKPOINT
List an example of an industrial business, a commercial
business, and a service business
• Industrial business = coal mining business
• Commercial business = Holiday Inn hotels
• Service business = barbershop