Why Do Prices Change? 4 Forces: Supply, Demand, Global Trends, and Uncertainty
Autor: gooomba1234 • February 16, 2017 • Study Guide • 3,296 Words (14 Pages) • 963 Views
• Why do prices change? 4 forces: supply, demand, global trends, and uncertainty
BUSINESS, PROFIT, AND THE EXTERNAL ENVIRONMENT
Business and Profit
• Businesses: organizations that provide goods or services that are then sold to earn profits
• Profit: the difference between a business's revenues and its expenses
○ What encourages people to open and expand their businesses
○ The rewards owners get for risking their money and time
○ The right to pursue profits distinguishes a business from organizations such as universities, hospitals, and gov't agencies
• Consumer choice and demand
○ Consumers have a freedom of choice
○ Businesses must take into account what customers want/need in order to pursue profits
• Opportunity and enterprise
○ If enterprising business ppl can spot a promising opportunity and then develop a good plan for capitalizing on it, they can succeed
○ Ex. Although large retailers such as Circuit City and Linens-N-Things closed their doors in 2009, other firms profited from these closings by handling the inventory liquidation of those failed retailers
○ In general, business opportunity involves goods or services that consumers need or want - esp. if no one else is supplying them or if existing businesses are doing so inefficiently or incompletely
• The benefits of businesses
○ Produce most of the goods and services we consume
○ Employ most working people
○ Create most innovations and provide a vast range of opportunities for new businesses, which serve as their suppliers
○ A healthy business climate contributes to the quality of life and standard of living of people in a society
○ Business profits enhance the personal incomes of millions of owners and stockholders
○ Business taxes help to support gov'ts at all levels
○ Some businesses harm the earth's environment
The External Environments of Business
• External environment: consists of everything outside an organization's boundaries that might affect it
○ External environment
...