Chapter 1: Business In General PDF

CHAPTER 1  r ni ng Lea 1 Goals 5 Concept of business and Responsibility of Business Enterprise development of business culture 6 Why People Engage in Business 2 Relationship betw...

CHAPTER 1  r ni ng Lea 1 Goals 5 Concept of business and Responsibility of Business Enterprise development of business culture 6 Why People Engage in Business 2 Relationship between business and the economy 7 International Business Environment 3 Elements of a Business System 4 Profit Motive  DEFINITION OF BUSINESS Business – is any activity involved in the production and distribution of goods and services, aimed to meet the economic needs of consumers with an objective of eventually earning profits. – aims to satisfy the consumer’s basic and secondary needs. Relationship between Business and the Economy  ELEMENTS OF A BUSINESS SYSTEM Economics – the study of how a society produces and distributes its desired goods and services. Four factors of production: a. Land – natural resources b. Labor - people c. Capital - wealth d. Entrepreneur - businessman  PROFIT MOTIVE  It is the difference between income and expenses.  It is the prime motivator why people engage in business.  Management perspective: Profit keeps the business viable.  Employees perspective: profit give employees a fair share in the form of just wages and incentives. Why People Engage in Business? Why people engage in Business? Reasons 1. Profit 2. Power 3. Service to the community 4. Prestige 5. Livelihood 6. Social Approval  Hierarchy of Needs Abraham W. Maslow 1. Physiological or Biological = Essential need to survive 2. Safety = the desire for security, stability or protection 3. Social = the need for group belongingness, affection, love and friendship 4. Ego or self – esteem = the need for self - recognition 5. Self - fulfillment = the need for the realization of personal ambition KINDS OF BUSINESS  Industries – conversion of raw materials into finished products with the application of labor.  Manufacturing industries  Commerce – involves the process of buying and selling where the goods are move from the point of production to the point of consumption.  Ex. NCCC mall, SM, Abreeza. etc.  Service Enterprises - primarily concerned with the satisfaction of the needs and wants of customers in the form of service.  Public and Community Service – Transportation Companies & Meralco  Professional Service – Lawyers, Accountant, etc.  KINDS OF ECONOMIC SYSTEM  Capitalism – owned and operated by private individuals (capitalist or provider of capitals)  Socialism – a free enterprise system with government control and supervision. (mixed economy)  Promotes equality and balance in the society  Communism – the state owns and controls all economic activities. PHASES OF ECONOMIC DEVELOPMENT  CRITERIA  Means of Livelihood  Extent of economic activity  Medium of exchange  MEANS OF LIVELIHOOD: 1. Hunting & Fishing Phase – bounties of nature 2. Pastoral Phase – raising of livestock 3. Handicraft Phase – skills creation of items/object 4. Agricultural Phase - farming 5. Industrial Phase - manufacturing  EXTENT OF ECONOMIC ACTIVITY 1. Household Economy – family needs 2. Village Economy – organized village 3. National Economy – bigger & broader social units 4. International Economy – Global trade  MEDIUM OF EXCHANGE 1. Barter Economy – Exchange of goods- goods, services-services, goods-services/services-goods - No money involved 2. Money Economy – payments for objects standardized in value and regular in appearance (acceptable in general public) 3. Money & Credit Economy – payments of goods & services to be paid at some future date LEGAL FORMS OF BUSINESS OWNERSHIP  Single / Sole Proprietorship –organized and managed by only one person.  Partnership - two or more persons combine to operate a business.  Corporation - is a type of business entity which has a legal entity separate and distinct from its owners. (stockholders or shareholders)  Cooperative  Project Feasibility Study Aspects 1. Marketing 2. Organization and Management 3. Technical 4. Financial 5. Socio - economic BUSINESS Start a new or buy an existing one? It depends: 1.On the nature and kind of business 2.The availability of opportunities for acquisition 3.On personal biases  Business Registration Purposes 1. to establish the legal personality of the business 2. to obtain a Permit to operate 3. to comply with the requirements of special regulatory or promotional programs of government  Business Registration Security and Exchange Commission (SEC) - Partnership - Corporation * Bureau of Trade Regulation and Consumer Protection (BTRCP) - Single or Sole Proprietorship  THE ENTREPRENEUR AND THE MANAGER Entrepreneur – a person who organize and operate a business, willing to face greater financial risks to start a business. Manager- a person responsible in controlling or running the business. THE ENTREPRENEUR AND THE MANAGER  Positive values of a Filipino Entrepreneur  Pakikipagkapwa tao-human relation  Bahala na/malakas ang loob – strong-hearted  Pakikipagsapalaran – risk-taker  Gaya-gaya - imitations  Utang na loob, hiya, awa, bayanihan  Kasipagan -industriousness  Pagtitipid - thrifty  Pagtitiis - enduring  Pagtitimpi – self-control  Katapatan - honesty International Business Environment Exporting – the selling of an organization’s goods in another country Importing – the purchasing of goods and services from a foreign company/another country.  Exporting Reasons: 1. if the production process requires high volume to reduce cost per unit, the home market may be too small to absorb the output. 2. the demand for the firms product may be seasonal and irregular. 3. product life cycle 4. Established goods in new overseas markets  Importing Reasons: 1. the goods may be needed but not available in the importing country. 2. many foreign – made products have prestige value and are demanded by the home market. 3. some foreign goods are less expensive due to lower production costs.