Business Organizations

1. Business Organizations Characteristics of Business

2. Nature of Business • Business – an organization that produces or distributes a good or service for profit • Profit – is the difference between earned income and costs

3. Every Business engages in at least three major activities • Production • Marketing • Finance

4. A good manager focuses on both Effectiveness – making the right decisions about what products or services to offer customers and how to produce and deliver them Efficiency – producing needed goods or services quickly and at a low cost

5. Efficiency can be achieved in three ways: • Specialization – not all workers do all things. Individuals get really good at fewer things • Technology and Innovation – new ideas and new processes can lower costs • Reorganization – downsizing can save costs

6. A nations economic wealth is measured by: • Gross National Product – the total market value of all goods and services produced in a country in a year • Individual well-being of its’ citizens – statistics such as how many people own their own home etc.

7. Business Trend in the US • Reasons for business growth in America • Entrepreneur Spirit - strong desire of people to start a business • Ease at which the government lets a business start up

8. Business Trend in the US Over the past decade, small businesses created 60 to 80 percent of the net new jobs. Small firms accounted for all of the net new jobs. Firms with fewer than 500 employees had a net gain of 1.86 million new jobs. Large firms with 500 or more employees lost more jobs than they created, for a net loss of 181,122 jobs. Based on most recent year with data (2004), www.sba.gov/advo/research/data.html#us.

9. Employ about half of all private sector employees • Pay more than 45 percent of total U.S. private payroll • Hire 40 percent of high tech workers (such as scientists, engineers, and computer workers). • 52 percent home-based • Small innovative firms produce 13 times more patents per employee than large

10. Entrepreneurship • Small Business – is a term applied to any business that is operated by one or a few individuals • Franchise – is a legal agreement in which a distributor buys the rights to sell the franchising product or service under the franchising company’s name and trademark. • Franchisor – parent company • Franchisee – the distributor of a franchised product of service

11. Characteristics of an Entrepreneur • Prefers self-employment • Motivated self starter • Lots of energy • Obtains some expertise in their field • Perseverance • Creative Thinkers • Risk Taker

12. Obligations of ownership to: • Customer – may have the best at the lowest cost • Workers – welfare may not be sacrificed and rights will be respected • Management – may be recognized in proportion to it’s demonstrated ability • Competitors – avoidance of every form of unfair competition • Investors – rights will be safe guarded and they will kept informed • Public – business will strive to promote general welfare and to observe the law

13. Reasons to study business principles and management • If you want to own your business you must know business • If you become a supervisor or manager, the tools will make you more confident • It will help you contribute as an employee since you will have a better concept of the big picture