Ch01a-Intro to Basic Bus. Considerations

8/11/2019 Ch01a-Intro to Basic Bus. Considerations

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BUSINESS

CONSIDERATIONS


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What is BUSINESS ?

BUSINESS= ones work or occupation

Special task or duty

Commerce or trade

Commercial or industrial establishment

*It is the process of producing goods &

services and then distributing them to

those who desire or need them.


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What is BUSINESS ?

In business process, here are several

key ingredients needed to support

economic activity called the FACTORS

OF PRODUCTION.

1) Land (natural resources)

2) Labor (human resource)

3) Capital

4) Entrepreneurship


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FACTORS OF PRODUCTION


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1) Natural resourcesinclude land & that materialthat come from land (timber, mineral deposits, oil

deposits, water).

2) Labor (human resource)mental & physical effort

of all workers regardless of their skill or education

3) Capitalincludes the building, machineries, and

tools used to produce goods & services

4) Entrepreneurshipcapacity & willingness to

develop, organize and manage a business venture

along w/ any of its risks to make PROFIT.


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TYPES OF BUSINESSES

3 BROAD CLASSIFICATIONS OF BUSINESSESTABLISHMENTS :

1) Manufacturing companiesinvolved in the

conversion of raw materials into some

tangible, physical product.Ex : San Miguel Corp., Purefoods, Nestle, Intel

2) Merchandising companiesinvolved in the

selling of finished goods produced by otherbusinesses. This tangible, physical product is

called merchandise.


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TYPES OF BUSINESSES

3 BROAD CLASSIFICATIONS OF BUSINESSESTABLISHMENTS : ( contd.)

Merchandisers could either be :

a) Wholesalecompany that buys its product from the

manufacturer (or another wholesaler) and then sells theproduct to the company that eventually sells it to the

consumer.

ex : Puregold, Macro Inc, Super8

b) Retailcompany that buys its products from a wholesaleror manufacturer and then sells the product to the end

consumers.ex: SM stores, Rustans, The Landmark, Bench, and others


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TYPES OF BUSINESSES

3 BROAD CLASSIFICATIONS OF BUSINESSESTABLISHMENTS : ( contd.)

3) Service companies companies that do not

deal with tangible products, but rather

provides some sort of service as its major

operation.

4) Hybrid companiescompanies that involved

in more than one type of activity.(manufacturing, merchandise, and or service).


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MOTIVES OF GOING INTO

BUSINESS

PROFIT= the primary motive of a

person/group of persons in engaging in

business activity.What is PROFIT MOTIVE ?

The basic idea behind it is that a person will do

something only if the benefit derived from doing it

is greater than the sacrifice required in doing it. A rational person desires to drive the greatest

benefit with the least amount of sacrifice.


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MOTIVES OF GOING INTO

BUSINESS

PROFIT= the excess of benefit

(REVENUE) over sacrifice (COSTS).

GROSS PROFIT - the excess of benefitreceived over the sacrifice made to

complete a sale.

NET PROFITthe amount that remainsafter all costs have been deducted from

the revenue or benefit.


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Basic computational procedure to

determine Profit :

Sales or Revenues XX

Less: Cost of goods/services sold XX

Gross profit XX

Less: Selling and admin expenses XXNet Profit XX


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CHECKLIST FOR STARTING A

BUSINESS

1) Personal Assessment

2) Planning

3) Establishment

4) Implementation


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LEGAL FORMS OF BUSINESS

ORGANIZATION

Proprietorshipowned by a singleperson who has complete control over

business decisions.

Partnershiplegal arrangement in which2 or more persons agree to contribute

capital/services to the business and divide

the profits.

Corporationartificial being created by

law and is a legal entity separate and

distinct from its owners.


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The End

Chapter 1

Ch01a-Intro to Basic Bus. Considerations

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