Business - Loudoun County Public Schools

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Chapter 6

Business Ownership and Operations

Section 6.2

Types and Functions of Businesses

Read to Learn Differentiate the six types of businesses.

Describe the five functions of business.

Discuss how the five functions of business relate to each other.

The Main Idea

There are many different types of businesses. The five functions of business are involved in every one.

Key Concepts Types of Businesses

Functions of Business

How the Functions of Business Are Interdependent

Key Term producer a business that gathers raw goods

a business that changes raw materials processor into more finished products

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Key Term

manufacturer

a business that makes finished products out of processed goods

a business that moves goods intermediary from one business to another

Key Term wholesaler a business that distributes goods

retailer

a business that purchases goods from a wholesaler and sells them to consumers, the final buyer of the goods

Key Term production

the process of creating, expanding, manufacturing, or improving goods and services

the buying and reselling of goods procurement that have already been produced

Key Term marketing

the process of planning, pricing, promoting, selling, and distributing ideas, goods, and services

the process of achieving company

management

goals by planning, organizing, directing, controlling, and evaluating

the effective use of resources

Key Term finance

accounting

the business or art of money management

maintaining and checking records, handling bills, and preparing financial reports for a business

Graphic Organizer

Types of Businesses

? Producers ? Processors ? Manufactures ? Intermediaries and

Wholesalers ? Retailers and Service

Businesses

Functions of Businesses

? Production and Procurement

? Marketing ? Management ? Finance and

Accounting

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Producers

A producer may be found in industries such as agriculture, mining, fishing, or forestry.

producer a business that gathers raw goods

Processor

A processor may, for example, turn crude oil into gasoline.

processor a business that changes raw materials into more finished products

Manufacturers

Cars, CDs, and computers are examples of goods that are made by a manufacturer.

manufacturer a business that makes finished products out of processed goods

Intermediaries and Wholesalers

An intermediary buys goods, stores them, and then resells them.

intermediary a business that moves goods from one business to another

Intermediaries and Wholesalers

A wholesaler of clothing may buy thousands of jackets from several manufacturers, divide the large quantities into smaller ones, and sell them to retailers.

wholesaler a business that moves good from one business to another

Retailers and Service Businesses

A record store is an example of a retailer.

retailer a business that purchases goods from a wholesaler and sells them to consumers, the final buyers of the goods

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Retailers and Service Businesses

Service businesses perform tasks rather than provide goods.

Service businesses employ about threequarters of the workforce and are rapidly increasing in numbers.

Functions of Business

The five main functions of business are: Production and procurement Marketing Management Finance Accounting

Production and Procurement

Production and procurement are closely related functions of business.

production the process of creating, expanding, manufacturing, or improving goods and services

procurement the buying and reselling of goods and services that have already been produced

Marketing

Marketing involves getting consumers to buy a product or service.

marketing the process of planning, pricing, promoting, selling, and distributing ideas, goods, and services

To Advertise or Not

Advertising is used to influence consumers to buy one product or service over another.

Management

Management is an important function of business.

management the process of achieving company goals by planning, organizing, directing, controlling, and evaluating the effective use of resources

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Finance and Accounting

Finance requires analyzing financial statements to make future decisions.

finance the business or art of money management

Finance and Accounting

Accounting requires attention to detail and accuracy.

accounting maintaining and checking records, handling bills, and preparing financial reports for a business

How the Functions of Business Are Interdependent

The functional areas of a business depend on each other.

Sometimes, the functional areas of a business conflict with each other.

Graphic Organizer

Example of How Functional Areas Depend on Each Other A furniture maker's sales are decreasing.

The accounting and finance department notice decreasing sales. If the furniture is too highly priced, more efficient procedures will have to be implemented. A new marketing plan is created. The accounting and finance department will monitor the effects of new marketing efforts.

Graphic Organizer

Example of How Functional Areas Conflict with Each Other Management wants to increase sales by 20 percent within three years. The production department suggests improving quality. The marketing department requests more funds for projects. Accounting says there is not enough money for either plan. The final plan involves ideas from all the functions of business.

1. What is the difference between a producer and a processor?

A producer gathers or creates raw products. A processor changes raw products into more finished products.

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2. Identify the five functions of business.

production and procurement, marketing, management, finance, and accounting

3. Give an example of how the accounting and finance functions can affect a business's marketing and production processes.

If the financials show little profits, new marketing plans may be developed and new production procedures may be implemented.

End of Chapter 6

Business Ownership and Operations

Section 6.2

Types and Functions of Businesses

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