The American Private Enterprise System. Part IV How to Do Business.
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Transcript of The American Private Enterprise System. Part IV How to Do Business.
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The American Private Enterprise
System
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Part IV
How to Do Business
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Overview of How to Do Business• Business Organizations- produce or manufacture, distribute, or sell goods
and services
• Production of Basic Commodities- basic-raw goods and materials consumers- coal and oranges
• Processing and Manufacturing- make basic commodities more useful to consumers
• Marketing- selling and transporting products
• Business Services- selling services instead of products to people or businesses
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How Does Business Produce?
• Basic Natural Resources• Labor• Capital• Management• Government• Capital Goods
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What Business Does for a Community??
• Provides our basic needs:– Food– Shelter– Clothing– Transportation– Communication– Services
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Starting a Business
Entrepreneur A person with a new idea who took a risk in the hope of making PROFIT
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Problems of Productivity
ProductivityOutput per worker per hour• Flood of inexperienced workers• Failure of firms• Implementation of technology
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A Topsy Turvey Investment World
• Core- financial system that puts money to work to make more money
• Our economy relies on financial markets to funnel peoples savings into industrial expansion
• Inflation • Double Digit Interest Rates• Stocks and Bonds • Raising the Money
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In the Driver Seat
• Board of Directors– Officers of the Company– Major stockholders– Outsiders who can provide useful connections
with law firms, banks, investment houses, and customers
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Stock Market
• “Hub of the Investment World”• More than 40 Million individuals own shares
in the U.S. corporations (valued at $1 Trillion)• Stocks can provide:– Dividend- profits a firm distributes to its
shareholders– Capital gain- investor reaps when a stock is sold
for more than the original PRICE
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Stock Prices
• Bear Market- prices are FALLING • Bull Market- prices are RISING• Influenced by: – Value of firms assets– Earning prospects– Investor demand
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How the Market Works?
• Buying and Selling Bonds– Less Risky than Stocks• Invest savings• Bond certificate
• Hedging Bets– Buying or selling a stock at a current market price
prior to the future date