Objective 1.01 Understand the purpose and Objective 1.01 Understand the purpose and the functions of businessthe functions of business

1.01 Purpose and Functions of Business

Purpose of BusinessPurpose of Business

Businesses fulfill the needs and Businesses fulfill the needs and wants of consumers.wants of consumers. Consumers use goods and servicesConsumers use goods and services Customers purchase goods and Customers purchase goods and

servicesservices Businesses sell goods, services or Businesses sell goods, services or

both to consumersboth to consumers Goods—clothing, cars, computers, CDsGoods—clothing, cars, computers, CDs Services—hairdresser, dry cleaner, Services—hairdresser, dry cleaner,

lawn care, babysittinglawn care, babysitting

CustomerCustomer

ConsumerConsumer

Need verses WantNeed verses Want

Need – something one must have to Need – something one must have to survivesurvive

Want – unfulfilled desireWant – unfulfilled desire

ProductsProducts

Goods – tangible itemsGoods – tangible items Services – intangible itemsServices – intangible items

Motivation to start a Motivation to start a businessbusiness

Profit motive—desire to make money; Profit motive—desire to make money; see the opportunity to make money in see the opportunity to make money in the marketplace. Profit = revenue - the marketplace. Profit = revenue - expenseexpense

Opportunity to meet wants and needs of Opportunity to meet wants and needs of consumersconsumers

Opportunity to increase competition in Opportunity to increase competition in the marketplacethe marketplace

Businesses are investment opportunities Businesses are investment opportunities for individuals—future incomefor individuals—future income

Functions of BusinessFunctions of Business

Accounting—recording and Accounting—recording and reporting financial activity and reporting financial activity and transactionstransactions ExamplesExamples

Paying billsPaying bills Collecting money from customersCollecting money from customers Paying taxesPaying taxes Preparing employee payroll checksPreparing employee payroll checks Reconciling bank statementsReconciling bank statements Investing cashInvesting cash

Functions of BusinessFunctions of Business

ManagementManagement

Organization – assigns roles and Organization – assigns roles and responsibilities of group and responsibilities of group and individualsindividuals

Control – makes sure goals are metControl – makes sure goals are met Planning – develops plans and Planning – develops plans and

forecasts for the futureforecasts for the future

Functions of BusinessFunctions of Business

MarketingMarketing Satisfies the needs and wants of Satisfies the needs and wants of

consumers through exchangeconsumers through exchange Based on four Based on four ““PP ’’ss””

ProductProductPrice (establishing the price of the Price (establishing the price of the

product)product)Placement (placing the product in Placement (placing the product in

attractive and convenient sales attractive and convenient sales locations)locations)

Promotion (advertising)Promotion (advertising)

ProductsProducts

PromotionPromotion

Banner Ads

TV Ads

PricePrice

PlacePlace

Functions of BusinessFunctions of Business

Information TechnologyInformation Technology Uses technology to share knowledge, Uses technology to share knowledge,

facts, and data to others (co-workers, facts, and data to others (co-workers, customers, and suppliers)customers, and suppliers)

ExamplesExamplesMaintains e-mail accountsMaintains e-mail accountsMaintains software applicationsMaintains software applicationsMaintains processing systemsMaintains processing systemsMaintains hardware for all technology Maintains hardware for all technology

usedusedMaintains computer networksMaintains computer networksResponsible for computer securityResponsible for computer security

Functions of BusinessFunctions of Business

OperationsOperations Considered the Considered the ““back officeback office””

Involves behind the scenes Involves behind the scenes paperwork required to complete paperwork required to complete all transactionsall transactions

Found in both the service and the Found in both the service and the manufacturing sectormanufacturing sector

Functions of BusinessFunctions of Business

Human ResourcesHuman Resources Manages Manages ““peoplepeople”” relations within the relations within the

companycompany Helps TRAIN workers to develop the skills and Helps TRAIN workers to develop the skills and

knowledge needed to be successful on the jobknowledge needed to be successful on the job Responsible for hiring employeesResponsible for hiring employees Responsible for firing employeesResponsible for firing employees Selects employee benefits and enrolls all Selects employee benefits and enrolls all

employees in the benefits (insurance, employees in the benefits (insurance, retirement, etc.)retirement, etc.)

Helps employees pursue educational Helps employees pursue educational opportunitiesopportunities

Key TermsKey Terms

ProfitProfit Profit motiveProfit motive CompetitionCompetition NeedsNeeds WantsWants ConsumerConsumer CustomerCustomer GoodsGoods ServicesServices

Types of BusinessesTypes of Businesses

Sole proprietorshipSole proprietorship PartnershipPartnership FranchiseFranchise Non-profit organizationNon-profit organization CorporationCorporation Multi-national corporationMulti-national corporation