The Role of business in our

economic setting
Business
• “An organization that provides goods and
services to earn or maximize a profit.”
• “An organization engaged in producing and
selling, at a profit, goods and services that
consumer’s needs and wants.”
Key points about business
• Produce goods and services
• Seek profit
• Try to satisfy consumer’s needs and wants
Produce goods and services
• Goods
• A commodity, or a physical, tangible item that satisfies
human want or need. Such as credit
card, beverages, ice creams.

• Services
• An activities that benefits consumers or other
businesses. It is an intangible products such as
accounting, banking, consultancy, education, insuranc
e, expertise, medical treatment or transportation.
Types of business
• Require the same functions or activities to be
performed to operate the business.
• Use the same inputs to produce the final goods
and services.
Activities of business
• Creates a product or service
• Market the product or service to the consumer
• Account for the financial transaction
• Hire, train and evaluate employees
• Acquire financing
• Process information
Management functions of business
• Plan what it wants to accomplish
• Organize its resources
• Acquire the people to operate the business
• Guide the people to operate the business
• Monitor progress
How to operate business

Input Process Output

Factor of production
• Input or resources used to produce goods and
services.
• The four resources are;
• Land
• Labor
• Capital
• Entrepreneurship
• Land:
• Land is the natural resources that can be used to
produce goods and services.

• Labor:
• Labor is the total human resources required to
turn raw materials into goods and services.
• Capital:
• Capital is the total of tools, equipment, machinery
and buildings used to produce goods and services.

• Entrepreneurship:
• Entrepreneur is an individual who takes initiatives
to bundle resources in innovative ways and is
willing to bear the risk and/or uncertainty to act.
profit
• Profit is the amount of money remaining from a
firm’s sales revenues after it deduct its total
expenses.
• It is the reward to the business.
• Profit is the ultimate goal of business.
Economic system
• It is the method a society uses to allocate its
resources and meet its needs for goods and
services.

• Types of Economic system

• Capitalism
• Communism
• Socialism
Capitalism
• It is an economic system in which both the
factors of production and the businesses are
owned by private individuals.
• It not concern by the government.
• Private enterprise system, an economic system
in which businesses or enterprises are privately
owned.
Principles or rights of the private
enterprises system
• Right to private ownership of property
• Right to freedom of choice
• Right to compete
• Rights to profits
Types of capitalism
• Two types of capitalism
• Pure capitalism
• Mixed capitalism
Pure capitalism
• It is also known as market economy.
• It is an economic system in which economic
decisions are made freely according to the
market forces of supply and demand.
• Government does not interfere in the economic
system is called laissez-faire or hands off
approach.
Producing goods and services
• A household, in economic terms, is any person
or group of people living under the same roof
and functioning as an economic unit.
• 5 triggers a series of action.
Mixed capitalism
• An economic system based on a market economy
with limited government involvement.
• Two primary tool:
• Power of tax
• Power of spend
• Government own entities
• Government agencies that regulate the activities
of some businesses
• Government involves employer employee
relations
Communism
• In which the government controls the factor of
production.
• Central government planner make all the
decision about production and resource
allocation.
• Supply, demand and competition have no
influence in this system.
Socialism
• It is an economic system in which the
government controls the operation and direction
of basic industries but private ownership also
exists.
• Government take a decisions.
• The industries normally under control of the
government.
Mixed economic system
• In this economic system, in which there is both
private and government ownership and
production of goods and services.
• There is more than one economic system at work
in the country.
• Economic system are not static.
The performance of economic system
• Gross National Product (GNP):
• The GNP accounts for all goods and services a
country produces, no matter where they were
produced.
• Gross domestic Product (GDP):
• The total market value of all goods and services
that a country produces in a year with in its
national boundaries.
Standard of living
• The degree of material wealth in a country.
• It shows that how well an individual is doing to
satisfy his or her needs for goods and services.
• Productivity:
• A final measure of economic performance is
productivity.
• It is the amount of outcome for a given amount
of input.
Business today and tomorrow
• Environmental protection
• International interdependence
• International business competition
• Quality
• Family and work
• Cultural diversity
• Technological changes
• Productivity
• Social responsibility
Why study business
• The impact of business
• Career choice
• Business ownership