MGMT105 1 15 14 THE CONCEPT OF BUSINESS AND THE CONCEPT OF PROFIT BUSINESS Organization that provides goods or services to consumers to earn profits PROFITS Difference between a business s revenues and its expenses How many businesses damage their services trying to make a profit THE EXTERNAL ENVIRONMENTS OF BUSINESS This external environment consists of everything outside an organization s boundaries that might affect it Not surprisingly the external environment plays a major role in determining the success or failure of any organization ECONOMIC SYSTEM o A nations system for allocating its resources among its citizens both individuals and organization PLANNED ECONOMY o Economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions Communism Socialism Country of Peru took over the milk industry because of shortage of milk under socialism the country owns most factors of production FACTORS OF PRODUCTION o The resources that a country s businesses use to produce goods and services o 5 thing that impact a businesses successful operation Labor Capital Entrepreneurs Physical Resources Information Resources MARKET ECONOMY o Individual producers and consumers control production and allocation by creating combinations of supply and demand MIXED MARKET ECONOMY o 01 15 2014 01 15 2014
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