What is Business?
1. Differentiate the three meanings of business as commerce, occupation and organization and identify the four main kinds of productive resources.
2. Understand the forces of supply and demand determine fair or market price.
3. Appreciate how a company’s business model is the source of its competitive advantage and the difference between profit and profitability
4. Recognize the way specialization and the division of labor through the “invisible had of the market” lead to increasing profit and wealth.
5. List the reasons why business organizations are created to structure business exchanges and facilitate business commerce.
Definitions of Business Business has three dimensions of a meaning
A commerce An occupation An organization
• Business as a commerce is the process that people produce, exchange and trade goods and services
• Business as an occupation is the acquired set of specialized skills and abilities that allows people to create valuable goods and services
• Business as an organization is the system of task and authority relationship that coordinates and controls the interactions between people so that they work toward a common goal
• Business as a system is a combination of business commerce, occupations, and organizations that produces and distributes the goods and services that create value for people in a society
Factors of Production
• Regardless of meaning there are four crucial ingredients or productive factors or resources of land, labor, capital and enterprise that are needed to profit from business
• These four productive factors or resources of land, labor, capital and enterprise that are needed to profit from business and are limited in supply (scarcity)
• A company must use them efficiently and effectively to produce goods and services
• Together, the cost of acquiring and using these four resources to make and sell goods and services determines a company’s operating costs
• Owners/managers are...