This book covers essential elements of business and management providing foundations for understanding key contents both theoretical and practical. Most of the other books are thick and full of theories and cases that simply cannot be covered in a semester. To maintain focus and to enhance convenience for students, this book coherently insisted core body of knowledge about introductory level business and management issues. Tons of cases and complementary resources are easily found by searching websites and communities these days and this provided an opportunity to make this textbook as essential as possible.
What is Business?
Today business underpins every aspect of the world we live in and are no longer just local providers of goods and services. So, understanding how it works is the key to understanding human society and to develop personal career as you find your role in the society.
In this first chapter we describe how selling goods and services generates revenue and profits, how business benefits society, and how economy has evolved from providing goods to principally providing services. We next consider the rules for successful business that will guide you through whole course.
- Business and Profits
Business seeks to make a profit by selling goods or services to others. This first section explains how businesses create wealth by taking in revenue. In this book, we mean business for profit organizations distinguished from nonprofit organizations whose purpose is something else than generating profit.
What is business?
Let us briefly define the definition of business. A business is any activity that seeks to make a profit by satisfying needs through selling goods or services that are valuable to customers.
Businesses do sell goods or services to generate revenue and profits. The sales of goods or services meeting customers’ needs and want produce revenue for a business and when revenues are greater than expenses may create profits.
Selling is the exchange of goods or services for an agreed sum of money. Revenue is the total amount of money that the selling of goods or services
produces for a business during a defined period of time, such as every 3 or 12 months.
Goods are defined as tangible products-things you can touch-such as food, clothing, appliances, gasoline, and books.
Services are defined as intangible products-things you can’t touch- such as education, transportation, recreation, or health care.
Value is the extent to which a good or service is perceived by its customer to meet his or her needs or wants, measured by customer’s willingness to pay for it. It commonly depends more on the customer’s perception of the worth of the product than on its intrinsic value.
Profit is the amount of money a business makes after paying for its salaries and all other costs such as R&D, materials and components, marketing expenses, utilities, fees and so on-that is, revenue minus expenses. Loss occurs when business expenses are larger than revenues.
Wealth is created with the accumulation of profits and at the same time business provides benefits to the society by satisfying the needs of people in it. The following section takes close look at how business can impact society in both positive and negative ways.