Understanding business

• Objectives are to define business, the role of the consumer, what it takes to start a business, economic resources, and the laws of supply, demand, and price.
• Learning goals include explaining how needs and wants create business opportunities, describing supply and demand, and comparing how different industries address consumer needs.

What is Business

• Business involves the production or sale of goods or services to satisfy consumer wants, needs, and demands, aiming to make a profit.
• Businesses can be for-profit or non-profit, large or small, and can take various forms of ownership.
• Businesses deal in goods or services, use diverse distribution channels, play a role in the community, and provide jobs.

Profit vs. Non-Profit vs. Not-for-Profit

• For-profit businesses aim to make money, and profit is calculated as Revenue minus Expenses.
• Not-for-profit organizations do not distribute profits to owners.
• Non-profit organizations distribute income to group members, directors, or officers while raising money for a cause

Characteristics of businesses

• Businesses can be large or small, with SMB (small or medium sized business) employing less than 500 people.
• In Canada, over 1 million SMBs employ more than 60% of the workforce.
• Businesses can be sole proprietorships, partnerships, corporations, co-operatives, or franchises.
• Businesses offer goods that are tangible items to be sold for a profit.
• Businesses offer services, which are activities done for a fee without a tangible exchange.

Channels of distribution

• Distribution refers to how businesses deliver goods or services to customers.
• "Bricks & Mortar" businesses operate from a physical location.
• Other distribution channels include online stores, B2B (Business to Business), wholesalers, and direct-to-customer sales.

Role in the community

• Businesses play various roles like offering support via organizations like the Canadian Diabetes Foundation or providing services like those of a John Deere dealership.

Jobs in Businesses

• Businesses provide many jobs, such as health clubs which employ fitness trainers, front desk workers, office workers, maintenance and food service personnel

Role of Consumers

• Consumers buy and use goods or services.
• Customers simply buy goods or services.
• Producers are the ones who make the goods or services.
• A marketplace is any location where producers and consumers interact.

Consumer Influence

• More consumer options and wants lead to increased competition.
• Consumers influence products, prices, and service levels.
• A product becomes obsolete when there is no longer a want or need for it.
• Producers stop making products that consumers no longer buy.

Consumer Influence on Price

• Businesses in control have pricing power and can increase prices due to costs or to improve profits.
• Consumers have purchasing power and can seek products elsewhere, if needed.
• Consumer purchasing power includes control in buying goods at the preferred price and location.

Starting a Business and Entrepreneurs

• An entrepreneur is someone who starts their own business.
• Entrepreneurs take risks, solve problems, and meet community needs.
• Key traits for entrepreneurs include self-confidence, outgoing personality, innovative thinking, ability to work alone, and aptitude for managing others.

Needs vs. Wants

• Needs are essential for human survival, such as food, shelter, and clothing.
• Wants are desires beyond basic needs and aren't essential for survival.
• Entrepreneurship often involves creating a venture to fulfill needs or wants.
• A venture is defined as a risky or new business idea.

Attracting Customer interest

• Attracting customers requires identifying needs, wants, and competition
• Once needs and wants have been identified, business can attract customers from its competitors

Making Buying Decisions

• Consumer buying decisions involve brand, price, taste, promotions, and health reasons.
• Businesses can make bad decisions if these factors have not been correctly identified.
• A multi-step decision-making model can help businesses with this

Economic resources

• Economic resources, also called factors of production, include natural, human, and capital resources.

Natural Resources

• Natural resources include materials from the earth, water, and air like soil, iron, gold, oil, trees, wildlife, fish, oxygen, wheat, and apples.
• Most natural resources are non-renewable.

Human Resources

• Human resources equate to labor or workforce.
• They consist of people who create goods and services, such as farmers, factory workers, construction workers, website designers, investment bankers, teachers, and pilots.

Capital Resources

• Capital resources are long-lasting and require business investment.
• These include buildings, equipment, tools, trucks, and factories.
• Money is needed to buy resources and produce goods or services.

Interdependence

• Businesses are interdependent and rely on various other businesses to satisfy consumer needs and wants.
• A clothing manufacturer relies on other businesses for buttons, denim, thread, zippers, and sewing machines.

Economic Systems

• Economic systems manage selection, production, distribution, and consumption of goods and services.
• Governments and businesses collaborate to foster economic activity and growth.
• Economic systems address the key questions of what, for whom, and how goods or services should be produced.

Law of Demand

• Demand is the quantity of goods or services consumers are willing to buy at a certain price.
• The Law of Demand states consumers buy more when prices decrease and less when prices increase.

Conditions affecting demand

• Key factors affecting demand include consumer income, tastes, expectations for the future, and population size.

Law of Supply

• Supply is the amount of goods or services available for sale.
• Law of Supply is that companies supply goods and services in line with what price they can charge.

Conditions affecting supply

• Factors affecting supply include number of producers, changes in price, technology, expectations, and production costs.

Price

• Price is determined by supply and demand and the cost of production.
• When demand is low and supply is high, prices tend to fall.
• When demand is high and supply is low, prices rise.