Business Ownership and Types

• Different forms of business ownership exist, each with unique characteristics and implications for liability, management, and taxation.

Types of Ownership

• Sole Proprietorship: A business owned and run by one person.
• Partnership: A business owned and run by two or more people.
• Corporation: A legal entity with many owners, treated as an artificial "person".
• Cooperative: A business owned and operated for the benefit of its workers or members.
• Franchise: A hybrid business model using license agreements between a franchisor and franchisee.
• Non-Profit: Organizations that do not generate profits for owners, like those in healthcare or education.
• Profit: Businesses that generate revenue and distribute profits to owners or shareholders.

Types of Businesses

• Merchandising: Businesses involved in planning, presenting, and selling products to consumers, including product selection, pricing, display, and promotion.
• Service: Businesses providing intangible benefits to customers through activities like repairs, consulting, or entertainment.
• Production/Manufacturing: Businesses involved in creating goods or products using raw materials, labor, and machinery.
• Distribution: Businesses focused on making products or services available to customers through channels, logistics, and transportation.

Business Size

• Small: A business with fewer than 50 employees or annual revenue below a specified threshold.
• Medium: A business with a moderate number of employees and revenue, falling between small and large.
• Large: A business with a substantial number of employees and revenue, often holding a significant market share.

Customer vs. Consumer

• Customer: A person or organization that purchases goods or services from a business.
• Consumer: An individual who ultimately uses or consumes goods or services.
• Consumers make purchasing decisions based on needs, wants, and available information, driving demand and shaping market trends.
• Consumers influence businesses through purchasing decisions, reviews, feedback, and advocacy, which shapes product development and marketing strategies.

Market/Marketplace

• Market: A place or system, either physical or virtual, where goods and services are exchanged.
• Marketplace: A specific location or platform where buyers and sellers interact to conduct transactions.

Factors of Production

• Natural Resources (Land): Resources that occur naturally and are used in the production of goods and services, including land, water, minerals, and forests.
• Human Resources (Labor): Refers to human effort, both physical and mental, applied to the production of goods and services.
• Capital Resources: Man-made resources used in the production process, such as machinery, tools, equipment, and buildings.
• Entrepreneurship: The ability and willingness to take risks, innovate, and organize the other factors of production to create new goods and services.
• Gross Domestic Product (GDP): A monetary measure of the total market value of all final goods and services produced within a country's borders during a specific period, like a year.

Economic Systems

• Traditional Economic System: Production and distribution are determined by customs, traditions, and beliefs.
• Command Economic System: The government controls all economic activity, including production, distribution, and pricing.
• Market Economy: Decisions about production, distribution, and pricing are made by individuals and businesses, guided by supply and demand.
• Mixed Economic System: A combination of command and market economies, with some government intervention and regulation alongside private enterprise.
• Law of Demand: As the price of a good or service increases, the quantity demanded decreases, and vice versa.
• Law of Supply: As the price of a good or service increases, the quantity supplied also increases, and vice versa as businesses are more willing to produce and sell a product when they can get a higher price.
• Supply: The quantity of a good or service that producers are willing and able to provide at a given price.
• Demand: The quantity of a good or service that consumers are willing and able to purchase at a given price.
• Equilibrium Price: The point where the supply and demand curves intersect, representing the price at which the quantity supplied equals the quantity demanded.

Market Structures

• Perfect Competition: A theoretical model with many small firms selling identical products, easy entry and exit, and firms are price takers.
• Monopolistic Competition: Many firms sell differentiated products, with relatively easy entry and exit, allowing firms some control over pricing.
• Oligopoly: A market dominated by a few large firms, with high barriers to entry, where firms’ actions significantly impact competitors.
• Monopoly: A market with a single seller, offering a unique product with high barriers to entry, giving the firm significant pricing power.
• Non-Price Competition: Firms compete by distinguishing their products or services through means other than price, like advertising, branding, product quality, or customer service.