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Key Terms
stakeholder • stock • stockholder
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An entrepreneur who creates a business initially serves as the sole owner. • With the expansion of the business, other people may invest in the firm and become co-owners. • The investors who purchase stock are call stockholders or shareholders. • Owners create business ideas and possibly provide some financial support for the firm.
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4–15
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Electronic Business
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Business-to-customer e-commerce business activities serving end consumers with products and/or services. An example would be a person buying a pair of shoes from a retailer.
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4–11
Natural Resources
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Any resources that can be used in their natural form, e.g. land, coal, fossil fuels, forestry, lake, river.
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Resources Used to Produce Products or Services
• Natural
resources • Human resources • Capital • Entrepreneurship
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Key Terms
human resources • information system • information technology • management • manager • marketing • natural resources • nonprofit organization
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4–9
Nonprofit Businesses
A nonprofit organization is an organization that serves a specific cause and is not oriented to make profits. • In the U.S., a nonprofit organization is not taxed as long as it meets specific requirements. • Although not oriented to make profits, it is still run like a business to accumulate enough funding to serve the community.
4–5
The Goal of a Business
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To make profits by providing products or services desired by customers.
Copyright © 2004 South-Western. All rights reserved.
Jeff Madura Jeff Madura
Learning Goals
Explain the goal of a business. • Identify the resources a business uses to produce a product or service. • Identify the key stakeholders that are involved in a business. • Describe the business environment to which a firm is exposed. • Describe the key types of business decisions.
1
Part I Business Environment Part II: Business Environment
4 Motives and Functions of a Business
Introduction to Business 3e Introduction to Business
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4–8
How Profit Motive
Governments of free-market economies allow private ownership of businesses, because these businesses serve customers and create job opportunities. • In some other countries, businesses are typically owned by the governments and are not profit oriented.
4–13
Capital
Machinery, equipment, tools and physical facilities used by a business • Technology improves capital by helping to produce products and services more quickly and at a higher quality. • Information technology, as a subset of technology, enables information to be used to produce products and services.
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Creditors
Financial institutions or individuals who provide loans • Creditors will lend funds to a firm only if they believe the firm will perform well enough to pay interests on the loans and the principal (amount borrowed) in the future.
4–6
Where the Profits Come From
A business receives revenue when it sells products or services. • It incurs expenses from paying employees and purchasing machinery or facilities. • The difference between the revenues and expenses is the profit (or earnings).
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4–14
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Electronic Business
A related type of technology • Use of electronic communications, such as the Internet, to produce or sell products and services • Business-to-business e-commerce commerce transactions between businesses, such as between a manufacturer and a wholesaler
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4–17
Key Stakeholders in a Business
People who have an interest in a business; • The business’s owners, creditors, employees, suppliers and customers.
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