Introduction to Business
HOMEWORK
1.
Read Chapters 5 & 6
OBJECTIVE
Be able to define the term
“Business”
“Business”
An activity that satisfies
economic needs by planning,
organizing, & controlling
resources to produce & market
goods & services
Business
 An
activity . . .
 that satisfies . . .
 economic wants & needs . . .
 by planning,
 organizing,
Business
&
controlling . . .
 resources . . .
 to produce . . .
 & market . . .
 goods & services.
“Business”
(Revisited)
An activity that satisfies
economic needs by planning,
organizing, & controlling
resources to produce & market
goods & services
Business
Activity
 For
the businesses listed below,
explain how each meets the definition
of business:
– McDonald’s
– Nichols Hardware
– Food Lion
– Google
– (Your Choice)
OBJECTIVE
Be able to describe
the three functions of business
Three Functions of Business
 Production
 Marketing
 Management
Three Functions of Business
 Production
- Creating, growing,
manufacturing, or improving products
 Marketing - Activities that move
goods/services from producers to
consumers
 Management - Achieving company goals
by directing its resources
(Make $ or else!!!)
OBJECTIVE
Be able to define the term utility
& describe all of the different
types of utilities
UTILITY
Defined
as
“value added”
UTILITY TYPES
How we “add value”
 Form
 Place
 Time
 Information
 Possession
UTILITY TYPES
How we “add value”

Form:
- changing item’s shape or creating item
 Place:
- By putting a product where the
consumer can get it easily
 Time:
- By making an item available
when the consumer needs it
Oil, for
example
UTILITY TYPES
How we “add value”
 Information:
- By letting people know
how the item will benefit
them
 Possession:
- By allowing people to
own the product
Oil, for example
UTILITY TYPES
How we “add value” to the computer
Form:
- By changing an item’s shape or
creating an item
 Place:
- By putting a product where the
consumer can get it easily
 Time:
- By making a product available
when the customer needs it
UTILITY TYPES
How we “add value” to the computer
Information:
- By letting people know
how the item will benefit
them
 Possession:
- allowing people to own
the product

OBJECTIVE
Be able to describe the “social
responsibilities” of a business including
its ethical treatment of customers
Social Responsibility & Ethics
Social Responsibility
- What a business “should” do in the eyes
of the majority of the population
 Ethics
- Guidelines for “good” or acceptable
behavior in the eyes of the majority of the
population

Areas of Social Responsibility
Consumption of Natural Resources
– Use of resources & recycling efforts
 Environmental Issues
– Damage to & protection of the
environment
 Worker Issues
– Treatment (handicapped, health-care, etc.)
– Pay (amounts, docking, profit-sharing,
telecommuting, etc.)

Areas of Social Responsibility
Consumerism - “Using legal, moral, &
economic pressure on business protect the
consumer’s rights ”
– To be protected against fraud, deceit, &
misleading statements & to be educated in
wise financial decisions
– To be protected from unsafe products
– To have a choice in products & services
– To have a say in product/marketing decisions
LEGAL CONSIDERATIONS
 Statutory
Law - Laws
that are written by
congress or other
ruling bodies & then
enforced by law
enforcement
institutions (police,
FBI, etc.)
LEGAL CONSIDERATIONS
 Common
Law - Laws
that are based on the
actions of a “reasonable
person,” often
determined in court.
(negligence, for
example)
OBJECTIVE
Be able to define
“Entrepreneurship” and
identify its advantages &
disadvantages
ENTREPRENEURSHIP
Owning & operating your
own business
ENTREPRENEURSHIP
Owning & Operating Your Own Business
 Advantages
 Disadvantages
Discussion
ENTREPRENEURSHIP
Owning & Operating Your Own Business
 Advantages
–Freedom
–Satisfaction
–$$$$$
–Self-Esteem
 Disadvantages
–RISK!!!
–Loss of income
–Long & irregular
hours
–Need for selfdiscipline
OBJECTIVE
Be able to describe the most
common personality traits of
successful entrepreneurs
ENTREPRENEURS
 Personality
Traits
of Successful
Entrepreneurs:
(Discussion)
ENTREPRENEURS
 Personality
Traits of
Successful Entrepreneurs
– confidence
– skill
– risk-taker
– competitive
– determined
– hardworking
ENTREPRENEURS
 Personality
Traits of
Successful Entrepreneurs
– flexible
– disciplined
– healthy
– experienced
– goal-oriented
– people-person
OBJECTIVE
Be able to describe the three major
types of business ownership &
discuss their advantages &
disadvantages
SOLE PROPRIETORSHIP
 Owned
& operated by one
person (Usually highly
skilled)
– employs 95% of the
workforce
– examples include
plumbers, dentists,
beauticians, small shop
owners, etc.
PARTNERSHIP
 Two
or more
people legally
agree to share the
ownership &
responsibilities of
a business
CORPORATION
A
charted (legal) entity that
operates apart from the
owners
– the corporation will often
sell stock
– the stockholders will elect
a board of directors to run
the company
CORPORATIONS
(Discussion)
 Doctors
will
often incorporate
their practice;
Why?
(Discussion)
SOLE PROPRIETORSHIP
 Advantages
 Disadvantages
(Discussion)
PARTNERSHIPS
 Advantages
 Disadvantages
(Discussion)
CORPORATIONS
 Advantages
 Disadvantages
(Discussion)
SOLE PROPRIETORSHIP
 Advantages
 Disadvantages
– easy to start
– decisions are easy
to make
– low taxes
– fewer gov.
regulations
– you get all the
money!!
– capital ($) is
limited
– can’t have
“group-think”
– no help
available w/
other skills
– big Risk
PARTNERSHIPS
 Advantages
 Disadvantages
– more ideas & – more ideas &
opinions to
opinions to consider
consider
(?)
– you have help to – harder to make
run the business decisions
– the risk is shared – personally at risk
– more capital
– death of a partner
available
causes problems
CORPORATIONS

Advantages
 Disadvantages
– liability is limited to
– often a complex
your investment
& changing
ownership
– it is easy to raise
picture making
more capital (sell
decisions
more stock)
difficult
– it is easy to get into &
out of the corporation – highly regulated
(sell or buy stock)
– higher tax rates
OTHER FORMS OF BUSINESS
OWNERSHIP
 Franchise:
– a legal agreement to operate a business in
the name of a recognized company.
Advantages
Franchisor offers help
Planning already done
Disadvantages
Expensive to buy
Limited creativity
OTHER FORMS OF BUSINESS
OWNERSHIP

Subchapter S Corporation:
– A small business taxed like a sole
proprietorship or partnership but w/ limits:
»No more than 35 stockholders
»Incorporated in the US
»Max. 20 % of income comes from
investments
»Max. 80% of revenue comes from
overseas
INTRODUCTION TO BUSINESS
Quiz Review