Introduction to Business Essay Example

something is heavily demanded and at the same time, it's resources are limited, the price of the product will rise. This idea of course works both ways. The easier it is to produce something, the cheaper it will be. All economic systems begin with the same resources including land, labor, capital and technology.

These resources may be limited at any given time, varying within the world at large, from country to country. This business cycle explains how business fluctuates from high to low prosperity, recession, depression and recovery over time. The major challenges faced by our nation today are the Federal Budget Deficit, international trade deficit, the Decline of Smokestack America, and the conservation of energy. The Federal Budget Deficit occurs when our expenditures are greater then our revenues. International trade deficits occur when a nation imports more then it exports. The Decline of Smokestack America is when there is a change from an industrial to a post-industrial economy. Finally, the conservation of energy is so that there are a sufficient amount of natural resources necessary to produce goods. General economic growth or stagnation also has an important influence on business within our society. Many factors can affect it's condition, such as war, new inventions and technology, political assassinations, the discovery of physical and natural resources, labornegotiations, government action, and many others.

When the economy is strong and the demand is high, businesses can prosper. Regardless of how great the economy may become, businesses still must compete with other firms for scarce raw materials and labor. A businesses environment creates many opportunities as well as problems for prospering businesses. The environment determines what a business can do

by shaping and channeling its development. Businesses function within an environment by allowing entrepreneurs to raise capital and create profits freely. The supply of money available within a business as well as the economic stability through times of growth and recession have strong effects on businesses. Not only is the physical environment, including natural resources, pollution, and energy as discussed previously, important, but many other aspects within the environment influence business. A business must adapt and overcome consumerism and ecology, and it has a social responsibility to do so. Cultures surrounding businesses also play a major role. A business must adapt to a changing society with age, lifestyle, culture and location. When a business learns to adapt to these changes, it will be profitable for both the business and consumers. Economic systems can be classified into three categories. These include capitalism, socialism and communism. Pure capitalism is unrestrained freedom to buy, sell and compete.

Private enterprises allow entrepreneurs to run businesses without central government control and can operate within a free market. Capitalism is a system of true private enterprise. Some aspects of capitalism are free choice, private ownership, private profit and free competition. The only drawback of this type of system is that a company can operate with no competition thereby creating a monopoly unfavorable for consumers. Socialism, on the other hand, is a system where the production and distribution of industries are owned and operated by the government. Officials directly manage some or all of the extraction of raw materials, manufacturing, communication and transportation. This system is loosely regulated by the government. Finally, communism replaces the operation of a free market almost entirely. Most

of the rights enjoyed within the capitalist system are denied and private ownership is prohibited. Business are controlled by state planners and competition is almost completely eliminated. Today our economy is made up of a mixed economic system with each one contributing but no one dominating. Communist and socialist systems seem to be adopting many capitalists views and ideas. It is up to you to decide which system you prefer, but the United States' system of capitalism seems to be working adequately and positively. It is based on the principles of private enterprise and modified capitalism.

There are many forms of business within our economic system but they are all arranged in three major categories. These three categories are sole proprietorships, partnerships, and corporations. Within a sole proprietorship, one entrepreneur assumes all the risks of the business, but at the same time, keeps all of the profits. In just this one simple sentence we become aware of the obvious fact that along with it's advantages come many disadvantages. A sole proprietor, on one hand, makes his own decisions and pays only one tax for himself and the business. In addition, setting up a business for a sole proprietor is much simpler under the law compared to the other two types of businesses. However, the sole proprietor has unlimited liability and complete responsibility to the business. He or she must assume all of the risks and often must contribute from his own savings in order to prosper or just simply exist. A sole proprietor must also bring the natural resources, human resources and capital together by himself in order to run the business and produce goods and

services. Because of it's difficulty to raise funds and grow, sole proprietorships very often suffer from impermanence.

A partnership can also start with little difficulty under the law. They have a greater chance of growing and existing because partners can pool their assets, talents, funds, and borrowing power. Similar to sole proprietorships, partnerships also pay only one tax and create a high degree of satisfaction for the partners stemming from them being their own boss. Unfortunately, however, with a partnership comes unlimited liability and personal disagreements between the partners. In addition, because of this single taxation, the personal assets of the partners are frozen which often creates major problems. As a result, partnerships also suffer from impermanence. A corporation, in my opinion, is the best option. Although filing for a corporation can become expensive and they are heavily regulated by the state, they have the ability to raise large amounts of capital.

They have a long term existence, continuing to exist even when one of it's officers dies or resigns, large investment possibilities, easy withdrawal power and specialized management making production easier and quicker. Best of all, corporations have limited liability, holding only the corporation itself liable to any debts or obligations and freeing all officers and their personal assets from blame and liability. Although this may all be true, owners within a corporation, that being the shareholders, must share the total investment and divide all profits made. Because of the generally large number of owners, job satisfaction also decreases along with strong personal motivation. Shareholders have almost no privacy when it comes to their financial affairs. There is higher taxation for corporations and the shareholders are

taxed twice, once for the corporations assets and a second time for personal assets. The role of the government in authorizing the operations of corporations creates still another disadvantage. They are often expensive to establish and complex to run because they are strictly regulated by the government. More government regulations are applied to corporations then any other form of business ownership. Just simply reporting to the government so that they know all regulations are being followed can be timely and complicated. Strict and detailed records and statements must always be kept for the government as well as for the shareholders of the corporation. It is obvious, everything that comes with advantages must also come with disadvantages, this is why the type of business ownership that is right for a person varies, depending on the detailed aspects of each particular business.

The advantages and disadvantages must be weighed within each situation. While the main forms of business ownership include the three subsequently discussed, there are many other variations that can be used, depending upon each situation. These include limited partnerships, joint ventures, joint-stock companies, cooperatives and franchises. Small businesses are also widespread in our nation and are growing rapidly. They provide the most employment to teenagers, immigrants and the elderly, thereby employing a large percentage of the population. This fact is true because small business are more willing to adjust to their employee's needs and responsibilities. The services industry is dominated by small businesses which require limited capital in order to establish them and run successfully. They have greater flexibility, provide greater personal attention to consumers, have lower, fixed costs, high innovation and greater motivation. Unfortunately, the

failure rate of small businesses is high due to poor management and inadequate financing. Therefore, small business owners accept many benefits as well as burdens. The benefit of being your own boss and gaining greater work satisfaction is accompanied by the burden of working long hours and dealing with high amounts of stress. However, these burdens are generally a result of many occupations, regardless of whether or not you are your own boss. This is why small businesses are on the rise.

There are many aspects that go along with creating a successful business, regardless of its size. These include networking, planning, environmental examinations, internal control, and resources. The problem is, however, that it is up to the sole proprietor of the business to bring all of these aspects together in working order which is harder for a small business than it is for a larger business or corporation. However, there are several agencies of the federal government whose primary purpose is to offer support and guidance to small businesses. A major agency among these is the Small Business Administration. Specifically, the Small Business Administration provides guidance in the form of special courses and workshops in management problems and skills. It publishes information on how to prepare a business plan start up and operate a business, and helps a business obtain there fair share of governmental contracts. Of major importance to small business owners is the fact that the Small Business Administration assists sole proprietors in obtaining loans and capital necessary in order to create a business. While they can neither guarantee nor provide these funds, they can be of great assistance.

People obtaining small businesses through

franchising have much higher success rates, for obvious reasons. They are a good choice in order to avoid the many problems of creating a small business on your own. A franchise permits an individual to own his or her own business while benefiting from a trademark, know-how and the reputation of an established firm. This enables an individual to acquire a business more quickly and receive profits rapidly. However, the individual owner must pay the parent corporation a portion of the businesses' profits. This often becomes a problem because in some instances the financial rewards for the individual are sometimes low in relation to the time an effort that they put in to running the business. Therefore, this a major disadvantage and often makes the idea unattractive to small business owners. Since the government plays a major role in the operation of a business, the two must learn to coexist. The main role of government has traditionally been to protect the rights of the country's citizens. They follow this role by providing for the people police protection, a judicial system and a national defense system.

The government protects individuals within our economy by protecting fair competition, consumer investments, and general welfare promotes property rights, and oversees certain administrations and industries. During the nineteenth century many businesses' strategy was to reach a monopoly position, and many were successful. Finally the government stepped in and regulation has been a rule ever since.The right to own property is basic to a private enterprise and it is the ultimate responsibility of the government to enforce this right. The government must also enforce limitations on property rights, one important limitation being

taxation, in order to benefit the public. It is responsible for establishing many agencies to protect consumers' health and safety. This, of course, is another benefit of taxation. Taxation is done in order to provide public service and promote the general well-being of the people. The most important source of revenue for the federal government is a tax on personal and corporate incomes. Many states and some cities depend heavily on income taxes.

Noting gets done without management. Business management is central to running a business by handling resources and activities and accomplishing work through other people within the firm. A business can be looked at as a system of related parts working together, and management is what integrates these parts to make up the system. Small firms usually have only one or two managers, but large corporations have a staff of managers all working on different levels. The level of the manager is how he or she is ranked within the company. The to level consists of executives, the middle level are known as the middle managers, and finally the lower level are commonly known as the first-level supervisors. This is what I mean by the managers being ranked in the company. An executive will be known to have much more responsibility, plan and implement strengths and have more control of the business than the lower-level managers do. However, all managers are trying to achieve the same goal regardless of the size of the company, this goal being to work effectively with the employees and consumers in order to achieve the company's objectives. Managers have four basic responsibilities; planning, organizing, and staffing, directing and coordinating,

and evaluating and controlling. Managers make plans to solve problems and take advantage of opportunities that come their way in order to help the business run successfully and profitably. They must recruit qualified workers to carry out his plan, workers who work well with others and are hard working and innovative. Some king of the organization is needed to arrange each workers position within the company. A supervisor must also be selected so that each employee will know to whom they will be directly working for. All of these tasks must be brought together by the manager. The manager must constantly evaluate the workers and coordinate the work being completed. The evaluation of results leads to control, which influences other functions within the company. One important aspect that makes a successful manager is his degree of sensitivity. Since a manager must work through people, personal interaction skills are of utmost importance. All managers use different approaches to dealing with people but it is important to treat employees with respect, flexibility, recognition, and room for ideas. You will only get back what you give, and this is where many business fail.