1. What is business?
1. Business is a word which is commonly used, in many different languages.
2. This broad all-inclusive term can be applied to many kinds of enterprise.
3. Business consist of all profit-seeking activities and enterprises that provide goods and services.
4. Thus, it is commonly described in terms of production, distribution, and sale of goods and services for a profit.
5. First, production is the creation of services or the changing of materials into products.
6. Next these products need to be moved from the factory to the marketplace.
7. This is known as distribution.
8. Third is the sale of goods and services.
9. Sale is the exchange of a product or service for money.
10. Business, than, is a combination of all these activities, production, distribution, and sale.
11. However, there is one other important factor: the creation of profit or economic surplus.
12. Profit is the money that remains after all the expenses are paid.
13. Creating an economic surplus or profit is a primary goal of business activity.
14. Business is the means through which society’s standard of living improves.
15. It provides the bulk of our employment as well as the products we enjoy.
2. Finance
1. The money needed to start and continue operating a business is known as capital.
2. A new business needs capital not only for ongoing expenses but also for purchasing necessary assets.
3. The process of managing this acquired capital is known as financial management.
4. Financial management performs such finance functions as: planning; budgeting; obtaining funds; auditing and others.
5. In general, finance is securing and utilizing capital to start up, operate, and expand a company.
6. Most organizations have finance managers or financial departments.
7. In financing business operations and expansion, a business uses both short-term and long-term capital.
8. It utilizes short-term capital to pay for items that last a relatively short period of time.
9. At same time it seeks long-term financing to pay for new assets that are expected to last many years.
10. When a company obtains capital from external sources, the repayment period may vary from a year to some years.
11. Finance involves the securing of funds for all phases of business operations.
12. In obtaining and using this capital, the decisions made by managers affect the overall financial success of company.
3. Product, market and market relations
1. Product is everything that one receives in an exchange.
2. Some products are tangible and others are intangible.
3. Products, are divided into two classes: goods and services.
4. A good is a real, physical, tangible thing that is produced and consumed.
5. A service is an intangible attribute that involves selling help and advice, or delivering goods for customers.
6. The definition of the term product is based on the concept of a market.
7. The term market is defined as a place where people gather to buy and sell goods.
8. Today, however, markets such as the gold market or the cotton market do not need to have any fixed geographical location.
9. Such a market is a set of transactions in which a particular kind of commodity is exchanged.
10. Some people come to a market because they want to buy (demanders).
11. Others come because they want to sell (suppliers).
12. Supply and demand are the twin factors which determine the price in any market.
13. Markets reallocate commodities from suppliers to demanders.
14. A market is equilibrium when the demand is exactly equal to the supply.
15. The equilibrium relative price is the only price at which the interests of demanders happen to coincide precisely with the interests of the suppliers.
4. International business
1. International business includes all business transactions that involve two or more countries.
2. Such business relationships may be private or governmental.
3. There are three primary motivations for firms to pursue international business: to expand sales, to acquire resources, and to diversify sources of sales and supplies.
4. The concept of international business includes the balance of trade and balance of payments.
5. A company can engage in international business through various means., including exporting and/or importing of merchandise and services, direct and portfolio investments, and strategic alliances with other companies.
6. Merchandise export are tangible goods sent out of a country: merchandise imports are tangible goods brought in.
7. Service export and imports are international earnings other than those derived from goods sent to another country.
8. Foreign investment is the ownership of property abroad.
9. When two or more organizations share in the ownership of a direct investment, the operation is known as a joint venture.
10. Portfolio investment can be either debt or equity.