1.

1 Nature of Business
What is a Business?
Any organization that uses resources to
produce a good or service.

What is added-value?

Changing or altering a natural resource or

a semi-finished good to make it more
desirable.
What do businesses do?

Businesses identify needs of consumers

then purchase resources (or inputs) to
produce outputs.

Making Profit?
Usually business aims to make money.
 Land (& natural resources)
 Fields for factories/ energy for power
 Labor
 Employees needed to run machines, sell, etc.
 Capital
 Plant/machinery/computers, $
 Enterprise/Entrepreneurship
People to invest/manage/innovate/take risks


These are also referred to as “Factors of Production”

Goods and Services that satisfy the needs
and wants of customers.

 “goods” something tangible—touchable

 “service” usually intangible—people do things for
you
 Consumer Goods
•Consumer goods are sold to general public.
Can be Durable or Non-durable.

Durable Good
Consumer goods that can be used over time,
repeatedly.
Examples of: Televisions, T-shirt, books, cars
Non-Durable Good
•Consumer goods that can only be used once.
Examples of: Food, drinks, and candy
 Capital Good
•Goods used by industry to produce other goods
and services

Examples of: machinery, cranes, dump trucks

Consumer Service
•Non-tangible product that sold to the consumer
Examples of: hotel rooms, airplane ticket, insurance
Business Functions (Departments)
 Marketing
 Finance
 Human Resource Management
 Operations Management
Marketing
 Identifies consumer wants based on
market research
 Product/Price/Place/Promotion plus
3 more…
 How and where to promote
 How to sell and distribute
Finance
 Flow of money in and out of
business
 Provides financial information to
management
 Key division to all companies
Human Resource Management
 Identifies workforce needs of business
 Recruits potential employees
 Selects and trains staff
 Motivational systems to retain staff and
encourage productivity
 Employment contracts
 Redundancy and redeployment of staff
Operations Management
 Insures resources are available
for production
 Maintains production levels
 Maintains quality levels
 Oversees production efficiency
Interrelationship
 All four business functions must
work together!
Sectors of Industry
 Primary Sector – deal with natural resources
 Farming, fishing, natural resource extraction
 Secondary Sector – deal with manufacturing and
processing
 Assembly, baking, clothing, construction
 Tertiary Sector – provide services
 Retailing, transportation, insurance, banking, tourism,
telecommunications
AND Quarternary Sector-IT