The Nature and Aims of Business Chapter 1

The Philippine Economy• Always been saddled with difficulties which

appeared to be insurmountable:• Low productivity in the workplace• Graft and corruption in the government• Declining value of peso• Unfavorable balance of trade

• In spite of the great obstacles hampering the economic growth, the Philippine economy continues to slowly grow but it does not fare well if compared with other countries in the Far East.

The Philippine Economy• Business success has always been associated

with economic growth. • A major reason for business failure is the

businessman’s lack of sufficient skills in managing finance.

The Roles of Business• Business is largely responsible for bringing

into the market a wide array of products and services which were not previously available.

• Business continues to provide mankind with the basic necessities like food and shelter.

• Business entities are means to develop a countries economy.

Business Defined• Business is any lawful economic activity

concerned with the production and/or distribution of goods or services for profit.

Kinds of Business• Commerce• Industry• Services

Kinds of Business

Kinds of Business

• Genetic industries are businesses involved in agriculture, forestry, and fish culture.

• Extractive industries are businesses involved in the extraction of goods from natural resources which includes mining, lumbering, hunting, and fishing.

• Manufacturing industries are those which convert raw materials into finished products.

• Construction industries consist of firms engaged in building infrastructures like airports, seaports, dams, and highways.

Industry

Kinds of Business

• Recreation (i.e. movie houses, television and radio stations, theater for drama and stage presentations, etc.)

• Personal (i.e. restaurants, barber shops, transportations, hotels, tailoring shops, etc.)

• Finance (i.e. such as banks, insurance companies, investment houses, financing institutions, credit unions, savings and loans associations, etc.)

Services

Objectives of Business• Primary objective is for profit. • Other goals could be:

1. Political influence2. Family control of the business3. Community involvement

Objectives of Business• To survive and grow, businesses must attain the

following objectives:1. The provision of products and services to the

community;2. The satisfaction of personal objectives like:

a. Profits for ownersb. Adequate salaries and compensation for executives and

employeesc. Psychic income for all, including pride in work, security,

recognition, and acceptance3. Protection and enhancement of the human and

physical resources of society4. Economy and effectiveness of operation

Next Meeting

Chapter 2 of Business Finance, Second Edition by Roberto G. Medina

Review on Chapter 1

1. Why do persons engage in business?

2. How do you determine the feasibility of a business?

Readings

Quiz

Assignment