Chapter 1 – Business: 2006 and Beyond
Business – all profit-seeking activities and enterprises that provide goods and services necessary
to an economic system.
Profits – rewards for business people who take the risks included to offer goods and services to
Not-for-profit Organizations – businesslike establishments that have primary objectives other
than returning profits to their owners.
Factors of Production – four basic inputs for effective operation: natural resources, capital,
human resources, and entrepreneurship.
Natural Resources – all productive inputs that are useful in their natural states, including
agricultural land, building, sites, forests, and mineral deposits.
Capital – includes technology, tools, information, and physical facilities.
Human Resources – include anyone who works.
Entrepreneurship – the willingness to take risks to create and operate a business.
Entrepreneur – someone who sees a potentially profitable opportunity and then devises a plan to
achieve success in the marketplace and earn those profits.
Private Enterprise System – economic system that rewards businesses for their ability to identify
and serve the needs and demands of customers.
Competition – battle among businesses for consumer acceptance.
Capitalism – an economic system that utilizes competition in order to produce the best possible
products and prices for consumers because less efficient producers would gradually be driven
from the marketplace.
Competitive Differentiation – unique combination of organizational abilities and approaches that
sets a company apart from competitors in the minds of consumers.
Private Property – the most basic freedom under the private enterprise system.
enjoys the right to own, use, buy, sell, and bequeath most forms of property, including land,
buildings, machinery, equipment, patents on inventions, and various intangible properties.
Four Rights in the Private Enterprise System: Private property, competition, profits, and freedom