INTRODUCTION TO BUSINESS

Lecture: 1
Lecturer: S M Shahidul Alam
Date: 26/9/2017
 INTRODUCTION

Over the year people have become more

and more dependent on others. We can’t
produce all we need to live in this society.

Once people exchange the surplus goods

that they have after their own
consumption. This is called Barter
System.
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 BARTER

It is the direct exchange of one goods for

another without using anything as money
or as a medium of exchange.
Barter is a type of trade where goods or
services are exchanged for a certain
amount of other goods or services;
no money is involved
in the transaction.
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 BUSINESS
 Business is the exchange of goods, services or
money for the mutual benefit or profit.
Who will produce what?
 He who has skills and ability or specialization in
specific job will produce or serve or involve in
that task.
International Opportunities
 As the shortage of resources and as they are not
distributed equally all over the world, people will
go across the border for international business .
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 BUSINESS

Standard of Living
 A measure of how well a person or family is doing
in terms of satisfying needs and wants with goods
and services.

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 BUSINESS

Free Enterprise
 It means that private businesses are able to
conduct business activities competitively with
minimal government regulation.

Inflation
 Rate at which the general level of prices for
goods and services is rising and purchase
power is falling.
(example: inflation rate goes up to
2%) 6
The Core of Business

The human element is the core of business.

Business needs people as owners,
managers, employees, and consumers.
People need business for the production of
goods and services and the creation of
jobs. Whether business is transacted in
Bangladesh, USA, Japan or Ghana dose not
matter.

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 The Core of Business

Owners
 People,who own a business as well as those
who invest money in one, do so because they
expect to earn profit.
Managers
 The person responsible for operating the
business may be the owner or a professional
manager employed by the owner. An owner-
manager is also called an entrepreneur.

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 The Core of Business

Owner-Managers
 Theowner-manager sets his/ her own objectives,
whereas a professional manager attempts to
achieve objectives set by others.

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 The Core of Business

Employees
 Employees supply the skills and abilities needed
to provide a product or service and to earn a
profit. Most employees expect to receive an
reasonable wage or salary and to be given regular
increases in the amount they are paid for the use
of their skills and abilities.

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 The Core of Business

Consumers
 A consumer is a person or business who
purchases a goods or services for personal and
organizational use. A business enterprise
attempts to satisfy consumer needs and desires
while earning a profit.

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 Business Objectives

 Survival
 Growth
 Social Responsibilities

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 Business Objectives

 Survival
Survival objective is an obvious objective. Other
objectives can be accomplished only if the
business enterprise survives.

 Growth
Growth is an objective because business does
not stand still. Market share increase, personal
and individual development and increase
productivity are important growth objectives.
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 Business Objectives

 Social Responsibilities
In recent years, meeting social responsibilities has been
recognized as important objectives. Businesses, like
each person in society, must accept their
responsibilities in areas such as pollution control,
eliminating discriminatory practices and energy
conservation.

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 Business Objectives

Profit
 The profit objective plays the major role in
business.
Business Profit
 The difference between business income and
business expenses

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Business Objectives

Activities Performed to earn Business

Profit:
Risk Taking
Evaluation of Demand
Well-organized Management

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 Business Objectives

Activities Performed to earn Business

Profit:
Risk Taking
Toyota invested millions of dollars in promoting and
selling small cars in the US. Today, this Japanese
corporation is the largest small car seller in the US
market.

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Business Objectives

Activities Performed to earn Business

Profit:
Evaluation of Demand

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 Business Objectives

Activities Performed to earn Business Profit:

Well-organized Management

Management of people, technology, materials and

capital. Efficient planning, organizing, controlling,
directing and staffing can earn satisfactory profit.

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 Business Objectives

Economic Profit
Opportunity Cost: Something you given up
in order to get something else.
Economic Profit: What remains after the
expenses and opportunity costs are
subtracted from income.
Selling Price: All costs of making and selling
a product, including taxes.
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 Business Objectives

Economic Profit
Opportunity Cost

Mr. Rahman is working in Company X. Earning Tk

40,000/- per month. His office is near to his house.
But he could earn Tk 60,000/- per month working in
Company Y which is far from his house. His
opportunity cost is Tk 20,000/-.

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 Economics:
The Foundation of Business

 Economics
The study of how a society (people) chooses to
use limited resources to produce goods and
services and to distribute them to the people
for consumption.
 This definition raises certain issues that are key
to understanding economics:

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 Economics:
The Foundation of Business
There are three factors:
 Resources
 Goods and Services
 Allocation of Resources and Products
 Resources
A nation’s resources consist of three broad areas:
 Natural Resources
 Capital Resource
 Labor (Human Resources)
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 Economics:
The Foundation of Business

Resources
1. Natural Resources
Resources provided in limited amounts by
nature such as oil, natural gas, minerals, timber
and water.
Natural resources must be processed to
become a product or to be used to produce
other goods and services.
Example....Trees must be processed into
lumber before they can be used to build
homes, offices, schools, etc. 24
 Economics:
The Foundation of Business
 Resources
2. Capital Resources
Goods produced for the purpose of making other
types of goods and services. Some capital
resources, called current assets have a short life
and are used up in the production process.
Such as fuel, raw materials, paper, money.
Long-lived capital resources which can be used
repeatedly in the production process are called
fixed capital.
Such as factory building, machineries, etc.
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 Economics:
The Foundation of Business

 Resources
3. Labor Resources
Represent the human talent, skills and competence
available to a nation.
To have value in the labor force, individuals must be
trained to perform either skilled or semiskilled
work.
This collection of human talent is the most valuable
national resource. Without human resources, no
productive use of either natural or capital
resources is possible.
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 Economics:
The Foundation of Business

 Goods and Services

A nation’s resources are used to produce goods and
services that will meet people’s needs and wants.
Needs: goods and services people must have in order
to survive. Example: food, clothing, shelter, medical
needs, etc.
Wants: are things they would like to have but do not
absolutely require for survival. Example: luxury
holidays, fast foods (Burgers, Fries), etc.

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 Economics:
The Foundation of Business

 Allocation of Resources and Products

The process of choosing how resources will be used to
meet a society’s needs and wants and it also includes
the distribution of products to customers.

Resources are Limited but Wants are Unlimited such as

the Supply of Oil, Gas and other Petroleum Products.

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END OF LECTURE 1

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