1

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

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Types of Businesses

» Are classified by the work activities

performed

» Include:

– producers

– processors

– manufacturers

– intermediaries

– service firms

– non-profit organizations

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Producers

» Develop products for distribution from raw

goods

– raw goods – materials derived from natural

resources

» Examples include:

– farming

– forestry

– mining

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Processors

» Change raw goods into a more finished

form

» Produce processed goods

» Examples include:

– cotton mills

– oil refineries

– textile mills

– food processors

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Manufacturers

» Change raw or processed goods into

finished goods

» Examples include:

– juice factories

– clothing factories

– automobile factories

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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

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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 YWCA11

Business Departments

» Human Resources

» Management

» Finance and

Accounting

» Marketing

» Production and Distribution

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Human Resources &

Management

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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

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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 oriented15

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

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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

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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

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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

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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

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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 experiences21

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

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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?

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

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

» Is the process of reaching a company’s

goals and objectives by utilizing its

resources

» Has these four main functions:

– planning

– organizing

– directing

– controlling

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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

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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 activities28

Directing

» Is the third main function of management

» Is leading employees to carry out their

assigned tasks

» Includes the following:

– staffing

– motivating

– influencing

– guiding

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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

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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

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Finance & Accounting

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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

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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

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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 liabilities35

Financial Transactions

» Include the accounting equation:

» Are recorded, classified and summarized,

providing information used to create

financial statements

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assets = liabilities + owner’s equity

(both sides of the equation must balance)

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

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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

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Liabilities

Accounts payable $ 4,000.00

Owner’s Equity

Capital from Kay $10,000.00

Total liabilities

and owner’s equity $14,000.00

Financial Statements –

Income Statement ExampleKay’s Kloth Shop

Income Statement

Revenue:

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: $2,000.0039

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

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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

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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 business42

Marketing, Production

& Distribution

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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

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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 store45

Product Life Cycle

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Stage 1

Introduction

Stage 2

Growth

Stage 3

Maturity

Stage 4

Decline

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

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Remember Maslow’s hierarchy of needs pyramid?

These apply for consumers too.

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 48

Production

» Must be effective and efficient by doing the

following:

– forecasting demand

– scheduling production of goods and services

– managing inventory

– controlling quality

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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 50

Acknowledgements

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