this is the 1st chapter of introduction to business

1. Chapter 1
the role of business in our economic
setting
Prepared by:
Ms. Ghazala Danish

2. Business
• “An organization that provides goods and
services to earn or maximize a profit.”
• “An organization engaged in producing and
selling, at a profit, goods and services that
consumer’s needs and wants.”

3. Key points about business
• Produce goods and services
• Seek profit
• Try to satisfy consumer’s needs and wants

4. Produce goods and services
• Goods
• A commodity, or a physical, tangible item that satisfies
human want or need. Such as credit
card, beverages, ice creams.
• Services
• An activities that benefits consumers or other
businesses. It is an intangible products such as
accounting, banking, consultancy, education, insuranc
e, expertise, medical treatment or transportation.

5. Types of business
• Require the same functions or activities to be
performed to operate the business.
• Use the same inputs to produce the final goods
and services.

6. Activities of business
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Creates a product or service
Market the product or service to the consumer
Account for the financial transaction
Hire, train and evaluate employees
Acquire financing
Process information

7. Management functions of business
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Plan what it wants to accomplish
Organize its resources
Acquire the people to operate the business
Guide the people to operate the business
Monitor progress

8. How to operate business
Input
Process
Output

9. Factor of production
• Input or resources used to produce goods and
services.
• The four resources are;
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Land
Labor
Capital
Entrepreneurship

10. • Land:
• Land is the natural resources that can be used to
produce goods and services.
• Labor:
• Labor is the total human resources required to
turn raw materials into goods and services.

11. • Capital:
• Capital is the total of tools, equipment, machinery
and buildings used to produce goods and services.
• Entrepreneurship:
• Entrepreneur is an individual who takes initiatives
to bundle resources in innovative ways and is
willing to bear the risk and/or uncertainty to act.

12. profit
• Profit is the amount of money remaining from a
firm’s sales revenues after it deduct its total
expenses.
• It is the reward to the business.
• Profit is the ultimate goal of business.

13. Economic system
• It is the method a society uses to allocate its
resources and meet its needs for goods and
services.
• Types of Economic system
• Capitalism
• Communism
• Socialism

14. Capitalism
• It is an economic system in which both the
factors of production and the businesses are
owned by private individuals.
• It not concern by the government.
• Private enterprise system, an economic system
in which businesses or enterprises are privately
owned.

15. Principles or rights of the private
enterprises system
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Right to private ownership of property
Right to freedom of choice
Right to compete
Rights to profits

16. Types of capitalism
• Two types of capitalism
• Pure capitalism
• Mixed capitalism

17. Pure capitalism
• It is also known as market economy.
• It is an economic system in which economic
decisions are made freely according to the
market forces of supply and demand.
• Government does not interfere in the economic
system is called laissez-faire or hands off
approach.

18. Producing goods and services
• A household, in economic terms, is any person
or group of people living under the same roof
and functioning as an economic unit.
• 5 triggers a series of action.

19. Mixed capitalism
• An economic system based on a market economy
with limited government involvement.
• Two primary tool:
• Power of tax
• Power of spend

20. • Government own entities
• Government agencies that regulate the activities
of some businesses
• Government involves employer employee
relations

21. Communism
• In which the government controls the factor of
production.
• Central government planner make all the
decision about production and resource
allocation.
• Supply, demand and competition have no
influence in this system.

22. Socialism
• It is an economic system in which the
government controls the operation and direction
of basic industries but private ownership also
exists.
• Government take a decisions.
• The industries normally under control of the
government.

23. Mixed economic system
• In this economic system, in which there is both
private and government ownership and
production of goods and services.
• There is more than one economic system at work
in the country.
• Economic system are not static.

24. The performance of economic system
• Gross National Product (GNP):
• The GNP accounts for all goods and services a
country produces, no matter where they were
produced.
• Gross domestic Product (GDP):
• The total market value of all goods and services
that a country produces in a year with in its
national boundaries.

25. Standard of living
• The degree of material wealth in a country.
• It shows that how well an individual is doing to
satisfy his or her needs for goods and services.
• Productivity:
• A final measure of economic performance is
productivity.
• It is the amount of outcome for a given amount
of input.

26. Business today and tomorrow
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Environmental protection
International interdependence
International business competition
Quality
Family and work
Cultural diversity
Technological changes
Productivity
Social responsibility

27. Why study business
• The impact of business
• Career choice
• Business ownership