foundation of business and economics
Post on 02-Jun-2018
224 Views
Preview:
TRANSCRIPT
-
8/10/2019 Foundation of Business and Economics
1/36
Chapter One:
Foundation of Business
and Economics
-
8/10/2019 Foundation of Business and Economics
2/36
Importance of Studying Business
Shape your answers
Sharpen your skills
Understand the business and economic
links within a country and between
countries
-
8/10/2019 Foundation of Business and Economics
3/36
2. WHY WE STUDY BUSINESS?
-
8/10/2019 Foundation of Business and Economics
4/36
2. Why We Study Bus iness ?
A.Increasing Dependence on OthersI) Over the years, people have become more and
more dependent on each others
II) Mutual dependence
III) Use business system effectively
IV) Be a part of business
V) Few people today produce everything they need.
Bus iness: The exchange of goods, serv ices or
money for mutual benefi t or prof i t
Barter : The exchange of goods w i thout us ingmone
-
8/10/2019 Foundation of Business and Economics
5/36
-
8/10/2019 Foundation of Business and Economics
6/36
2. Why We Study Bus iness ?
B. International Opportunities
I) Being educated in business, people can
avail exciting opportunities in the 21stcentury
II) Joint ventures between different countries
lll) Investment across geographical boundaries
lV) Working for multinational comp
C. Standard of Living
Is a measurement with respect to both quantity
and quality.
-
8/10/2019 Foundation of Business and Economics
7/36
2. Why We Study Bus iness ?
The amount of goods and services that an
average family or individual views as
necessary.
A measure of how well a person or family is
doing in terms of satisfying needs and
wants with goods and services
I)Minimal amount of government
interference &
II) A free market business system
-
8/10/2019 Foundation of Business and Economics
8/36
2. Why We Study Bus iness ?
Free Enterp rise:
A system in which private businesses are able
to start and do business competitively to earn
profits, with a minimal degree of government
regulation.D. Coping with the Change
Price change
New Product DevelopmentNeed Change
Unexpected events occurs
-
8/10/2019 Foundation of Business and Economics
9/36
2. Why We Study Bus iness ?
E. Preventing misconceptions
Understanding business also prevents our
accepting misconceptions, misinformationand inaccurate data as truth.
-
8/10/2019 Foundation of Business and Economics
10/36
3. WHO ARE THE PEOPLE THATFORM THE CORE OF BUSINESS?
-
8/10/2019 Foundation of Business and Economics
11/36
3. People Form The Core Of Business
A. Owners B. Managers
C. Employees D. Consumers
A. OwnersPeople who own a business, as well as those
who invest money in one and have right on the
business property, do so because they expectto earn profit
-
8/10/2019 Foundation of Business and Economics
12/36
3. People Form The Core Of Business
B. Managers
The person responsible for operating the businessmay be the owner (an owner-manager also calledan entrepreneur) or a professional manageremployed by the owner
I) The owner-manager sets his or her ownobjectives
II) A professional manager attempts toachieve objectives set by others. They areaccountable to the owners of the business
-
8/10/2019 Foundation of Business and Economics
13/36
3. People Form The Core Of Business
C. Employees
Employees supply the skills and abilities
needed to provide a product or service and to
earn a profit
D. ConsumersA person or business who purchases a good or
service for personal or organizational use.
-
8/10/2019 Foundation of Business and Economics
14/36
3. People Form The Core Of Business
Stakeholders
Stakeholders are people who affect, and are
affected by, the company. In other words,
stakeholders are people one who have shares orinterests in an enterprise.
Stakeholders in a company may include
shareholders, directors, management, suppliers,
government, employees, and the community.
-
8/10/2019 Foundation of Business and Economics
15/36
4. WHAT ARE THE OBJECTIVES
OF A BUSINESS?
-
8/10/2019 Foundation of Business and Economics
16/36
4. Business Objec t ives
Businesses must achieve their objectives to
remain in their operation.
Business objectives can be categorized as -
A. ProfitBusiness Prof itThe difference between business
income (revenue) and business expenses (costs)
Business profit is calculated by subtracting all costs,including taxes, from the revenue received from selling
a product or service in the marketplace.
-
8/10/2019 Foundation of Business and Economics
17/36
4. Business Objec t ives
A. Profit
Business Prof it(continued)
By conducting a number of activities, business
enterprise earns profit. These are-
Risk-taking The business may earn a profit when
it takes risk by entering a new market
or by competing head-on with
another business.
Evaluation
of demand
Business organizations that evaluate
consumer needs and demands can
earn substantial profits.
-
8/10/2019 Foundation of Business and Economics
18/36
4. Business Objec t ives
A. Profit
Business Prof it(continued)
Efficient
management
Efficient management, that is,
efficient planning, organizing,controlling, directing, and staffing
can earn satisfactory profits.
A major cause of business failureis improper or inadequate
management of people,
technology, materials, and capital.
-
8/10/2019 Foundation of Business and Economics
19/36
4. Business Objec t ives
A. Profit
Econom ic Prof i tEconomic profit is what
remains after both actual expenses and
opportunity costs are subtracted from income.
Opportunity costOpportunity costis the cost of
choosing to use resources for one purpose while
sacrificing the next best alternative use of those
resources.
-
8/10/2019 Foundation of Business and Economics
20/36
4. Business Objec t ives
A. Profit
Opportunity costExample:
Mr. Anis has a part-time job that pays him Tk. 1000
per week. He would like to spend a week at the beach
during spring break, and his employer has agreed togive him the time off, but without pay. What is the
opportunity cost here?
Ans: The Tk. 1000 in lost wages would be anopportunity cost of taking the week off to be at the
beach.
-
8/10/2019 Foundation of Business and Economics
21/36
4. Business Objec t ives
A. Profit
Opportunity costExample:
Ms. Mita Chowdhury is employed with a company that
pays her a salary of Tk. 240,000 per year. She is
thinking about leaving the company and returning toUniversity for attending MBA classes. Since returning
to university would require that she gives up her
Tk. 240,000 salary, the foregone salary would be an
opportunity cost of seeking further education.
-
8/10/2019 Foundation of Business and Economics
22/36
4. Business Objec t ives
B. Survival
This is an obvious objectives. Other objectives canbe attained only if the business survives.
C. Growth
Growth is an objective because the business doesnot stand still. Market share increase and increasedproductivity are important growth objectives.
D. Social responsibilityBusinesses, like each person in society, must accepttheir responsibilities in areas such as pollutioncontrol, eliminating discriminatory practices, and
energy conservation.
-
8/10/2019 Foundation of Business and Economics
23/36
5. DEFINE ECONOMICS
-
8/10/2019 Foundation of Business and Economics
24/36
5. Econom ics : The foundat ion o f bus iness
EconomicsThe study of how a society uses its scarceresources to produce goods and services and todistribute them for consumption.
At least three issuesare key to understandingeconomics :
(1) Resources(2) Goods & Services(3) Allocation of both resources and products
-
8/10/2019 Foundation of Business and Economics
25/36
5. Econom ics : The foundat ion o f bus iness
1. Resources
a.Natural Resources
Natural Resources are those resources providedin limited amounts by nature, such as oil, coal,water and timber etc.
Natural resources must be processed to becomea product or to be used to produce other goods or
services.b. Capital Resources
Capital Resources are goods produced for thepurpose of making other types of goods and
services.
-
8/10/2019 Foundation of Business and Economics
26/36
5. Econom ics : The foundat ion o f bus iness
1. Resources (continued)
Some capital resources are current assetshaving ashort life and are used up in the production process
fuel, raw materials, paper, and money etc.
Some are long-lived capital resources named asfixed capital, which are used repeatedly in theproduction processfactory buildings, PCs,
machinery etc.
-
8/10/2019 Foundation of Business and Economics
27/36
5. Econom ics : The foundat ion o f bus iness
1. Resources (continued)
c. Labor resources
Labor resources represent the human talent, skills
and competence, available in a nationdoctors,operators, teachers and so on.
Without human resources, no productive use ofeither natural or capital resources is possible.
-
8/10/2019 Foundation of Business and Economics
28/36
5. Econom ics : The foundat ion o f bus iness
B. Goods and Services
A nations resources are used to produce goods
and services that will meet peoples needs and
wants.
NeedsGoods and services people must
have simply to exist.
WantsThings people would like to have but
do not absolutely need for survival. Apersons want can be unlimited: as soon as
one want is satisfied, another is created.
-
8/10/2019 Foundation of Business and Economics
29/36
5. Econom ics : The foundat ion o f bus iness
B. Goods and Services
Needs Wants
Food, clothing, shelter,
medical care, etc.
Fashionable clothes,
luxury vacations,Camcorder etc.
C. Allocation
The process of choosing how resources will be
used to meet a societys needs and wants.
-
8/10/2019 Foundation of Business and Economics
30/36
5. Econom ics : The foundat ion o f bus iness
C. Allocation
a. Resource allocation
We must make choices about how the scarce resources are
to be used. To make these choices, we have to answer three
fundamental economic questions:
i. What goods and services will be produced, and
in what quantities?
ii. How will goods and services be produced, and by
whom?
iii.Who will use the goods and services?
-
8/10/2019 Foundation of Business and Economics
31/36
5. Econom ics : The foundat ion o f bus iness
C. Allocation
b. Product distribution
Besides scarce resource, the issue of allocation involves the
distribution of goods and services to the consumer.
The business earns a profit and the customer is satisfied
with the goods or services: the exchange provides mutual
benefit.
When goods and services get to the customers who want or
need them and mutual satisfaction occurs, both resources
and products have been well al located.
-
8/10/2019 Foundation of Business and Economics
32/36
6.Economic Systems
-
8/10/2019 Foundation of Business and Economics
33/36
6. ECONOMIC SYSTEMS
An economic system is an accepted way of:
organizing production,
establishing the rights and
freedom of ownership,
using productive resources
and governing business transactions in a society.
There are 3 basic types of systems
-
8/10/2019 Foundation of Business and Economics
34/36
6. ECONOMIC SYSTEMS
Economic Systems
Capitalism or
Free-Market System
Right to ownership
Entitled to all profits
Right to choose job
Decide what toproduce
How to produce
Whom to sell to
Mixed
Freedom to start abusiness
Both state andprivate ownedindustries
Profits mostly inprivate sector
Communism or
Planned Economy
Planned system
State ownsindustries
Profits not
recognized State decides
occupation
-
8/10/2019 Foundation of Business and Economics
35/36
6. ECONOMIC SYSTEMS
Economic Systems (continued)
A. Communism/ Planned Economy
An economy in which the government owns the
productive resources, financial enterprises, retail
stores and banks
B. Capitalism/ Free MarketPrivate enterprise
can produce almost everything
C. Mixed Economy
both private and government
produce and distribute goods and services
-
8/10/2019 Foundation of Business and Economics
36/36
End of Chapter One
top related