What is a Business?

Learning Target
I will be able to explain what a business is, and differentiate
between ‘Needs and Wants’
 Do Now

What comes to mind when you hear the word “business”?

 A local grocery store? Your favorite pizzeria?

All of these organizations are examples of businesses!

A national clothing store? A large technology company, like Apple?

 What is a Business?

Business: any organization or enterprise that provides products to

meet the needs of customers
 Products can be a good, a service, or a combination of both

Goods are items that are tangible, Services are things done for you by
meaning that you can physically other people. They are intangible.
touch them. Examples include a Examples include a haircut, a
computer, a book, and a car concert, and an Uber ride
 What is the Purpose of a Business?

The main goal of a business is to provide products that people are

willing to buy in order to earn a profit

Profit is one of the main rewards that comes from risking time and
money to start and run a business

In addition, businesses may also have other goals, such as creating

innovative products, contributing to society, and creating jobs
 What is Profit?
Profit: the difference between revenue of a business and its expenses

Profit is a key measure to business success

 What is Revenue?

Revenue: funds that flow into a business from it primary activity, such
as the sale of products

Businesses can earn revenue from various sources, such as sales of

goods or services, subscriptions, licensing, rent, advertising, and
interest
 What are Expenses?
Expenses: costs incurred by a business in the process of generating
revenue

Examples of expenses include the direct costs associated with

producing products, such as raw materials and labor, as well as
operating expenses incurred to run the business, such as rent, utilities,
advertising, and insurance
 Calculating Profit
To calculate profit, you subtract the expenses of the business from its
revenue

Profit = Revenue - Expenses

 How Do Businesses Use Their Profits?

Businesses use their profits in various ways, such as:

• Reinvesting in the business
• Expanding operations
• Repaying any debts
• Rewarding owners and shareholders
• Improving employee compensation
• Investing in research and development
• Investing in marketing
• Supporting social and environmental initiatives
 However, not every business earns a profit

When the expenses of a business are greater than its revenue, it has
what is called a loss
Earning a profit is not necessary for an organization to be considered
a business. Just the pursuit of profit makes an organization a business
In addition, an organization does not need to have a physical store, or
even a website, to be considered a business

A person selling water outside on A self-employed worker who offers

a hot day is doing business, as their video editing skills on a
they are offering a product in freelance basis could be a business
exchange for a profit within themselves
 Quick Write!

Do you think government organizations and nonprofits are

considered businesses?
No. When an organization provides goods or services without seeking
a profit, it is not a business

Organizations that are not considered businesses usually fall into one
of those two categories

Government Organizations Nonprofit Organizations

 Government Organizations

Local, state, and federal government organizations exist to provide

public services, enforce laws, and manage public resources, with the
primary goal being to serve the interests of citizens rather than
generating profits
 Nonprofit Organizations

Nonprofit organizations, such as UNICEF and the Red Cross, operate

for charitable or social purpose, providing services such as healthcare,
education, and community development. Their funding comes from
donations, grants, and fundraising rather than generating profits from
business activities
 What are the Benefits of Business in Society?
• Businesses play a significant role in job creation
• Businesses drive innovation and technological advancement that
improve the quality of life and enhance productivity
• Businesses promote economic growth by earning revenue, paying
taxes, and investing
• Successful businesses create wealth for their owners, shareholders,
and employees, which circulates through the economy
• Businesses offer a wide range of products, promoting healthy
competition and providing consumer choice and greater affordability
• Businesses support various social and environmental causes
 What are the Drawbacks of Business in Society?
• Certain industries and businesses have negative environmental
impacts, such as pollution and greenhouse gas emissions
• Some businesses exploit labor through poor working conditions,
inadequate wages, or unethical labor practices
• Some businesses engage in unethical behavior, such as tax evasion
and corporate scandals
• Some businesses contribute to income inequality by concentrating
wealth in the hands of a few
• Large businesses can have significant market power, leading to a
monopoly that hinders fair competition and limits consumer choices
 Types of Businesses

There are various types of businesses, and it is common for

businesses to operate in multiple areas simultaneously. However, the
main types of businesses include:

• Manufacturing
• Merchandising
• Service
• Hybrid
 Manufacturing
Manufacturing businesses are those who develop a product and sell it
either directly to the customer or to some type of middleman, like a
wholesaler or retailer. Examples of manufacturing businesses include
automobile and steel manufacturers
 Merchandising
Merchandising, also known as retailing, is a business strategy in which
products are purchased from manufacturers, wholesalers, or other
middlemen, and are sold at the retail price. Merchandisers generate
profits by selling products at a price higher than what they paid to
purchase them. Examples of a retail business include grocery stores,
supermarkets, and department stores
 Service
Service businesses sell intangible goods to consumers. Unlike tangible
goods, services cannot be separated from the provider or stored.
Service businesses offer professional services, expertise, and various
other offerings. Examples of service businesses include nail salons,
educational institutions, and accounting firms
 Hybrid

Hybrid businesses possess the qualities of multiple business types. For

example, a restaurant develops its own dishes (manufacturing), sells
products like cold drinks which are manufactured by other businesses
(merchandising), and provides service to the customers (service)
 Activity: Types of Businesses
Directions: Given the list of well-known companies, determine whether
each is predominately a manufacturing, merchandising, service, or
hybrid business. If it is hybrid, state which two or three types it is.
1. Apple 9. Gap
2. Boeing 10. Google
3. Coca-Cola 11. H&R Block
4. CVS 12. Johnson & Johnson
5. Delta Airlines 13. McDonald’s
6. Disney 14. Netflix
7. FedEx 15. Nike
8. Ford 16. Wal-Mart
 Types of Businesses – Answer Key
1. Apple: Hybrid (manufacturing
and service)
2. Boeing: Manufacturing
3. Coca-Cola: Manufacturing
4. CVS: Hybrid (merchandising
and healthcare services)
5. Delta Airlines: Service
6. Disney: Service
7. FedEx: Service
8. Ford: Manufacturing
9. Gap: Manufacturing
10. Google: Hybrid
(manufacturing and service)
11. H&R Block: Service
12. Johnson & Johnson:
Manufacturing
13. McDonald’s: Hybrid (all 3)
14. Netflix: Service
15. Nike: Manufacturing
16. Wal-Mart: Merchandising
 Summary

In your own words, what is a business?