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Unformatted text preview: Confi rming Pages B1.2 * Plug-In B1 Business Basics 1. Define the three common business forms. 2. List and describe the seven departments commonly found in most organizations. 3. Describe a transaction and its importance to the accounting department. 4. Identify the four primary financial statements used by most organizations. 5. Define the relationship between sales and marketing, along with a brief di scussion of the marketing mix. 6. Define business process reengineering and explain how an organization can use it to transform its business. Introduction A sign posted beside a road in Colorado states, Failing to plan is planning to fail. Playnix Toys posted the sign after successfully completing its 20th year in the toy business in Colorado. The companys mission is to provide a superior selection of high-end toys for children of all ages. When the company began, it generated inter- est by using unique marketing strategies and promotions. The toy business has a lot of tough competition. Large chain stores such as Wal-Mart and Target offer toys at deep discount prices. Finding the right strategy to remain competitive is diffi- cult in this industry, as FAO Schwarz discovered when it filed for bankruptcy after 143 years in the toy business. This plug-in introduces basic business fundamentals beginning with the three most common business structuressole proprietorship, partnership, and cor- poration. It then focuses on the internal operations of a corporation including accounting, finance, human resources, sales, marketing, operations/production, and management information systems. Types of Business Businesses come in all shapes and sizes and exist to sell products or perform ser- vices. Businesses make profits or incur losses. A profit occurs when businesses sell products or services for more than they cost to produce. A loss occurs when P L U G - I N B1 Business Basics LEARNING OUTCOMES baL76795_pluginb01_002-023.indd B1.2 baL76795_pluginb01_002-023.indd B1.2 7/25/09 4:59:35 PM 7/25/09 4:59:35 PM Confi rming Pages * Plug-In B1 Business Basics * B1.3 bu sinesses sell products or services for less then they cost to produce. Businesses typically organize in one of the following types: 1. Sole proprietorship 2. Partnership 3. Corporation SOLE PROPRIETORSHIP The soleproprietorship is a business form in which a single person is the sole owner and is personally responsible for all the profits and losses of the business. The sole proprietorship is the quickest and easiest way to set up a business operation. No prerequisites or specific costs are associated with starting a sole proprietorship. A simple business license costing around $25 from the local county clerk is all that is required to start a sole proprietorship. The person who starts the sole proprietor- ship is the sole owner....
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- Winter '09