1 Objectives ¾ Identify economic needs and

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Objectives ¾ Identify economic needs and wants. ¾ Describe three uses of money. ¾ Explain how business satisfies economic needs. ¾ Describe three forms of business ownership. 2

Objectives ¾ Describe the difference between a forprofit corporation and a nonprofit corporation. ¾ List the four functions of business and give an example of each. ¾ Explain the role of marketing in business. 3

Marketing Terms ¾ need ¾ want ¾ economic needs and wants ¾ economic goods and services ¾ exchange ¾ money ¾ value ¾ business ¾ profit ¾ sole proprietorship ¾ partnership ¾ corporation ¾ nonprofit corporation ¾ production ¾ finance ¾ management 4

Economic Needs and Wants ¾ Need ¤ necessary for survival ¾ Want ¤ something you would like, but you could survive without it 5

Economic Needs and Wants ¾ Economic needs and wants can be satisfied ¤ by buying something What are some of your economic wants and needs? 6

Economic Needs and Wants ¾ The items you buy to satisfy economic needs and wants ¤ are economic goods and services Name some economic goods and services. 7

Economic Needs and Wants ¾ Some needs and wants cannot be satisfied ¤ by buying something What are some needs and wants that cannot be satisfied by buying something? 8

The Exchange ¾ An exchange is a trade ¾ Exchanges are the basis of all business Describe an exchange you made. 9

Money ¾ Money ¤ consistent item ¤ that people accept in exchange for goods or work Describe American money. How is it consistent? 10

Money ¾ Without money ¤ modern business could not exist ¾ Money is used in three ways ¤ medium of exchange ¤ unit of value ¤ store of wealth 11

Medium of Exchange ¾ Money is a convenient medium of exchange ¾ Paper money and coins are easy to carry 12

Unit of Value ¾ Money can express ¤ the exact value of an item – the dollar is the unit of value in the United States ¾ The value of a product ¤ expressed in dollars – is the price ¾ Marketers use price ¤ to set the value of a product 13

Store of Wealth ¾ Money is easy to store ¾ You can save money until you need it Why do people save money? 14

What Is Business? ¾ Business ¤ general term for activities – involved in the development and exchange of products ¾ The term business also refers to ¤a person or group of people – involved in the development and exchange of products 15

What Is Business? ¾ Other terms for business ¤ firm, company, organization, corporation, and enterprise Describe some businesses in your neighborhood. 16

What Is Business? ¾ Business powers the economy ¾ Money flows from businesses to workers ¤ then from the workers back to the businesses ¾ Business provides ¤ goods and services you use everyday ¤ wages (money) people use to buy goods and services 17

Money Payment for goods and services Workers Business Money Payment of salary, wages, and profits 18

Goal of Business ¾ Businesses aim to make a profit. Sales Costs and Expenses Profit What is profit? 19

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Forms of Business Ownership ¾ Sole proprietorship ¤ business owned by one person – who gets all profits and bears all risks ¾ Partnership ¤ owned by small number of people, usually two or three – who share profits and risks 21

What Is a Corporation? ¾ A corporation is ¤a legal entity established for the purpose of doing business ¤ exists separate from the people who own it ¤ is owned by stockholders 22

What Is a Corporation? ¾ A corporation can ¤ buy property, manufacture products, earn money, lose money, sue, and be sued ¾ A corporation offers limited liability to its shareholders ¤ if a corporation is sued, the corporation pays damages from its income – the shareholders (owners) do not pay Name some corporations. 23

What Is a Nonprofit Corporation? ¾ There are two types of corporations ¤ for-profit ¤ nonprofit ¾ Goal of a for-profit corporation is to make a profit for its owners ¾ Goal of a nonprofit is to benefit society 24

What Is a Nonprofit Corporation? ¾ A nonprofit corporation ¤ is a legal entity, like a for-profit corporation ¤ is established to provide a benefit to society ¤ can make a profit, but. . . ¤ any profit that a nonprofit corporation earns goes back to support its cause or benefit ¾ Examples of benefits or causes ¤ charity, education, medical research, youth activities, religion, and the arts 25

What Is a Nonprofit Corporation? ¾ Examples ¤ DECA ¤ American Cancer Society ¤ Goodwill Name some other nonprofit corporations. 26

The Functions of Business ¾ Four functions of business ¤ production – making products ¤ finance – handling money ¤ marketing – focusing on customers ¤ management – planning, coordinating, monitoring 27

Production ¾ For goods, production includes ¤ farming ¤ mining ¤ construction ¤ manufacturing 28

Production ¾ For services, production is often the service itself ¤ Examples – TV production – hair styling Describe production that you have seen. 29

Finance ¾ Finance includes ¤ planning and budgeting ¤ accounting – paying bills – receiving payments – keeping track of transactions 30

Marketing ¾ Marketing helps the business focus on the customer ¾ Marketing includes ¤ selling ¤ promotion ¤ pricing ¤ learning about customers 31

Management ¾ Management includes ¤ planning ¤ coordinating ¤ monitoring ¤ supervising ¾ Managers look at the big picture and lead workers to make the business better 32

Review ¾ Explain the three uses of money. ¾ What are three forms of business ownership? ¾ What are the four functions of business? ¾ What is the role of marketing in business? 33

Glossary ¾ business. General term for all the activities involved in the development and exchange of products. Also used to refer to a specific person or group of people who are involved in the development and exchange of products; also called firm, company, organization, corporation, or enterprise. ¾ corporation. Legal entity established for the purpose of doing business. 34

Glossary ¾ economic goods and services. Products that you buy to satisfy economic needs. ¾ economic needs and wants. Needs and wants that you can satisfy by buying something. ¾ exchange. To trade something of value for something you want. ¾ finance. The function of business that includes all activities involving money. 35

Glossary ¾ management. The function of business that includes all the activities required to plan, coordinate, and monitor a business. ¾ money. A consistent item that people accept in exchange for goods or work. ¾ need. Something that is necessary for survival. 36

Glossary ¾ nonprofit corporation. Legal entity, like a for-profit corporation; however, instead of profit, its main goal is to achieve something to benefit society; also called nonprofit, nonprofit organization, or notfor-profit organization. ¾ partnership. Business owned by a small number of people, usually two or three. 37

Glossary ¾ production. Any activity related to making a product (good, service, or idea). ¾ profit. Money that a business has left after all the expenses and costs of running the business are paid. ¾ sole proprietorship. Business owned by one person. 38

Glossary ¾ value. How much something is worth. ¾ want. Something you desire but you could function without. 39