principles of business, marketing, and finance producers in a private enterprise system copyright ©...

Principles of Business, Marketing, and FinancePrinciples of Business, Marketing, and Finance

Producers in a Private Enterprise System

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Scarcity

Scarcity

Scarcity

• Unlimited wants and needs

• Limited resources

• Choices must be made

Basic Economic Problem


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Questions Economies Must Answer

Questions Economies Must Answer

What goods and services will be produced?

How will they be produced?

For whom will they be produced?


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Economic Systems

Controlled Economy

Mixed Economy

Market Economy


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America’s Private Enterprise System


Based on independent decisions by businesses and consumers with only a limited government role regulating those relationships


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Characteristics of Private Enterprise– resources of production are owned and controlled by

individual producers– Producers use the profit motive to decide what to

produce-use of resources to obtain the greatest profit– Individual consumers make decisions about what will

be purchased to satisfy needs– Consumers use value in deciding what to consume– Government stays out of exchange activities between

producers and consumers unless it is clear that individuals or society are harmed by the decision


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ConsumersConsumers

Individuals who purchase products and services to satisfy needs


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DemandDemand

a relationship between the quantity of a product consumers are willing and able to

purchase and the price


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ProducersProducers

businesses that use their resources to develop products and services to consumers for profit– Supply-relationship between the quantity of a product

that producers are willing and able to provide and the price

– Determine the needs and demands of consumers


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GovernmentGovernment

least amount of involvement in free enterprise system

some regulations

use taxes for services


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Business Customer Classifications


Producers-1.2 million businesses– farms and ranches– mining companies– oil refineries– manufacturers of business and consumer products– construction-largest production category-over 700,000

companies – small-less than $10,000 a year on purchases– large-employ several hundred thousand people

worldwide and may easily spend $10 million in one day on purchases


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ResellersService

BusinessesGovernment

Non-Profit Organization

s


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Forms of ProductionForms of Production

Extraction and cultivation -products are obtained from nature or grown using

natural resources

Processing -changing and improving the form of another product

Manufacturing -combines raw materials and processed goods into

finished product


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Manufacturing ProcessManufacturing Process

Several manufacturers are

part of the total activity needed to

produce goods that are purchased by

consumers or other businesses.


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Types of Manufacturing Procedures


Mass Production -assembly process that makes a large number of

identical products using a continuous, efficient procedure

Custom Manufacturing -building a specific and unique product to meet the needs

of one customer


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Materials Processing

• changing the form of raw materials so they can be consumed or used to make other products

Intermittent Processing

• uses short production runs to produce a precise amount of a variation of a product

Continuous Processing

• raw materials constantly move through specially designed equipment changing them into a specific product useable for consumption


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