Chapter Review
Key Takeaways
- Government influences business activity through the roles it plays.
- A business is an organization that strives for a profit by providing goods and services desired by its customers.
- Goods are tangible items manufactured by businesses, such as laptops.
- Services are intangible offerings of businesses that can’t be held, touched, or stored.
- Revenue is the money a company receives by providing services or selling goods to customers.
- Costs are expenses, including rent, salaries, supplies, transportation, and many other expenses a company incurs from creating and selling goods and services.
- If a company has money left over after it pays all costs, it has a profit.
- A company whose costs are greater than its revenues incurs a loss.
- Risk is the potential to lose time and money or otherwise not be able to accomplish an organization’s goals.
- A not-for-profit organization is an organization that exists to achieve some goal other than the usual business goal of profit at all costs.
- The standard of living of any country is measured by the output of goods and services people can buy with the money they have.
- Quality of life refers to the general level of human happiness based on factors including life expectancy, educational standards, health, sanitation, and leisure time.
- The public business sector includes goods and services produced, delivered, and allocated by the government and public sector organizations (publicly controlled government business enterprises).
- The private business sector includes goods and services produced and delivered by private individuals or groups as a means of enterprise for profit.
- The non-profit or voluntary sector includes non-governmental, non-profit organizations that receive support from individual citizens, government, and businesses.
- Business participants are the people who participate in conducting the work of the business.
- Stakeholders are those affected by a business’s operations and its decisions. Examples of stakeholders include shareholders, investors, the community, customers, competitors, and governmental agencies.
- Functional areas in a business refer to different departments or sections that perform specific tasks, such as human resources, operations, accounting, and finance.
- The Human Resources (HR) functional area is an organizational function that is about searching for, selecting, training, and maintaining workers.
- Operations is the organizational function that is focused on producing the goods and/or services of the business.
- Marketing plays a crucial role in a business by helping to identify, create, and satisfy customer needs and wants through the promotion of products or services.
- Accounting is the organizational function that is focused on recording, keeping, analyzing and communicating financial information.
- The financial functional area of a business is responsible for managing the company’s financial resources, including budgeting, accounting, financial reporting, cash flow management, and investment decisions.
- Information technology is the organizational function that aims to understand the information and data needs of the company in terms of obtaining, analyzing, and protecting information. Information is one of the critical assets of most businesses.
- To provide goods and services, regardless of whether they operate in the for-profit or not-for-profit sector, organizations require inputs in the form of resources called factors of production. Four traditional factors of production are common to all productive activity — natural resources, labour (human resources), capital, and entrepreneurship. Many experts now include knowledge as a fifth factor, acknowledging its key role in business success.
- The internal business environment refers to the elements within the organization that influence its operations and decision-making.
- The micro-environment may be defined as including groups and organizations that have a direct relationship with the business.
- The macro-environment refers to the broader conditions of an economy as opposed to specific markets.
End-of-Chapter Exercises
- Factors of Production. Consider all the factors of production — labour, natural resources, capital, entrepreneurs, and knowledge. Is each of these resources a vital part of the school you attend or the company you work for? Which factors do you believe are most important to the goods and services provided by your organization? Why? Discuss with a partner and/or your professor.
- Fortune 500 Company. Search the Fortune 500 list (or other list as assigned by your professor) of the largest companies in the world for a business you have either shopped with or worked for. Learn about this company through the list and through the corporate website. Does the company provide goods or services? How much revenue did the company generate last year? How much of this revenue was profit? Share your findings with the class and/or professor.
- Government Role. Research how the government supports your college or university. Which government regulations affect your institution? How does the government support your institution? Share your findings with your class and/or professor.
- Not-for-Profit Organization. Pick one non-profit organization to research. How much revenue did the organization make last year? What did they do with it since they do not make a profit? Share your findings with your class and/or professor.
- Business Environments. Search the Fortune 500 list (or other list as assigned by your professor) of the largest companies in the world for a business you have either shopped with or worked for. Consider the internal and external business environments for this company. Use the Internet to research specific answers to the following questions. What is one internal environmental factor that is currently having a big impact on this organization? What is one micro-environment factor that is having a big impact on this organization? What is one macro-environment factor that is having a big impact on this organization? Share your findings with your class and/or professor.
- Young Entrepreneurs. Conduct an Internet search to locate information about support for young entrepreneurs. The Government and banks may have some programs/funding, start there. Would you like to start a business? Why or why not? Share your findings with your class and/or professor.
Self-Check Exercise: Business Concepts
Check your understanding of this chapter’s concepts by completing this short self-check quiz.
Additional Resources
Attributions
This chapter compiles content from various Open Educational Resources (OER). For details, please refer to the Attributions page.
