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Overview of Business
June 4, 2012
What Is…?
• Business– An organization that provides goods and
services to earn profits
• Profit– The positive difference between revenues
and expenses
Physical Resources
Labor Capital
Entrepreneurs
Factors of Production
InformationResources
Knowledge workers
Knowledge
Types of economies
Planned Economy:
An economic system in which the government owns and operates all sources of production
Planned Economy
Types of economies
Planned Economy:
An economic system in which the government owns and operates all sources of production
Socialism is a planned economic system in which the government owns and operates selected sources of production
Market Economy:
An economic system in which buyers and sellers interact based on freedom of choice
“Circular Flow in Market Economy”
OUTPUT MARKETS
Goods Services
INPUT MARKETS
LaborCapital
EntrepreneursPhysical Resources
Information Resources
HOUSEHOLDS
• Demand products in output markets
• Supply resources in input markets
FIRMS
• Supply products in output markets
• Demand resources in input markets
DEMAND
DEMAND SUPPLY
SUPPLY
Copyright ©2003 Prentice Hall, Inc. 1 - 7
70%!
Mixed EconomiesPlanned and Market
• The economies of most countries include both planned and market elements
• Worldwide trend toward more market elements
– Or is it?????
State CapitalismPost 2007
•State capitalism–a system in which the state dominates markets primarily for political gain
–autocratic states reap the benefits of capitalist enterprise while maintaining a vice-grip on political freedom
•“capitalism for the wealthy”
Supply & Demand
Supply:
The willingness and ability of producers to offer a good or service for sale
Law of Supply:Producers will supply (offer) more of a product for sale as its price rises and less as its price drops
But what makes the price rise????
Supply & DemandDrive the US Economic System
Demand:
The willingness and ability of buyers to purchase a good or service
Law of Demand:
Buyers will demand (purchase) more of a product as its price drops and less as its price increases
Demand & Supply
Quantity of Pizzas Supplied
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Pri
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izza
sSupply Curve
Copyright ©2003 Prentice Hall, Inc. 1 - 13
$1.00
Demand & Supply
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Quantity of Pizzas Demanded
Pri
ce o
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izza
sDemand Curve
Copyright ©2003 Prentice Hall, Inc. 1 - 14
Demand & Supply
Quantity of Pizzas per Week
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Pri
ce o
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izza
sDemand Curve
Supply Curve
Equilibrium Price
Copyright ©2003 Prentice Hall, Inc. 1 - 15
Business cycle
Balance sheet recession
Recessions & Depressions
Recession:
Aggregate output declines, unemployment increases
Depression:
Severe and long-lasting recession
Productivity
–The amount a system produces compared to the resources needed to produce it
–typically measured as a ratio of output per labor-hour
–Key to improving “standard of living”
Introduction to Business Studies
Marketing
Objectives and Strategy
Offshoring vs. outsourcing
Human Resource Management
Supply Chain
What does “Made in the US” really mean?
Blue Springs, MS
Make/Model Domestic-parts content Assembly location
Ford Taurus 90 percent ChicagoLincoln MKS 85 percent ChicagoToyota Sienna 85 percent Princeton, Ind.GMC Savana 1500 82 percent Wentzville, Mo.Chevrolet Express 1500 82 percent Wentzville, Mo.
Buick Lucerne 81 percent DetroitChevrolet Malibu 80 percent Kansas City, Kan.Honda Odyssey 80 percent Lincoln, Ala.Toyota Avalon 80 percent Georgetown, Ky.Toyota Tundra 80 percent San AntonioToyota Venza 80 percent Georgetown, Ky.Source: NHTSA, automaker data (2009 models)
Human Resources
Production/Operations Management
Accounting and Finance
External Influences