Principles of Business, Marketing, and Finance
Principles of Business, Marketing, and Finance
Scarcity
Scarcity
Scarcity
•
Unlimited
wants and
needs
•
Limited
resources
•
Choices
must be
made
Questions Economies Must
Answer
Questions Economies Must
Answer
What goods and services
will be produced?
How will they be
produced?
Economic Systems
Controlled
Economy
Mixed
Economy
Market
America’s Private Enterprise
System
America’s Private Enterprise
System
Based on independent decisions by businesses and
America’s Private Enterprise
System
America’s Private Enterprise
System
Characteristics of Private Enterprise
–
resources of production are owned and controlled by
individual producers
–
Producers use the profit motive to decide what to
produce-use of resources to obtain the greatest profit
–
Individual consumers make decisions about what will
be purchased to satisfy needs
–
Consumers use value in deciding what to consume
–
Government stays out of exchange activities between
Consumers
Consumers
Demand
Demand
a relationship between the quantity of a
Producers
Producers
businesses that use their resources to develop
products and services to consumers for profit
–
Supply-relationship between the quantity of a product
that producers are willing and able to provide and the
price
Government
Government
least amount of involvement in free
enterprise system
some regulations
Business Customer
Classifications
Business Customer
Classifications
Producers-1.2 million businesses
–
farms and ranches
–
mining companies
–
oil refineries
–
manufacturers of business and consumer products
–
construction-largest production category-over 700,000
companies
–
small-less than $10,000 a year on purchases
–
large-employ several hundred thousand people
Business Customer
Classifications
Resellers
Service
Businesses
Government
Non-Profit
Organization
Forms of Production
Forms of Production
Extraction and cultivation
-
products are obtained from nature or grown using
natural resources
Processing
-changing and improving the form of another product
Manufacturing
-combines raw materials and processed goods into
Manufacturing Process
Manufacturing Process
Several
manufacturers are
part of the total
activity needed to
produce goods that
Types of Manufacturing
Procedures
Types of Manufacturing
Procedures
Mass Production
-
assembly process that makes a large number of
identical products using a continuous, efficient procedure
Custom Manufacturing
Types of Manufacturing
Procedures
Materials
Processing
•
changing the
form of raw
materials so
they can be
consumed or
used to make
other
products
Intermittent
Processing
•
uses short
production
runs to
produce a
precise
amount of a
variation of a
product
Continuous
Processing
•
raw materials
