CHAPTER 1

BUSINESS AND YOUBUSINESS AND YOU

NEEDS & WANTS

NEEDSNEEDS—food, clothing, shelter (basics —food, clothing, shelter (basics have to be satisfied before any others)have to be satisfied before any others)

WANTSWANTS—nice to have (as more goods —nice to have (as more goods and services are acquired….”wants will and services are acquired….”wants will become needs.” Decisions have to be become needs.” Decisions have to be made as to whether wants should be made as to whether wants should be satisfied.satisfied.

Needs and wants differ from person to person. Peoples' Needs and wants differ from person to person. Peoples' wants are often endless, even for those to have wants are often endless, even for those to have

everything. Over time, wants become needs.everything. Over time, wants become needs.

NEEDS & WANTS cont’d

Need—for transportation Need—for transportation Options:Options: walking, bicycle, carwalking, bicycle, car Want—car (any car that will get Want—car (any car that will get

you from point A to B)you from point A to B) Luxury Want—a specific car such Luxury Want—a specific car such

as a BMW, Benz, etc.as a BMW, Benz, etc.

Basic Survival Tactic #1—Ability to Adapt

Fast food restaurants: Wendy’s, Fast food restaurants: Wendy’s, McDonald’s, and Burger King had to McDonald’s, and Burger King had to adapt to remain competitive, adapt to remain competitive, profitable, and most significantly, to profitable, and most significantly, to stay in business. These fast food stay in business. These fast food establishments now have extended establishments now have extended their menus to include more variety their menus to include more variety and healthier food choices.and healthier food choices.

GOODS & SERVICES

GOODSGOODS—monetary value, have been —monetary value, have been producedproduced

• SERVICESSERVICES— both are valuable— both are valuable• a.a.      Monetary value (car repair, salon Monetary value (car repair, salon

treatments, etc.) treatments, etc.) • b.b.    No monetary value (volunteers in No monetary value (volunteers in

hospitals, firefighters, etc) hospitals, firefighters, etc) • Non-profit organization or charitable Non-profit organization or charitable

Organization—provide services, but not Organization—provide services, but not for profitfor profit

Business Survival Tactic #2—Risk Taking

(Sometimes necessary, but not always a smart (Sometimes necessary, but not always a smart business move)business move)

              Coca Cola—introduced new formulaCoca Cola—introduced new formula Result—the new product was not received well Result—the new product was not received well

by coke consumers; therefore, a new product by coke consumers; therefore, a new product is not always better than a familiar established is not always better than a familiar established product.product.

              Outcome—Customers demanded original Outcome—Customers demanded original formula, which was reintroduced as Coke formula, which was reintroduced as Coke ClassicClassic

Basic Survival Tactic #3—Innovation

Automated devices provide more convenience Automated devices provide more convenience for consumers, i.e., automated banking for consumers, i.e., automated banking machines—ATMsmachines—ATMs

EntrepreneurEntrepreneur—looks at consumer wants and —looks at consumer wants and needs and devises innovative goods or services needs and devises innovative goods or services to meet them.to meet them.

ObsoleteObsolete—people no longer want the goods —people no longer want the goods and /or services, i.e., black/white television; 8-and /or services, i.e., black/white television; 8-track tapes, stage coaches, steam-powered track tapes, stage coaches, steam-powered trains, etc.trains, etc.

Business Survival Tactic #4—Ability to Keep Learning

Many of today’s consumers are Many of today’s consumers are “Health Conscious Consumers”—“Health Conscious Consumers”—They read labels and look for goods They read labels and look for goods and services that are and services that are “environmentally friendly.”“environmentally friendly.”

In order to survive, businesses In order to survive, businesses have to pay attention to consumers have to pay attention to consumers and meet their needs and wants.and meet their needs and wants.

BUSINESS NEEDS CONSUMERS and CONSUMERS NEED BUSINESS

InterdependentInterdependent—co-operation is —co-operation is necessary; we buy goods and services necessary; we buy goods and services from many businesses; for example, a from many businesses; for example, a clothing manufacturer has to purchase clothing manufacturer has to purchase all the goods and services to produce all the goods and services to produce the final product—clothing the final product—clothing Some of the goods and services needed Some of the goods and services needed in a clothing manufacturing business in a clothing manufacturing business would be: (cont’d on next slide)would be: (cont’d on next slide)

WHAT BUSINESS NEEDS…

Raw materials—cotton, wool, linen, synthetics, Raw materials—cotton, wool, linen, synthetics, etc.etc.

Machinery—cutting, sewing, and packingMachinery—cutting, sewing, and packing Trucks—transporting the finished goodsTrucks—transporting the finished goods Office supplies—accounting records, computers, Office supplies—accounting records, computers,

telephones, etc. for keeping track of the telephones, etc. for keeping track of the business dealings and for contacting suppliers, business dealings and for contacting suppliers, customers, etc.customers, etc.

Employees—to make the goods, sort, package, Employees—to make the goods, sort, package, ship, delivership, deliver

Services—for repair of equipment, cleaning the Services—for repair of equipment, cleaning the machines and building, banking, delivery, etc.machines and building, banking, delivery, etc.

ESSENTIAL & LUXURY Essential goodsEssential goods—food, clothing, shelter—food, clothing, shelter Essential servicesEssential services—medical, dental, —medical, dental,

religious, water, heat, lighting, religious, water, heat, lighting, transportationtransportation

Luxury goodsLuxury goods—television, radios, cars, —television, radios, cars, showers, flush toilets, cameras, showers, flush toilets, cameras, magazines, movies, hot tubs, poolsmagazines, movies, hot tubs, pools

Luxury servicesLuxury services—salon treatments, —salon treatments, plastic surgery, limo service, air plastic surgery, limo service, air conditioning, fine dining, concert ticketsconditioning, fine dining, concert tickets

Supply of Product or Service—

affected by cost and the price people will pay If the demand is great and the supply is If the demand is great and the supply is

low, the price will go up i.e., gas prices low, the price will go up i.e., gas prices during war time; during war time;

If the supply is great and the demand is If the supply is great and the demand is low, prices will go down i.e., markdowns low, prices will go down i.e., markdowns and selloffs (after 911, airline prices were and selloffs (after 911, airline prices were greatly discounted because people were greatly discounted because people were scared of flying; some airlines even went scared of flying; some airlines even went bankrupt or had to merge to survive)bankrupt or had to merge to survive)

GOALS OF BUSINESS

ProfitProfit——reward business owner reward business owner

receives for taking a riskreceives for taking a risk Breaking EvenBreaking Even——

no profit, no lossno profit, no loss

Definition of a Business

By its type of ownershipBy its type of ownership By the goods produced and services offeredBy the goods produced and services offered The types of jobs providedThe types of jobs provided The different functions it performs in the The different functions it performs in the

communitycommunity

Producer & Consumer

A computer manufacturer is an example of A computer manufacturer is an example of a producer of a product, while a computer a producer of a product, while a computer repair shop is an example of a provider of a repair shop is an example of a provider of a service.service.

The people who buy the computers, along The people who buy the computers, along with the ones who have these computers with the ones who have these computers serviced at computer repair shops, are serviced at computer repair shops, are known as consumers.known as consumers.