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Importance of business to the economy.

Business also fulls a number of other important functions within the AustrianEconomy.

Pays taxes to governments (company tax and payroll tax)

Assists in the development and use of new technology

Provides employment and income for employees

nderta!es investment" which leads to economic growth

Exports products" which generates income for Austrians and helps reduce our trade decit

#elps provide owners with challenges and rewards

Encourages research and development into new products (invention) and improved products (innovation)

Provides a training ground for future business people (entrepreneurs)

$mproves our %uality of life

Produces a wide range of products giving consumers greater choice

Provides income for business owners

Encourages competition" which results in cheaper products

&reates value" which encourages economic growth

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Revision2 Identi)( the one common feature shared by all businesses.

3 Su&&'rise how Business 4tudies can help you better perform the roles of consumer"

employee" business owner and investor.

5 Out*ine the role of business.

6 #e$ne the term 7business.

8 Identi)( two goods and two services you recently purchased to satisfy a need or awant. 9ext to each one write the name of the business from which you bought theproduct.

: #e$ne the term 7nished products.

; E+p*'inwhy production is regarded as the most important business activity.

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T%e econo&ic 'nd soci'* i&port'nce o) business

Innov'tion'hrough research anddevelopment" existingproducts are improvedand new productsare created.

E&p*o(&entBusinesses provideabout obs.

"e'*t% cre'tionBusiness activity resultsin higher levels ofeconomic growthand wealth.

Inco&esBusinesses provideincome to businessowners?shareholdersand employees.

Entrepreneurs%ipBusinesses provideindividuals with theopportunity to turntheir ideas andpassions into alivelihood.

Pro$t'his is the return" orreward" that businessowners receive forproducing productsthat consumers needand want.

C%oice&onsumers havefreedom of choiceand the opportunityto purchase productsat competitive prices.

,u'*it( o) *i)eBusinesses o-er a vastarray of products thatimprove our standardof living.

Prot'he main activity of a business is to sell products to its customers. A businessreceives money (sales revenue) from its customers in exchange for products. $tmust also pay out money to cover the numerous expenses involved in operatingthe business. $f the businesss sales revenue is greater than its oper'ting e+penses"it has earned a prot. ore specically" pro$t is what remains after all businessexpenses have been deducted from the businesss sales revenue

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Bi!"OR#"evenue is the money a businessreceives as payment for itsproducts.#perating e$penses are all the

costs of running the businesse$cept the cost of goods sold.rot is what remains after allbusiness e$penses have beendeducted from sales revenue.

OPIC - 1 9ature of business

EmploymentBusinesses have another important role to play. 'o be able to purchase products"consumers need money. 'hey usually earn that money by wor!ing at >obs providedby businesses.

'he number of employees hired by a business at any time will largely depend on

the nature of the products and the number of customers who wish to purchase theproducts. @enerally" the more that is sold the more employees a business will hire.arge businesses employ thousands of people within their organisations.#owever" the 4E sector is a ma>or source of employment in Austria"accounting for about 8= per cent of all private (non,government) sector employment$n fact" the 4E sector has been the ma>or generator of new >obs since the mid2

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&ntrepreneurship and ris!ost of us have seen something advertised and thought" 7'hat is >ust what $ need.4omeone" somewhere" had the idea to provide this product. Crom this original

idea a business was formed to develop" produce and mar!et this product. Peoplewho transform their ideas into a new business are called entrepreneurs. 'hey areprepared to ta!e the ris! of starting and operating a business venture of turningtheir dreams and passions into a livelihood. Entrepreneurs have to ta!e ris!sbecause usually they explore untapped mar!ets with no trac! record of provenconsumer demand or guaranteed returns. But for those whose ideas translate into asuccessful business venture" the pro ts are often huge.@ordon erchant" founder of Billabong one of Australias most successfulsurfwear and surfboard businesses is a classic example of an entrepreneur. #eturned his ideas for selling surfboards and swimming gear from an operation runout of the bac! of his station wagon in 2;5 into a worldwideoperation. 'oday" the Billabong business venture sells its products in more than