1. 1.To identify the types of businesses. 2.To identify departments within businesses. 3.To describe...

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Business Characteristics

Objectives

1. To identify the types of businesses.

2. To identify departments within businesses.

3. To describe the activities each department is responsible for overseeing.

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Main Menu

» Types of Businesses

» Human Resources

» Management

» Finance & Accounting

» Marketing

» Production & Distribution

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Types of Businesses

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Types of Businesses» Are classified by the work activities

performed» Include:

– producers – processors– manufacturers– intermediaries– service firms– non-profit organizations

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Producers

» Develop products for distribution from raw goods– raw goods – materials derived from natural

resources

» Examples include:– farming– forestry– mining

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Processors

» Change raw goods into a more finished form

» Produce processed goods» Examples include:

– cotton mills– oil refineries– textile mills– food processors

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Manufacturers

» Change raw or processed goods into finished goods

» Examples include:– juice factories– clothing factories– automobile factories

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Intermediaries» Are referred to as the middleman» Move finished goods from one business to

another» Buy, store and resell goods» Examples include:

– wholesalers• buy finished goods from

manufacturers in large quantities and sell them to businesses in smaller quantities

– retailers• buy finished goods from manufacturers or

wholesalers and sell them directly to the consumer9

Service Firms

» Provide services to consumers and other businesses

» Examples include:– beauty salons– landscaping companies– plumbing companies

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Non-profit Organizations

» Provide goods and services to businesses and individuals

» Operate on donations, volunteers and philanthropists rather than income/profit

» Examples include:– Salvation Army– United Way of America– American Red Cross– YMCA and YWCA

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Business Departments

» Human Resources

» Management

» Finance and Accounting

» Marketing

» Production and Distribution

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Human Resources

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Human Resources

Human Resources

» Requires following laws and proper procedures

» Requires people with strong human relation and communication skills

» Responsibilities include:– maintaining the employment process– training and developing staff

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Human Resources

Employment Process

» Is carried out by human resources» Goal:

– to obtain qualified employees who are well-matched to the open position

» Steps:1. assess employment needs

2. recruit potential employees

3. select employee who fulfills goals

4. help employee get oriented

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Employment Process

» Step one: assess employment needs– determine what openings in the company

need to be filled– analyze what the open position involves– obtain or write job description, including:

• qualifications• duties• responsibilities

16Human Resources

Human Resources

Employment Process

» Step two: recruit potential employees– look within the company first– contact and utilize the following:

• newspaper and/or Internet advertising• colleges, universities, and technical or vocational

schools• applications on file• employment agencies and/or labor and

professional organizations

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Human Resources

Employment Process

» Step three: select employee who fulfills goals– review applications, resumes and cover

letters of applicants– choose applicants appearing to best match

company opening and conduct interviews• if there is not an appropriate applicant, start again

at recruiting potential employees

– review all obtained information and select best applicant

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Employment Process

» Step four: help employee get oriented– introduce to coworkers– help fill out new employee paperwork– answer questions about company pay,

benefits, policies, etc.– assist during adjustment phase

19Human Resources

Human Resources

Training & Developing

» Is also performed by human resources» Goal:

– maintain well-trained, qualified employees

» Is accomplished through:– training– evaluating performance– focusing on motivation and cooperation

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Human Resources

Training» Can be done individually or in groups» Includes the following techniques:

– on-the-job training• companies train employees while they work• employees have hands-on practice with supervision• occurs typically on an individual basis

– group training• companies teach new skills to several employees at

once• employees listen and learn from each other• employees get the opportunity to express ideas and

share experiences 21

Human Resources

Evaluating Performance

» Is often achieved through performance appraisals– managers evaluate employee performance– managers provide feedback to employees

» Helps when making decisions, including:– transfers– layoffs– promotions– terminations

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Human Resources

Focusing on Motivation

» Can help meet employees needs» Includes two types:

– extrinsic – motivation through outside sources• for example: money, benefits, recognition

– intrinsic – motivation occurring internally• for example: challenge, enjoyment, accomplishment

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What motivates you to do well in school or hobbies? Are they extrinsic or intrinsic

motivators?

Human Resources

Motivation» Can be ensured by meeting employees’

needs, including:– hierarchy of needs proposed by Abraham

Maslow:

24Basic Needs – food, shelter, etc.

Safety – physical & emotional

Belonging & Love – feeling accepted, loved, etc.

Self-Esteem – feeling skilled, useful, etc.

Self-Actualization – realizing full potential

Human Resources

Focusing on Cooperation» Improves the output produced by working

together in groups» Is needed to ensure high work quality and

employee job satisfaction » Requires effective communication in

order to:– enhance group dynamics– ensure employees know and understand

their roles– encourage employees to contribute ideas

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Management

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Management

» Is the process of reaching a company’s goals and objectives by utilizing its resources

» Has these four main functions:– planning– organizing– directing– controlling

27Management

Planning

» Is management’s first main function» Means determining a direction for the

company» Includes the following:

– setting long- and short-term goals– determining strategies to utilize company

resources– creating a written plan

28Management

Management

Organizing

» Is management’s second main function» Means obtaining and coordinating

resources to meet company goals and objectives

» Includes the following:– creating structure– dividing up the workload– arranging resources– coordinating activities

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Directing

» Is the third main function of management» Is leading employees to carry out their

assigned tasks» Includes the following:

– staffing– motivating– influencing– guiding

30Management

Management

Controlling

» Is management’s fourth main function» Is ensuring results meet expected goals

and objectives» Includes the following:

– evaluating employee performance– solving problems– setting standards for desired performance

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Management

» Is most effective when all four functions play an important role

» Is responsible for making sure the company runs smoothly

» Must remember to evaluate progress regularly and provide feedback to the appropriate personnel

32Management

Finance & Accounting

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Finance & Accounting

Finance & Accounting

» Are vital because a business cannot exist without cash flow

» Focus on the following:– creating up-to-date, accurate financial

statements– making a plan to create profits– managing and utilizing company resources

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Finance & Accounting

Accounting

» Is a system used to record, classify, summarize and report the financial position of a business

» Responsibilities include:– recording financial transactions– creating financial statements

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Finance & Accounting

Financial Transactions

» Are financial entries affecting the financial position of a business

» Include these classifications:– assets – items of value owned by a business

• examples include: cash, land, buildings, equipment

– liabilities – debts or obligations of a business• examples include: credit, mortgage payments

– owner’s equity – amount of capital invested by owners• total value of assets minus liabilities

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Finance & Accounting

Financial Transactions

» Include the accounting equation:

» Are recorded, classified and summarized, providing information used to create financial statements

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assets = liabilities + owner’s equity(both sides of the equation must balance)

Finance & Accounting

Financial Statements

» Are the reporting process of accounting» Are used to make financial decisions» Include two main types:

– balance sheet – reports totals in asset, liability and owner’s equity accounts

– income statement – reports net income or net loss of a company• net income – when revenue is greater than expenses• net loss – when expenses are greater than revenue

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Finance & Accounting

Financial Statements – Balance Sheet Example

Kay’s Kloth Shop

Balance sheet

Assets

Cash in bank $4,000.00

Cloth $8,000.00

Supplies $2,000.00

Total assets $14,000.00

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LiabilitiesAccounts payable $ 4,000.00

Owner’s EquityCapital from Kay $10,000.00

Total liabilities and owner’s equity $14,000.00

Finance & Accounting

Financial Statements – Income Statement Example

Kay’s Kloth Shop

Income StatementRevenue:

Cloth Sales$6,000.00

Expenses:

Advertising $100.00

Utilities $300.00

Rent $600.00

Payroll $3,000.00

Total expenses $4,000.00

Net Income:$2,000.00

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Finance & Accounting

Finance

» Goal:– determine use of company resources and

funds

» Responsibilities include the following:– managing use of company funds– obtained needed funds– creating a financial plan

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Finance & Accounting

Finance

» Funds are used to do the following:– buy resources used to create goods and

services– pay expenses required for operation

» When available, excess funds can be used in many ways including:– purchasing assets to help the company grow– paying unexpected or high expenses– investing to obtain profit

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Finance & Accounting

Finance

» Sources of funding include:– borrowing funds– selling stock– looking for new investors– increasing owner contributions

» The financial plan does the following:– specifies what funds are needed– documents period funds are needed– is crucial to the success of a business

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Marketing

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Marketing

» Goal:– to create products meeting consumer wants

and needs based on the marketing mix– to guide products through the product life

cycle, capitalizing on opportunities in each stage

– to understand consumers through marketing research

45Marketing

Marketing

The Marketing Mix» Consists of four interrelated marketing

strategies used to meet consumer needs1. Product

– is a good and/or service designed to meet consumer wants and needs– is determined by conducting studies and surveys

2. Price– must be low enough to attract consumers– must be high enough to cover costs and create profit

3. Promotion– activities to persuade consumers they need the product– includes packaging, commercials, trials, etc.

4. Place– is a location where products and/or services are sold– includes stores and location within a store

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Product Life Cycle

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Stage 1Introduction

Stage 2Growth

Stage 3Maturity

Stage 4Decline

Focus: draw

customer attention;

build product

awareness

Focus: build customer

satisfaction; recognize

competitors entering market

Focus: evaluate cost/profit relationship; decide product’s future

Focus: beat

competition;

improve product;

increase sales

Marketing

Understanding Consumers» Means understanding the needs they attempt

to meet when making purchases, including:– physical

• for necessities, safety, security and health• includes food, clothing, transportation, etc.

– social• to feel loved and accepted• includes fancy clothing, make-up, cologne, etc.

– psychological• for prestige and approval• includes luxury items which make the consumer feel

important

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Remember Maslow’s hierarchy of needs pyramid? These apply for consumers too.

Production & Distribution

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Production & Distribution

Production & Distribution» Goal:

– to produce and distribute goods and services in the most efficient and cost-effective manner

» Consists of three roles:1. facilities – physical elements needed for

production• need a good layout and location

2. processing – changing or combining resources to create a product or service

• adds value by transforming resources into products

3. people – invaluable human resource• plan, operate and supervise the process 50

Production

» Must be effective and efficient by doing the following:– forecasting demand– scheduling production of goods and services– managing inventory– controlling quality

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Distribution» Is getting produced goods and services to

consumers in a timely manner» Is typically from producers to wholesalers

and retailers» Uses the following four modes of

transportation:– waterways– railroads– trucks– airlines

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Assessment

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Assessment1. List three types of business.

2. What are the two types of intermediaries?

3. Name the responsibilities of a human resources department.

4. What are the four steps of the employment process?

5. (T/F) Group training gives employees hands-on practice with supervision.

6. Define and give one example of intrinsic motivation. 54

Assessment7. List the four main functions of

management.

8. List and define the three classifications of financial transactions.

9. List and explain the four parts of the marketing mix.

10. List two ways production can be made effective and efficient.

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Acknowledgements

Krista Scott

Amy Hogan

Production Coordinator

Megan O’Quinn

Brand Manager

Jennifer Donaldson

Graphics Editor

Jessica Odom

Technical Writer

Geoff Scott

Production Manager

G.W. Davis

Executive Producer

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