Chapter 1 M Business and NOTES.pdf - We begin part 1 of your textbook Business in a Changing World with chapter 1 The Dynamics of Business and Economics

Chapter 1 M Business and NOTES.pdf - We begin part 1 of...

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We begin part 1 of your textbook, Business in a Changing World, with chapter 1, The Dynamics of Business and Economics. 1
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A business is defined as individuals or organizations who try to earn a profit by providing products that satisfy people’s needs. The outcome of its efforts are products that have both tangible and intangible characteristics that provide satisfaction and benefits. When you purchase a product, you are buying the benefits and satisfaction you think the product will provide. A Subway sandwich, for example, may be purchased to satisfy hunger. 2
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Most people associate the word product with tangible goods—an automobile, computer, phone, coat, or some other tangible item. However, a product can also be a service, which occurs when people or machines provide or process something of value to customers. Examples of services include dry cleaning, having a physical with your doctor, the performance by a basketball player, and a musical concert. A product can also be an idea. Accountants and attorneys, for example, generate ideas for solving problems. 3
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The primary goal of all businesses is to earn a profit. The concept of profit is central to all business activity. Keep this very important concept in mind throughout our text. We define profit quite simply as the difference between what it costs to make and sell a product and what a customer pays for it. Thus, the goal is to produce and sell a product at a price that a consumer will pay that is above your costs of making and selling it. So if a product costs eight dollars to produce and is sold for ten dollars, two dollars is profit. Earning profits contributes to society by providing employment, which in turn provides money that is reinvested in the economy. In addition, profits must be earned in a responsible manner. 4
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Not all organizations exist to make a profit. Nonprofit organizations provide goods or services but do not have the fundamental purpose of earning profits. Like businesses, nonprofit organizations engage in management, marketing, and finance activities to reach their goals. Examples of nonprofit organizations include the Red Cross and Special Olympics. Can you name any nonprofit organizations? 5
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Stakeholders are groups that have a stake in the success and outcomes of a business. Stakeholders include customers, employees, investors, government regulators, and the community. To achieve and maintain profitability, businesses have found that they must produce quality products, operate efficiently, and be socially responsible and ethical in dealing with customers, employees, investors, government regulators, and the community. 6
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Here you see the Figure 1.1 from your text. This figure represents an overview of the business world. Note that owners, employees, and customers are the main stakeholders and are located in the center of our figure. As you move outward, you will see the functions of the business organization, such as finance, marketing and management; then the external environment in which the business operates.
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