1 Part 1 Marketing Dynamics Chapter 2

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Part 1 Marketing Dynamics Chapter 2 Business Basics 2

Chapter 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. (Continued) 3

Chapter 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. 4

Marketing Terms ¾ need ¾ want ¾ economic needs and wants ¾ economic goods and services ¾ exchange ¾ money ¾ value ¾ time value of money ¾ business ¾ profit ¾ sole proprietorship ¾ partnership ¾ corporation ¾ nonprofit corporation ¾ production ¾ finance ¾ management 5

Economic Needs and Wants ¾ Need ¤ necessary for survival ¾ Want ¤ something you desire, but could function without (Continued) 6

Economic Needs and Wants ¾ Economic needs and wants can be satisfied by buying something What are some of your economic needs and wants? (Continued) 7

Economic Needs and Wants ¾ Economic goods and services are the items you buy to satisfy economic needs and wants Name some economic goods and services. (Continued) 8

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? 9

The Exchange ¾ An exchange is a trade ¾ Exchanges are the basis of all business Describe an exchange you made. 10

Money ¾ Money is a consistent item that people accept in exchange for goods or work Describe American money. How is it consistent? (Continued) 11

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 12

Medium of Exchange ¾ Money is a convenient medium of exchange ¾ Paper money and coins are easy to carry 13

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 ¤ marketers use price to set the value of a product 14

Time Value of Money ¾ Time value of money is the notion that a sum of money has greater potential worth in the future than it does today 15

Store of Wealth ¾ Money is easy to store ¾ You can save money until you need it Why do people save money? 16

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 who are involved in the development and exchange of products (Continued) 17

What Is Business? ¾ Other terms for business ¤ firm, company, organization, corporation, and enterprise Describe some businesses in your neighborhood. (Continued) 18

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 every day ¤ wages (money) people use to buy goods and services (Continued) 19

Money Payment for goods and services Workers Business Money Payment of salary, wages, and profits 20

Making a Profit ¾ Businesses aim to make a profit Sales Costs and Expenses Profit What is profit? 21

Forms of Business Ownership (Continued) 22

Forms of Business Ownership ¾ Sole proprietorship is a business owned by one person ¤ who gets all profits and bears all risks ¾ Partnership is a business owned by a small number of people, usually two or three ¤ partners share profits and risks 23

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 (Continued) 24

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. 25

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 (Continued) 26

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 (Continued) 27

What Is a Nonprofit Corporation? ¾ Examples ¤ DECA ¤ American Cancer Society ¤ Goodwill Name some other nonprofit corporations. 28

The Functions of Business ¾ Four functions of business ¤ production – making products ¤ finance – handling money ¤ marketing – focusing on customers ¤ management – planning, coordinating, monitoring 29

Production ¾ For goods, production includes ¤ farming ¤ mining ¤ construction ¤ manufacturing (Continued) 30

Production ¾ For services, production is often the service itself ¤ Examples – TV production – hairstyling Describe production that you have seen. 31

Finance ¾ Finance includes ¤ planning and budgeting ¤ accounting – paying bills – receiving payments – keeping track of transactions 32

Marketing ¾ Marketing helps the business focus on the customer ¾ Marketing includes ¤ selling ¤ promotion ¤ pricing ¤ learning about customers 33

Management ¾ Management includes ¤ planning ¤ coordinating ¤ monitoring ¤ supervising ¾ Managers look at the big picture and lead workers to make the business better 34

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? 35

Glossary Back 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. (Continued) 36

Glossary Back 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. (Continued) 37

Glossary Back 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. (Continued) 38

Glossary Back 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. (Continued) 39

Glossary Back 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. (Continued) 40

Glossary Back ¾ time value of money. The notion that a sum of money has greater potential worth in the future than it does today. ¾ value. How much something is worth. ¾ want. Something you desire but you could function without. 41