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Ahmad Yamin Lecturer, SOB www.freeuniversitybd.weebly.comBusiness

Introduction to Business

Ahmad YaminLecturer, SOB

Introduction

Over the year people have become more and more dependent on others. We can’t produce all we need to live in this society.

Once people exchange the surplus goods that they have after their own consumption. This is called Barter System.

Barter

It is the direct exchange of one goods for another without using anything as money or as a medium of exchange.

Barter is a type of trade where goods or services are exchanged for a certain amount of other goods or services; no money is involved in the transaction.

Ahmad Yamin Lecturer, SOB www.freeuniversitybd.weebly.com

Business

Business is the exchange of goods, services or money for the mutual benefit or profit.

Who will produce what?

He who has skills and ability or specialization in specific job will produce or serve or involve in that task.

International Opportunities

As the shortage of resources and as they are not distributed equally all over the world, people will go across the border for international business.

Business

Standard of Living A measure of how well a person or family is doing in terms of

satisfying needs and wants with goods and services.

Free Enterprise It means that private businesses are able to conduct business

activities competitively with minimal government regulation.

Inflation Rate at which the general level of prices for goods and services is

rising and purchase power is falling. (example: inflation rate goes up to 2%)

Core of Business

The human element is the core of business. Businessneeds people as owners, managers, employees, andconsumers. People need business for the productionof goods and services and the creation of jobs.Whether business is transacted in Bangladesh, USA,Japan or Ghana dose not matter.


Core of Business

Owners

People, who own a business as well as those whoinvest money in one, do so because they expect toearn profit.

Managers

The person responsible for operating the businessmay be the owner or a professional manageremployed by the owner. An owner-manager is alsocalled an entrepreneur.

Core of Business

Managers (Contd...)

The owner-manager sets his/ her ownobjectives, whereas a professional managerattempts to achieve objectives set by others.

Core of Business

Employees

Employees supply the skills and abilities needed toprovide a product or service and to earn a profit.Most employees expect to receive an reasonablewage or salary and to be given regular increases inthe amount they are paid for the use of their skillsand abilities.

Consumers

• A consumer is a person or businesswho purchases a goods or servicesfor personal and organizational use.A business enterprise attempts tosatisfy consumer needs and desireswhile earning a profit.

Core of Business


Business Objectives

Survival

Growth

Social Responsibilities

Business Objectives

Activities Performed to earn Business Profit:

Evaluation of Demand

KFC

Domino’s Pizza

Boomers

BCB

Business Objectives

Survival

Survival objective is an obvious objective.Other objectives can be accomplished onlyif the business enterprise survives.

Business Objectives

Growth

Growth is an objective because businessdoes not stand still. Market share increase,personal and individual development andincrease productivity are important growthobjectives.

Business Objectives

Social Responsibilities

In recent years, meeting socialresponsibilities has been recognized asimportant objectives. Businesses, like eachperson in society, must accept theirresponsibilities in areas such as pollutioncontrol, eliminating discriminatory practicesand energy conservation.


Business Objectives

Profit: The profit objective plays the major role in business.

Business Profit:

The difference between business income andbusiness expenses

Business Objectives


Risk Taking

Evaluation of Demand

well-organized Management


Business Objectives


Risk Taking

Toyota invested millions of dollars inpromoting and selling small cars inthe US. Today, this japanesecorporation is the largest small carseller in the US market

Business Objectives


well-organized Management

Management of people, technology,materials and capital. Efficient planning, organizing, controlling, directing , andstaffing can earn satisfactory profit.

Cola Cola , GP , Banglalink


Business Objectives

Economic Profit

Opportunity Cost: Something you given up in orderto get something else.

Economic Profit: What remains after the expensesand opportunity costs are subtracted from income.

Selling Price: All costs of making and selling aproduct, including taxes

Business Objectives

Economic Profit

Opportunity Cost

Mr. Mahmud is working in Company X. EarningTk10000 per month. His office is near to his house.But he could earn Tk 20000 per month working inCompany Y. which is far from his house. Hisopportunity cost is Tk 10000.

Economics: The Foundation of Business

Economics

The study of how a society (people) choosesto use limited resources to produce goodsand services and to distribute them to thepeople for consumption.

This definition raises certain issues that are key to understanding economics:


There are three factors:

Resources

Goods and Services

Allocation of Resources and Products

Resources

A nation’s resources consist of three broad areas:

1. Natural

2. Capital

3. Labour



Resources:

1. Natural Resources

Resources provided in limited amounts by nature such as oil, natural gas, minerals, timber and water.

Natural resources must be processed to become a product or to be used to produce other goods and services.

Example....Trees must be processed into lumber before they can be used to build homes, offices, schools, etc.


2. Capital Resources

Goods produced for the purpose of making other types of goods and services. Some capital resources, called current assets have a short life and are used up in the production process.

Such as fuel, raw materials, paper, money.

Long-lived capital resources which can be used repeatedly in the production process are called fixed capital.

Such as factory building, machineries, etc.


3. Labour Resources

Represent the human talent, skills and competence available to a nation.

To have value in the labour force, individuals must be trained to perform either skilled or semiskilled work.

This collection of human talent is the most valuable national resource. Without human resources, no productive use of either natural or capital resources is possible.


Goods and Services

A nation’s resources are used to produce goods and services that will meet people’s needs and wants.

Needs: goods and services people must have in order to survive. Example: food, clothing, shelter, medical needs, etc.

Wants: are things they would like to have but do not absolutely require for survival. Example: luxury holidays, fast foods (Burgers, Fries), etc.


Allocation of Resources and Products

The process of choosing how resources will be usedto meet a society’s needs and wants and it alsoincludes the distribution of products to customers.

Limited resources and unlimited want.Supply of Gas, Oil.

Economic Systems

1. Planned Economy-------Socialism

2. Free Economy---- ------Capitalism

3. Mix Economy

Flow of Money and Products in the Economy


Adam Smith: Wealth of Nations

Publish 1776

Professor of the University Edinburgh in Scotland

Key issues he established:

1. People do their best when they reap the rewards of hard work and intelligence and suffered the penalties of laziness

2. people should be free to choose their own business, assuming they always choose the one that provide most.

3. What serves the individuals also serves the society.

Mix Economy and Govt. Controls

Price Regulations

Truth in Advertising

Non Smoking

Maintenance in Product Quality

Personnel hiring decisions

Highway construction

Regulations of Public utilities

Automobile safety, emission

Pollution Control

Tax

Registrations

Business Challenges for Next Years to come

An aging Population

The changing Family

Job

The Global Boom

The Environment

Techonology

Why we Study Business

Increasing Dependency on Others

International Opportunities

Standard of Living

Coping with Change

Preventing Misconception

To help, understand, develop and implement sound economic policies for sustainable socioeconomic development of people.

Key Terms

Business

Barter

Standard of living

Free Enterprise

GNP

GDP

Opportunity Cost

Depression

Laissez-Fair

Capitalism

Socialism

Consumer

Inflation

Profit Motive

Recession


Assignment

1. Dream a Business where you can earn profit as well as serve your Nation.

2. What Economic system you prefer and why?

3. What other Economic system we can establish?

4. Note all the Key Terms we learn from this chapter.


Documents

Ahmad Yamin Lecturer, SOB - freeuniversitybd.weebly.comfreeuniversitybd.weebly.com/uploads/4/7/0/6/47064417/y_1._20... · Whether business is transacted in Bangladesh, USA, ... KFC