Is Money That An Organization Brings In Through The Sale Of Its Goods And Services

1. How exercise businesses and not-for-turn a profit organizations help create our standard of living?

Take a moment to retrieve nigh the many different types of businesses you come into contact with on a typical twenty-four hour period. Every bit you lot drive to class, you may stop at a gas station that is part of a major national oil company and grab tiffin from a fast food chain such equally Taco Bell or McDonald's or the neighborhood pizza place. Need more cash? Y'all can practise your banking on a smartphone or other device via mobile apps. You don't fifty-fifty have to visit the store anymore: online shopping brings the stores to you, offer everything from clothes to food, article of furniture, and concert tickets.

A business is an organization that strives for a profit by providing appurtenances and services desired by its customers. Businesses run across the needs of consumers past providing medical intendance, autos, and countless other goods and services. Appurtenances are tangible items manufactured by businesses, such as laptops. Services are intangible offerings of businesses that can't be held, touched, or stored. Physicians, lawyers, hairstylists, car washes, and airlines all provide services. Businesses likewise serve other organizations, such equally hospitals, retailers, and governments, by providing machinery, goods for resale, computers, and thousands of other items.

Thus, businesses create the goods and services that are the footing of our standard of living. The standard of living of any country is measured by the output of goods and services people can purchase with the money they have. The Usa has i of the highest standards of living in the world. Although several countries, such equally Switzerland and Frg, accept higher average wages than the The states, their standards of living aren't higher, because prices are so much higher. As a result, the aforementioned amount of money buys less in those countries. For instance, in the United States, we can purchase an Extra Value Meal at McDonald'southward for less than $5, while in some other country, a similar meal might toll every bit much as $ten.

Businesses play a fundamental part in determining our quality of life by providing jobs and goods and services to society. Quality of life refers to the general level of human happiness based on such things equally life expectancy, educational standards, health, sanitation, and leisure fourth dimension. Building a high quality of life is a combined effort of businesses, government, and not-for-profit organizations. In 2017, Vienna, Austria, ranked highest in quality of life, followed past Zurich, Switzerland; Auckland, New Zealand; and Munich, Deutschland. Information technology may come up as a surprise that not 1 of the world's superlative cities is in the The states: seven of the top ten locations are in western Europe, ii are in Commonwealth of australia/New Zealand, and ane is in Canada. At the other stop of the scale, Baghdad, Iraq, is the urban center scoring the everyman on the annual survey.^[i]

Creating a quality of life is not without risks, however. Risk is the potential to lose time and money or otherwise not be able to attain an system's goals. Without enough claret donors, for example, the American Red Cross faces the hazard of non coming together the need for claret by victims of disaster. Businesses such as Microsoft face the gamble of falling brusque of their revenue and profit goals. Revenue is the money a visitor receives by providing services or selling goods to customers. Costs are expenses for hire, salaries, supplies, transportation, and many other items that a company incurs from creating and selling goods and services. For example, some of the costs incurred by Microsoft in developing its software include expenses for salaries, facilities, and advertizement. If Microsoft has money left over after it pays all costs, it has a profit. A company whose costs are greater than revenues shows a loss.

When a company such equally Microsoft uses its resources intelligently, it can frequently increase sales, hold costs down, and earn a profit. Not all companies earn profits, merely that is the gamble of being in business. In U.S. business today, there is more often than not a straight relationship between risks and profit: the greater the risks, the greater the potential for profit (or loss). Companies that take also bourgeois a stance may lose out to more nimble competitors who react quickly to the irresolute business environment.

Take Sony, for case. The Japanese electronics giant, once a leader with its Walkman music player and Trinitron televisions, steadily lost footing—and profits—over the past 2 decades to other companies by non embracing new technologies such as the digital music format and flat-console Tv screens. Sony misjudged what the market wanted and stayed with proprietary technologies rather than create cantankerous-platform options for consumers. Apple, at the time an upstart in personal music devices, quickly grabbed the lion'southward share of the digital music market with its iPods and iTunes music streaming service. By 2016, Sony restructured its concern portfolio and has experienced substantial success with its PlayStation four gaming console and original gaming content.^[ii]

Non-for-Profit Organizations

Not all organizations strive to make a profit. A not-for-profit organisation is an organization that exists to achieve some goal other than the usual business organisation goal of profit. Charities such equally Habitat for Humanity, the United Way, the American Cancer Social club, and the World Wildlife Fund are not-for-profit organizations, as are well-nigh hospitals, zoos, arts organizations, borough groups, and religious organizations. Over the last 20 years, the number of nonprofit organizations—and the employees and volunteers who work for them—has increased considerably. Government is our largest and most pervasive not-for-profit group. In addition, more than 1.5 million nongovernmental not-for-profit entities operate in the United States today and contribute more than $900 billion annually to the U.South. economy.^[iii]

Like their for-profit counterparts, these groups fix goals and crave resources to meet those goals. Nevertheless, their goals are not focused on profits. For example, a not-for-turn a profit organization'due south goal might be feeding the poor, preserving the surroundings, increasing attendance at the ballet, or preventing drunkard driving. Not-for-profit organizations do not compete directly with 1 another in the same manner as, for example, Ford and Honda, but they do compete for talented employees, people's limited volunteer time, and donations.

Rescue gunkhole. Following Hurricane Irma affected The island of Puerto Rico, the Kentucky and Haraii National Baby-sit assisted storm victims by donating to disaster relief efforts. Some non-for-profit charities focused aid toward the people of the region, merely others delivered care to a different group of sufferers: animals and pets. Although most animal hospitals are not normally a refuge for displaced animals, many facilities opened their doors to pet owners affected by the torrential rains. Why are tasks such as animal rescue managed primarily through non-for-profit organizations? (Credit: Hawaii and Kentucky National Guard /flickr /Attribution 2.0 Generic (CC Past))

The boundaries that formerly separated not-for-turn a profit and for-profit organizations accept blurred, leading to a greater exchange of ideas between the sectors. As discussed in detail in the ideals chapter, for-profit businesses are at present addressing social bug. Successful not-for-profits utilize business organization principles to operate more effectively. Not-for-profit managers are concerned with the same concepts as their colleagues in for-profit companies: developing strategy, budgeting carefully, measuring performance, encouraging innovation, improving productivity, demonstrating accountability, and fostering an ethical workplace environment.

In addition to pursuing a museum'southward artistic goals, for example, top executives manage the administrative and business organization side of the system: human resources, finance, and legal concerns. Ticket revenues cover a fraction of the museum's operating costs, so the director spends a great bargain of time seeking major donations and memberships. Today's museum boards of directors include both art patrons and business concern executives who want to see sound fiscal conclusion-making in a not-for-profit setting. Therefore, a museum director must walk a fine line between the institution'southward artistic mission and financial policies. Co-ordinate to a survey past The Economist , over the adjacent several years, major art museums will be looking for new directors, equally more than a third of the current ones are budgeted retirement.^[4]

Factors of Production: The Edifice Blocks of Business

To provide appurtenances and services, regardless of whether they operate in the for-turn a profit or non-for-profit sector, organizations require inputs in the grade of resources called factors of production. Four traditional factors of production are common to all productive activeness: natural resources, labor (human resource), capital letter, and entrepreneurship. Many experts now include noesis equally a fifth factor, acknowledging its fundamental role in business success. By using the factors of production efficiently, a company can produce more than goods and services with the aforementioned resources.

Bolt that are useful inputs in their natural country are known equally natural resource. They include farmland, forests, mineral and oil deposits, and water. Sometimes natural resources are simply called land, although, as you lot can see, the term means more than simply land. Companies use natural resources in different means. International Newspaper Company uses wood pulp to make paper, and Pacific Gas & Electric Company may use water, oil, or coal to produce electricity. Today urban sprawl, pollution, and express resources have raised questions about resource use. Conservationists, environmentalists, and government bodies are proposing laws to require land-use planning and resource conservation.

Labor, or human resources, refers to the economic contributions of people working with their minds and muscles. This input includes the talents of everyone—from a restaurant melt to a nuclear physicist—who performs the many tasks of manufacturing and selling goods and services.

The tools, machinery, equipment, and buildings used to produce appurtenances and services and get them to the consumer are known as capital. Sometimes the term capital letter is also used to mean the money that buys machinery, factories, and other production and distribution facilities. Yet, because money itself produces nothing, it is not one of the basic inputs. Instead, information technology is a means of acquiring the inputs. Therefore, in this context, capital does not include money.

Entrepreneurs are the people who combine the inputs of natural resources, labor, and capital letter to produce appurtenances or services with the intention of making a profit or accomplishing a not-for-profit goal. These people make the decisions that set the course for their businesses; they create products and product processes or develop services. Because they are not guaranteed a turn a profit in return for their time and try, they must be risk-takers. Of course, if their companies succeed, the rewards may be great.

Today, many individuals want to start their own businesses. They are attracted past the opportunity to be their ain dominate and reap the financial rewards of a successful business firm. Many first their beginning business from their dorm rooms, such as Mark Zuckerberg of Facebook, or while living at domicile, so their toll is near zero. Entrepreneurs include people such equally Microsoft cofounder Beak Gates, who was named the richest person in the world in 2017, as well every bit Google founders Sergey Brin and Larry Page. ^[five] Many thousands of individuals take started companies that, while remaining small, brand a major contribution to the U.S. economy.

StickerGiant Embraces Change

Entrepreneurs typically are not afraid to have risks or modify the fashion they practise business organization if it means there is a improve path to success. John Fischer of Longmont, Colorado, fits the profile.

The fatigued-out U.Due south. presidential election in 2000 between Bush-league and Gore inspired Fischer to create a bumper sticker that claimed, "He's Not My President," which became a top seller. Equally a result of this venture, Fischer started an online retail sticker store, which he viewed equally possibly the "Amazon of Stickers." Designing and making stickers in his basement, Fischer'southward start-upwardly would eventually become a multimillion-dollar visitor, recognized in 2017 by Forbes equally one of its top 25 minor businesses.

The StickerGiant online store was successful, supplying everything from sports stickers to ones commemorating stone and scroll bands and breweries. By 2011, the business was going strong; however, the entrepreneur decided to exercise away with the retail shop, instead focusing the business on custom orders, which became StickerGiant's main product.

As the company became more successful and added more employees, Fischer once again looked to make some changes. In 2012 he decided to introduce a concept called open-book management, in which he shares the company'south financials with employees at a weekly meeting. Other topics discussed at the meeting include customer comments and feedback, employee concerns, and colleague appreciation for one another. Fischer believes sharing information about the company's operation (skillful or bad) not but allows employees to feel part of the operation, but also empowers them to comprehend modify or suggest ideas that could aid the concern aggrandize and flourish.

Innovation is also visible in the engineering science StickerGiant uses to create miles and miles of custom stickers (nearly 800 miles of stickers in 2016). The manufacturing process involves digital printing and laser-finishing equipment. Fischer says only 5 other companies worldwide take the laser-finishing equipment StickerGiant uses every bit part of its operations. Considering of the investment in this high-tech equipment, the visitor can make custom stickers in large quantities overnight and transport them to customers the next twenty-four hours.

This small business continues to evolve with an entrepreneur at the helm who is non afraid of making changes or having fun. In 2016, StickerGiant put together Saul the Sticker Ball, a Guinness World Records winner that weighed in at a whopping 232 pounds. Fischer and his employees created Saul when they nerveless more than 170,000 stickers that had been lying around the part and decided to put them to good use. With $10 1000000 in annual sales and nearly 40 employees, StickerGiant continues to be a successful effort for John Fischer and his employees almost 2 decades after Fischer created his first sticker.

Questions for Word

1. How does being a risk-taker help Fischer in his business activities?
2. If you were a small business owner, would you consider sharing the company's financial information with employees? Explain your reasoning.

Sources: "All About StickerGiant," https://www.stickergiant.com, accessed May 29, 2017; Bo Burlingham, "Forbes Pocket-sized Giants 2017: America's Best Small Companies," Forbes, http://www.forbes.com, May ix, 2017; Karsten Strauss, "Making Money and Breaking Records in the Sticker Business," Forbes, http://www.forbes.com, January 26, 2016; Emilie Rusch, "StickerGiant Does Big Business organization in Tiny Town of Hygiene," Denver Post, April 19, 2016, http://world wide web.denverpost.com; Eric Peterson, "StickerGiant," Company Week, https://companyweek.com, September 5, 2016.

A number of outstanding managers and noted academics are beginning to emphasize a fifth factor of production—knowledge. Knowledge refers to the combined talents and skills of the workforce and has become a primary driver of economic growth. Today'south competitive surroundings places a premium on noesis and learning over concrete resources. Recent statistics propose that the number of U.South. knowledge workers has doubled over the last 30 years, with an estimated 2 million knowledge job openings annually. Despite the fact that many "routine" jobs have been replaced past automation over the concluding decade or outsourced to other countries, applied science has actually created more jobs that require knowledge and cerebral skills.^[6]

Concept check

1. Explain the concepts of revenue, costs, and profit.
2. What are the five factors of production?
3. What is the function of an entrepreneur in social club?

Summary of Learning Outcomes

1. How do businesses and not-for-profit organizations help create our standard of living?

Businesses attempt to earn a turn a profit past providing goods and services desired past their customers. Not-for-turn a profit organizations, though not striving for a profit, nonetheless deliver many needed services for our society. Our standard of living is measured by the output of goods and services. Thus, businesses and not-for-profit organizations help create our standard of living. Our quality of life is not simply the amount of goods and services available for consumers but rather the society's general level of happiness.

Economists refer to the building blocks of a business as the factors of product. To produce annihilation, one must take natural resources, labor (man resources), capital, and entrepreneurship to get together the resources and manage the business. Today's competitive business environment is based upon knowledge and learning. The companies that succeed will be those that acquire fast, apply knowledge efficiently, and develop new insights.

Glossary

business

An organization that strives for a profit by providing goods and services desired by its customers.

capital

The inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer.

costs

Expenses incurred from creating and selling goods and services.

entrepreneurs

People who combine the inputs of natural resources, labor, and capital to produce appurtenances or services with the intention of making a profit or accomplishing a non-for-turn a profit goal.

factors of production

The resources used to create appurtenances and services.

appurtenances

Tangible items manufactured by businesses.

noesis

The combined talents and skills of the workforce.

knowledge workers

Workers who create, distribute, and apply cognition.

not-for-profit organization

An organization that exists to reach some goal other than the usual business goal of profit.

profit

The money left over after all costs are paid.

quality of life

The general level of man happiness based on such things equally life expectancy, educational standards, health, sanitation, and leisure fourth dimension.

revenue

The money a company receives by providing services or selling goods to customers.

hazard

The potential to lose fourth dimension and money or otherwise non be able to reach an organisation's goals.

services

Intangible offerings of businesses that can't be held, touched, or stored.

standard of living

A country'south output of goods and services that people can buy with the money they take.

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Source: https://courses.lumenlearning.com/suny-osintrobus/chapter/the-nature-of-business/

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