Chapter Two cannot be traced directly to a
Types of Business product. It generally applies to
Service Providers
- Is type of business where you offer
to do work for other individuals
- Transient House, Barber Shops,
Repair Stations, Banking,
Schools, Hospitals, Legal
Services, Accounting Services,
and Tutoring Services
Benefits of Service Providers
 Non- Perishable products
 Minimal Capital
 Easy to Establish
 You are your own boss
 Mobility = can offer your business
everywhere. Ex. Repair Shop,
Photography
Manufacturing
- Is a type of business where the raw
materials are converted before
selling them into finished goods.
Raw Materials -> Direct Labor & Factory
Overhead -> Finished goods
Manufacturing Cost
1. Direct Materials - raw materials
that are made into finished
products. These are not materials
that are used in the production
process. 
2. Direct Labor - refers to the
salaries and wages paid to workers
that can be directly attributed to
specific products or services.  efficiency of labour which will
3. Factory Overhead - the total cost
involved in operating all
production facilities of a
manufacturing business that
indirect labor and indirect cost.
Indirect Cost
1. Indirect Materials - materials that
are used in the production process
but that are not directly traceable
to the product. For example, glue,
oil, tape, cleaning supplies, etc. are
classified as indirect materials.
2. Indirect Labor -refers
to employees who work on tasks
that contribute to the company's
performance outside of producing
products and services. They work
in areas such as the administrative,
accounting and engineering
departments.
3. Other Indirect Expenses -
referred to as overhead
expenses (for example, rent and
utilities) and general and
administrative expenses (for
example, officers' salaries,
accounting department costs and
personnel department costs).
Why do entrepreneurs engage in
manufacturing businesses despite of high
financial and operational requirements?
 Desired to earn more
 Low Manufacturing Cost
 Competitive Advantages
Two types of Manufacturing Firm
1. Labor Intensive -refers to
amount spent on training to
labour so as to increase the
ultimately result in the
increased production.
2. Capital Intensive - business
processes or industries that require
 large amounts of investment to Benefits of Trading
produce a good or service and thus  Fast turnover of products
have a high percentage of fixed  Encourages people to buy more
assets, such as property, plant, and  Answer to small buyers
equipment (PP&E).  Business strategy
 Enhances buyer-seller relationship
Trading  Helps low budget families
- Is a type of business where the
goods are bought and sold without Sources of Business Ideas
any changes in its form.  Suggestions
- Is the act of selling products  Prior work experience
directly to final consumer, who can  Friends and relatives
either be an individual or a
 Focus group discussion
business profit.
 Education
- Retailing and wholesaling
 Family Business
 Personal Interest
Modes of Trading
 Brainstorming
1. Retail Store – department stores,
supermarkets, convenience stores,  Research
hypermarkets etc.
2. Mail Factors in Choosing the Products or
3. Television Services Offer:
4. Telephone  Personal Interest
5. Door to door  Competence
6. Electronic Means  Competition
 Available resources
Examples of Trading Business  Market Demand
 Department Stores  Capital
 Convenience Stores  Personal Exposure
 Specialty Stores
 Supermarkets
 Superstores
 Direct Selling
 Discount Stores
 Vending Machine
 Factory Outlets
 Discount Stores
 Vending Machine
 Factory Outlets

Impact of Trading to Business