Chapter 1
Basic Economic
Concepts
Section 1.2
Business Activities
Read to Learn
Explain how profit and competition motivate
businesses.
List the activities businesses undertake when
developing products and services.
Explain how business impacts you and how you
impact business.
What is Business?
Any commercial activity that seeks profit by
providing goods and services to others in
exchange for money.
Profit is the money left over after a business has
paid the cost of providing its goods and services.
It’s a reward for meeting customers needs and
wants.
Businesses are motivated by making profits. If a
business does not earn a profit, it will fail.
What is Business?
• A successful business benefits the
community by paying taxes on earnings and
providing jobs.
What is the significance of competition?
Companies thrive on the contest between
businesses to win customers (Competition)
by producing and selling at the lowest cost
possible the products they think will be the
most profitable.
Companies can successfully compete in
today’s global economy by producing
quality products with outstanding service at
competitive prices.
The Significance of Competition
Offer
quality
products
Offer
outstanding
service
Offer
competitive
prices
Summary Statement
How does profit and competition motivate
businesses?
The Main Idea
Businesses seek profit by providing goods and
services in exchange for money. Companies thrive
on competition, the contest between businesses to
win customers. Competition and profit motivate
businesses to continually strive to find new ways to
satisfy customers.
What are the Six Main Business Activities?
Identifying opportunities for products
The success of a
business depends
on how well key
activities are
coordinated,
managed, and
performed.
and/or services
Evaluating the demand for products
and/or services
Obtaining start-up money and operating
capital
Managing the production of goods
and/or services
Marketing the goods and/or services
Keeping records to satisfy government
requirements and improve processes
What is Market Research?
Some business
activities should be
supported by market
research.
Which of the six are
supported by market
research?
market research
the act of gathering and
analyzing information
about the wants, needs,
and preferences of
consumers in a certain
market
Target Market
A target market is a group of people identified
as those most likely to become customers.
Example: Develop a list of shoe stores in your
area and the likely target market for each.
Why is Market Research Important?
Market research is important because it
provides information to help businesses:
• Identify opportunities
• Analyze Demand
• Respond to consumer demand for goods
and services.
Summary Statement #2
• What are the basic functions of business?
Summary Statement #2
• The success of a business depends on
how well key activities are
managed,(production and record keeping)
coordinated (ID opportunities and evaluate
demand through use of market research)
and performed (marketing)
What is a Consumer?
Businesses make
many decisions that
impact you, the
consumer.
consumer
a person who uses goods
and services
How Do Businesses Affect Consumers?
Businesses Affect Consumers
Businesses decide what goods and services
to produce.
Businesses affect the consumer when a product
is discontinued.
Business affects you as a wage earner because
they provide jobs.
How Do Consumers Affect Businesses?
Consumers Also Affect Businesses
Consumers decide what kind of goods and
services they want.
Consumers decide where they will buy the
goods and services they want.
The decisions of consumers can determine the
success or failure of a business.
Summary Statement #3
• How do business and consumers affect
each other?
Summary Statement #3
• The success of a business relies the
decision to provide goods and services
that consumers are willing to choose and
able to purchase. By choosing products
that consumers want, businesses also
provide jobs.
End of
Chapter 1
Basic Economic
Concepts
Section 1.2
Business Activities