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1
Business Characteristics
Objectives
1. To identify the types of businesses.
2. To identify departments within businesses.
3. To describe the activities each department is responsible for overseeing.
2
Main Menu
» Types of Businesses
» Human Resources
» Management
» Finance & Accounting
» Marketing
» Production & Distribution
3
Types of Businesses
4
Types of Businesses» Are classified by the work activities
performed» Include:
– producers – processors– manufacturers– intermediaries– service firms– non-profit organizations
5
Producers
» Develop products for distribution from raw goods– raw goods – materials derived from natural
resources
» Examples include:– farming– forestry– mining
6
Processors
» Change raw goods into a more finished form
» Produce processed goods» Examples include:
– cotton mills– oil refineries– textile mills– food processors
7
Manufacturers
» Change raw or processed goods into finished goods
» Examples include:– juice factories– clothing factories– automobile factories
8
Intermediaries» Are referred to as the middleman» Move finished goods from one business to
another» Buy, store and resell goods» Examples include:
– wholesalers• buy finished goods from
manufacturers in large quantities and sell them to businesses in smaller quantities
– retailers• buy finished goods from manufacturers or
wholesalers and sell them directly to the consumer9
Service Firms
» Provide services to consumers and other businesses
» Examples include:– beauty salons– landscaping companies– plumbing companies
10
Non-profit Organizations
» Provide goods and services to businesses and individuals
» Operate on donations, volunteers and philanthropists rather than income/profit
» Examples include:– Salvation Army– United Way of America– American Red Cross– YMCA and YWCA
11
Business Departments
» Human Resources
» Management
» Finance and Accounting
» Marketing
» Production and Distribution
12
Human Resources
13
Human Resources
Human Resources
» Requires following laws and proper procedures
» Requires people with strong human relation and communication skills
» Responsibilities include:– maintaining the employment process– training and developing staff
14
Human Resources
Employment Process
» Is carried out by human resources» Goal:
– to obtain qualified employees who are well-matched to the open position
» Steps:1. assess employment needs
2. recruit potential employees
3. select employee who fulfills goals
4. help employee get oriented
15
Employment Process
» Step one: assess employment needs– determine what openings in the company
need to be filled– analyze what the open position involves– obtain or write job description, including:
• qualifications• duties• responsibilities
16Human Resources
Human Resources
Employment Process
» Step two: recruit potential employees– look within the company first– contact and utilize the following:
• newspaper and/or Internet advertising• colleges, universities, and technical or vocational
schools• applications on file• employment agencies and/or labor and
professional organizations
17
Human Resources
Employment Process
» Step three: select employee who fulfills goals– review applications, resumes and cover
letters of applicants– choose applicants appearing to best match
company opening and conduct interviews• if there is not an appropriate applicant, start again
at recruiting potential employees
– review all obtained information and select best applicant
18
Employment Process
» Step four: help employee get oriented– introduce to coworkers– help fill out new employee paperwork– answer questions about company pay,
benefits, policies, etc.– assist during adjustment phase
19Human Resources
Human Resources
Training & Developing
» Is also performed by human resources» Goal:
– maintain well-trained, qualified employees
» Is accomplished through:– training– evaluating performance– focusing on motivation and cooperation
20
Human Resources
Training» Can be done individually or in groups» Includes the following techniques:
– on-the-job training• companies train employees while they work• employees have hands-on practice with supervision• occurs typically on an individual basis
– group training• companies teach new skills to several employees at
once• employees listen and learn from each other• employees get the opportunity to express ideas and
share experiences 21
Human Resources
Evaluating Performance
» Is often achieved through performance appraisals– managers evaluate employee performance– managers provide feedback to employees
» Helps when making decisions, including:– transfers– layoffs– promotions– terminations
22
Human Resources
Focusing on Motivation
» Can help meet employees needs» Includes two types:
– extrinsic – motivation through outside sources• for example: money, benefits, recognition
– intrinsic – motivation occurring internally• for example: challenge, enjoyment, accomplishment
23
What motivates you to do well in school or hobbies? Are they extrinsic or intrinsic
motivators?
Human Resources
Motivation» Can be ensured by meeting employees’
needs, including:– hierarchy of needs proposed by Abraham
Maslow:
24Basic Needs – food, shelter, etc.
Safety – physical & emotional
Belonging & Love – feeling accepted, loved, etc.
Self-Esteem – feeling skilled, useful, etc.
Self-Actualization – realizing full potential
Human Resources
Focusing on Cooperation» Improves the output produced by working
together in groups» Is needed to ensure high work quality and
employee job satisfaction » Requires effective communication in
order to:– enhance group dynamics– ensure employees know and understand
their roles– encourage employees to contribute ideas
25
Management
26
Management
» Is the process of reaching a company’s goals and objectives by utilizing its resources
» Has these four main functions:– planning– organizing– directing– controlling
27Management
Planning
» Is management’s first main function» Means determining a direction for the
company» Includes the following:
– setting long- and short-term goals– determining strategies to utilize company
resources– creating a written plan
28Management
Management
Organizing
» Is management’s second main function» Means obtaining and coordinating
resources to meet company goals and objectives
» Includes the following:– creating structure– dividing up the workload– arranging resources– coordinating activities
29
Directing
» Is the third main function of management» Is leading employees to carry out their
assigned tasks» Includes the following:
– staffing– motivating– influencing– guiding
30Management
Management
Controlling
» Is management’s fourth main function» Is ensuring results meet expected goals
and objectives» Includes the following:
– evaluating employee performance– solving problems– setting standards for desired performance
31
Management
» Is most effective when all four functions play an important role
» Is responsible for making sure the company runs smoothly
» Must remember to evaluate progress regularly and provide feedback to the appropriate personnel
32Management
Finance & Accounting
33
Finance & Accounting
Finance & Accounting
» Are vital because a business cannot exist without cash flow
» Focus on the following:– creating up-to-date, accurate financial
statements– making a plan to create profits– managing and utilizing company resources
34
Finance & Accounting
Accounting
» Is a system used to record, classify, summarize and report the financial position of a business
» Responsibilities include:– recording financial transactions– creating financial statements
35
Finance & Accounting
Financial Transactions
» Are financial entries affecting the financial position of a business
» Include these classifications:– assets – items of value owned by a business
• examples include: cash, land, buildings, equipment
– liabilities – debts or obligations of a business• examples include: credit, mortgage payments
– owner’s equity – amount of capital invested by owners• total value of assets minus liabilities
36
Finance & Accounting
Financial Transactions
» Include the accounting equation:
» Are recorded, classified and summarized, providing information used to create financial statements
37
assets = liabilities + owner’s equity(both sides of the equation must balance)
Finance & Accounting
Financial Statements
» Are the reporting process of accounting» Are used to make financial decisions» Include two main types:
– balance sheet – reports totals in asset, liability and owner’s equity accounts
– income statement – reports net income or net loss of a company• net income – when revenue is greater than expenses• net loss – when expenses are greater than revenue
38
Finance & Accounting
Financial Statements – Balance Sheet Example
Kay’s Kloth Shop
Balance sheet
Assets
Cash in bank $4,000.00
Cloth $8,000.00
Supplies $2,000.00
Total assets $14,000.00
39
LiabilitiesAccounts payable $ 4,000.00
Owner’s EquityCapital from Kay $10,000.00
Total liabilities and owner’s equity $14,000.00
Finance & Accounting
Financial Statements – Income Statement Example
Kay’s Kloth Shop
Income StatementRevenue:
Cloth Sales$6,000.00
Expenses:
Advertising $100.00
Utilities $300.00
Rent $600.00
Payroll $3,000.00
Total expenses $4,000.00
Net Income:$2,000.00
40
Finance & Accounting
Finance
» Goal:– determine use of company resources and
funds
» Responsibilities include the following:– managing use of company funds– obtained needed funds– creating a financial plan
41
Finance & Accounting
Finance
» Funds are used to do the following:– buy resources used to create goods and
services– pay expenses required for operation
» When available, excess funds can be used in many ways including:– purchasing assets to help the company grow– paying unexpected or high expenses– investing to obtain profit
42
Finance & Accounting
Finance
» Sources of funding include:– borrowing funds– selling stock– looking for new investors– increasing owner contributions
» The financial plan does the following:– specifies what funds are needed– documents period funds are needed– is crucial to the success of a business
43
Marketing
44
Marketing
» Goal:– to create products meeting consumer wants
and needs based on the marketing mix– to guide products through the product life
cycle, capitalizing on opportunities in each stage
– to understand consumers through marketing research
45Marketing
Marketing
The Marketing Mix» Consists of four interrelated marketing
strategies used to meet consumer needs1. Product
– is a good and/or service designed to meet consumer wants and needs– is determined by conducting studies and surveys
2. Price– must be low enough to attract consumers– must be high enough to cover costs and create profit
3. Promotion– activities to persuade consumers they need the product– includes packaging, commercials, trials, etc.
4. Place– is a location where products and/or services are sold– includes stores and location within a store
46
Product Life Cycle
47
Stage 1Introduction
Stage 2Growth
Stage 3Maturity
Stage 4Decline
Focus: draw
customer attention;
build product
awareness
Focus: build customer
satisfaction; recognize
competitors entering market
Focus: evaluate cost/profit relationship; decide product’s future
Focus: beat
competition;
improve product;
increase sales
Marketing
Understanding Consumers» Means understanding the needs they attempt
to meet when making purchases, including:– physical
• for necessities, safety, security and health• includes food, clothing, transportation, etc.
– social• to feel loved and accepted• includes fancy clothing, make-up, cologne, etc.
– psychological• for prestige and approval• includes luxury items which make the consumer feel
important
48
Remember Maslow’s hierarchy of needs pyramid? These apply for consumers too.
Production & Distribution
49
Production & Distribution
Production & Distribution» Goal:
– to produce and distribute goods and services in the most efficient and cost-effective manner
» Consists of three roles:1. facilities – physical elements needed for
production• need a good layout and location
2. processing – changing or combining resources to create a product or service
• adds value by transforming resources into products
3. people – invaluable human resource• plan, operate and supervise the process 50
Production
» Must be effective and efficient by doing the following:– forecasting demand– scheduling production of goods and services– managing inventory– controlling quality
51
Distribution» Is getting produced goods and services to
consumers in a timely manner» Is typically from producers to wholesalers
and retailers» Uses the following four modes of
transportation:– waterways– railroads– trucks– airlines
52
Assessment
53
Assessment1. List three types of business.
2. What are the two types of intermediaries?
3. Name the responsibilities of a human resources department.
4. What are the four steps of the employment process?
5. (T/F) Group training gives employees hands-on practice with supervision.
6. Define and give one example of intrinsic motivation. 54
Assessment7. List the four main functions of
management.
8. List and define the three classifications of financial transactions.
9. List and explain the four parts of the marketing mix.
10. List two ways production can be made effective and efficient.
55
Acknowledgements
Krista Scott
Amy Hogan
Production Coordinator
Megan O’Quinn
Brand Manager
Jennifer Donaldson
Graphics Editor
Jessica Odom
Technical Writer
Geoff Scott
Production Manager
G.W. Davis
Executive Producer
56© MMIII, MMIVCEV Multimedia, Ltd.