business w01 understanding the business system @1
TRANSCRIPT
Presented by: Anna Riana Putriya
CHAPTER 1CHAPTER 1CHAPTER 1CHAPTER 1
Understanding Understanding Understanding Understanding Understanding Understanding Understanding Understanding
The Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business SystemThe Business System
The Concept Of Business and The Concept Of Business and The Concept Of Business and The Concept Of Business and The Concept Of ProfitThe Concept Of ProfitThe Concept Of ProfitThe Concept Of Profit
• BusinessBusinessBusinessBusiness is an organization is an organization is an organization is an organization that provides goods or services to that provides goods or services to that provides goods or services to that provides goods or services to earn profitsearn profitsearn profitsearn profits
• ProfitsProfitsProfitsProfits represent the difference represent the difference represent the difference represent the difference between a businessbetween a businessbetween a businessbetween a business’’’’s revenues s revenues s revenues s revenues and its expenses and its expenses and its expenses and its expenses
What Are Factors of Production?What Are Factors of Production?What Are Factors of Production?What Are Factors of Production?
Resources used in the Resources used in the Resources used in the Resources used in the production of goods and production of goods and production of goods and production of goods and servicesservicesservicesservices————labor, capital, labor, capital, labor, capital, labor, capital, entrepreneurs, physical entrepreneurs, physical entrepreneurs, physical entrepreneurs, physical resources and information resources and information resources and information resources and information resourcesresourcesresourcesresources
Factors of ProductionFactors of ProductionFactors of ProductionFactors of Production
1.1.1.1. LaborLaborLaborLabor////Human resourcesHuman resourcesHuman resourcesHuman resources / / / / Intelectual CapitalIntelectual CapitalIntelectual CapitalIntelectual Capital are the are the are the are the physical and mental physical and mental physical and mental physical and mental capabilities of people as they capabilities of people as they capabilities of people as they capabilities of people as they contribute to economic contribute to economic contribute to economic contribute to economic productionproductionproductionproduction
2.2.2.2. CapitalCapitalCapitalCapital are the funds needed to are the funds needed to are the funds needed to are the funds needed to create and operate a business create and operate a business create and operate a business create and operate a business enterpriseenterpriseenterpriseenterprise
3.3.3.3. EntrepreneurEntrepreneurEntrepreneurEntrepreneur is an individual who accepts the is an individual who accepts the is an individual who accepts the is an individual who accepts the risks and opportunities involved in creating and risks and opportunities involved in creating and risks and opportunities involved in creating and risks and opportunities involved in creating and operating a new business ventureoperating a new business ventureoperating a new business ventureoperating a new business venture
4.4.4.4. Physical resourcesPhysical resourcesPhysical resourcesPhysical resources are tangible things are tangible things are tangible things are tangible things organizations use in the conduct of their organizations use in the conduct of their organizations use in the conduct of their organizations use in the conduct of their businessbusinessbusinessbusiness
5.5.5.5. Information resourcesInformation resourcesInformation resourcesInformation resources are data and other are data and other are data and other are data and other information used by businessinformation used by businessinformation used by businessinformation used by business
Can you name any others ?Can you name any others ?Can you name any others ?Can you name any others ?
Economic Systems Around theEconomic Systems Around theEconomic Systems Around theEconomic Systems Around the WorldWorldWorldWorld
An An An An economic systemeconomic systemeconomic systemeconomic system is a nationis a nationis a nationis a nation’’’’s system for s system for s system for s system for allocating its resources among its citizens.allocating its resources among its citizens.allocating its resources among its citizens.allocating its resources among its citizens.
Types of Economic SystemsTypes of Economic SystemsTypes of Economic SystemsTypes of Economic Systems
CommunismCommunismCommunismCommunismCommunismCommunismCommunismCommunism SocialismSocialismSocialismSocialismSocialismSocialismSocialismSocialism(Mixed(Mixed(Mixed(Mixed(Mixed(Mixed(Mixed(Mixed Market)Market)Market)Market)Market)Market)Market)Market)
Planned Planned Planned Planned Planned Planned Planned Planned EconomiesEconomiesEconomiesEconomiesEconomiesEconomiesEconomiesEconomies
Capitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. MarketCapitalism vs. Market
Relies on a centralized Relies on a centralized Relies on a centralized Relies on a centralized government to control all or government to control all or government to control all or government to control all or most factors of production and most factors of production and most factors of production and most factors of production and to make all or most production to make all or most production to make all or most production to make all or most production and allocation decisions. The and allocation decisions. The and allocation decisions. The and allocation decisions. The Kremlin is shown above.Kremlin is shown above.Kremlin is shown above.Kremlin is shown above.
1.1.1.1. Planned EconomyPlanned EconomyPlanned EconomyPlanned Economy
What Is Communism?What Is Communism?What Is Communism?What Is Communism?
Planned economy in which the government owns and Planned economy in which the government owns and Planned economy in which the government owns and Planned economy in which the government owns and operates all factors of productionoperates all factors of productionoperates all factors of productionoperates all factors of production
Relies on individuals to control production and Relies on individuals to control production and Relies on individuals to control production and Relies on individuals to control production and allocation decisions through supply and allocation decisions through supply and allocation decisions through supply and allocation decisions through supply and
demanddemanddemanddemand
2.2.2.2. Market EconomyMarket EconomyMarket EconomyMarket Economy
WhatWhatWhatWhat is is is is MarketMarketMarketMarket????
Mechanism for exchange between the buyers and Mechanism for exchange between the buyers and Mechanism for exchange between the buyers and Mechanism for exchange between the buyers and sellers of a particular good or servicesellers of a particular good or servicesellers of a particular good or servicesellers of a particular good or service
What Is Capitalism?What Is Capitalism?What Is Capitalism?What Is Capitalism?
Market economy that provides for private ownership of Market economy that provides for private ownership of Market economy that provides for private ownership of Market economy that provides for private ownership of production and encourages entrepreneurship by offering production and encourages entrepreneurship by offering production and encourages entrepreneurship by offering production and encourages entrepreneurship by offering profits as an incentiveprofits as an incentiveprofits as an incentiveprofits as an incentive
Circular Flow in a Market EconomyCircular Flow in a Market EconomyCircular Flow in a Market EconomyCircular Flow in a Market Economy
3.3.3.3. Mixed Market EconomyMixed Market EconomyMixed Market EconomyMixed Market Economy
Features characteristics of both planned and market Features characteristics of both planned and market Features characteristics of both planned and market Features characteristics of both planned and market economieseconomieseconomieseconomies
• Privatization Privatization Privatization Privatization is the process of converting is the process of converting is the process of converting is the process of converting government enterprises into privately government enterprises into privately government enterprises into privately government enterprises into privately owned companiesowned companiesowned companiesowned companies
• SocialismSocialismSocialismSocialism is a partially planned system is a partially planned system is a partially planned system is a partially planned system in which the government owns and in which the government owns and in which the government owns and in which the government owns and operates operates operates operates selected selected selected selected major industriesmajor industriesmajor industriesmajor industries
Demand and Supply in a Market EconomyDemand and Supply in a Market EconomyDemand and Supply in a Market EconomyDemand and Supply in a Market Economy
• DemandDemandDemandDemand is the willingness is the willingness is the willingness is the willingness and ability of buyers to and ability of buyers to and ability of buyers to and ability of buyers to purchase a good or servicepurchase a good or servicepurchase a good or servicepurchase a good or service
• SupplySupplySupplySupply is the willingness is the willingness is the willingness is the willingness and ability of producers to and ability of producers to and ability of producers to and ability of producers to offer a good or service for saleoffer a good or service for saleoffer a good or service for saleoffer a good or service for sale
The Laws of Supply and DemandThe Laws of Supply and DemandThe Laws of Supply and DemandThe Laws of Supply and Demand
The law of demand:The law of demand:The law of demand:The law of demand:Buyers will purchase (Buyers will purchase (Buyers will purchase (Buyers will purchase (demanddemanddemanddemand) more ) more ) more ) more of a product as its price drops and less of a product as its price drops and less of a product as its price drops and less of a product as its price drops and less as its price increases.as its price increases.as its price increases.as its price increases.
The law of supply:The law of supply:The law of supply:The law of supply:
Producers will offer (Producers will offer (Producers will offer (Producers will offer (supplysupplysupplysupply) more of ) more of ) more of ) more of a product for sale as its price rises a product for sale as its price rises a product for sale as its price rises a product for sale as its price rises and less as its price drops.and less as its price drops.and less as its price drops.and less as its price drops.
What Is the Market Price (or Equilibrium Price)?What Is the Market Price (or Equilibrium Price)?What Is the Market Price (or Equilibrium Price)?What Is the Market Price (or Equilibrium Price)?
ProfitProfitProfitProfit----maximizing price at which the quantity of goods maximizing price at which the quantity of goods maximizing price at which the quantity of goods maximizing price at which the quantity of goods demanded and the quantity of goods supplied are demanded and the quantity of goods supplied are demanded and the quantity of goods supplied are demanded and the quantity of goods supplied are equalequalequalequal
0
500
1000
1500
2000
2500
2 4 6 8 10 12 14 16 18 20
Quantity
Piz
za P
rice
HighHighHighHigh
HighHighHighHighLowLowLowLow
SSSSSSSSDDDDDDDD
MarketMarketMarketMarket EquilibriumEquilibriumEquilibriumEquilibrium
SurplusSurplusSurplusSurplus
ShortageShortageShortageShortage
Private Enterprise and Competition in a Private Enterprise and Competition in a Private Enterprise and Competition in a Private Enterprise and Competition in a Market EconomyMarket EconomyMarket EconomyMarket Economy
Private enterprisePrivate enterprisePrivate enterprisePrivate enterprise is an economic system that allows is an economic system that allows is an economic system that allows is an economic system that allows individuals to pursue their own interests without individuals to pursue their own interests without individuals to pursue their own interests without individuals to pursue their own interests without undue governmental restriction. undue governmental restriction. undue governmental restriction. undue governmental restriction.
Four elements:Four elements:Four elements:Four elements:
– Private Property RightsPrivate Property RightsPrivate Property RightsPrivate Property Rights– Freedom of ChoiceFreedom of ChoiceFreedom of ChoiceFreedom of Choice– ProfitsProfitsProfitsProfits– CompetitionCompetitionCompetitionCompetition
Degrees of CompetitionDegrees of CompetitionDegrees of CompetitionDegrees of Competition
SellersSellersSellersSellers
OneOneOneOne ManyManyManyMany
MonopolyMonopolyMonopolyMonopoly
OligopolyOligopolyOligopolyOligopoly
Perfect Perfect Perfect Perfect CompetitionCompetitionCompetitionCompetition
Monopolistic Monopolistic Monopolistic Monopolistic CompetitionCompetitionCompetitionCompetition
Degrees of CompetitionDegrees of CompetitionDegrees of CompetitionDegrees of Competition
Evolution in BusinessEvolution in BusinessEvolution in BusinessEvolution in Business
Industrial RevolutionIndustrial RevolutionIndustrial RevolutionIndustrial Revolution
LaissezLaissezLaissezLaissez----Faire Faire Faire Faire & & & & Entrepreneurship EraEntrepreneurship EraEntrepreneurship EraEntrepreneurship Era
Production EraProduction EraProduction EraProduction Era Marketing EraMarketing EraMarketing EraMarketing Era
Global EraGlobal EraGlobal EraGlobal Era
Information & Information & Information & Information & Internet EraInternet EraInternet EraInternet Era