People Form the Core of Business

The human element is the core of business. Business needs people as owners, managers, employees, and consumers. People need business for the production of goods and services and the creation of jobs. Whether business is transacted in Mexico, Canada, or Nigeria does not matter. Businesses may be operated differently and the objectives of businesses may differ, but the universal element in all business activities is people

Owners

People who own a business, as well as those who invest money in one, do so because they expect to earn a profit. Most of the giant corporations, such as General Motors, Eastman Kodak, Dow Chemical, Du Pont, and Exxon, are owned by large numbers of people. General Motors has over 1.2 million shareholders (owners) and 820,000 employees. When making decisions, the professional managers in business organizations need to consider the owners and what they expect from the business.

Managers

The person responsible for operating the business may be the owner (an owner- manager, also called an entrepreneur) or a professional manager employed by the owner. Both types of managers seek to achieve profit, growth, survival, and social responsibility.

The owner-manager sets his or her own objectives, whereas a professional manager attempts to achieve objectives set by others. The professional manager is accountable to the owners of the business, who judge the manager’s performance by how well their objectives have been accomplished over a period of time.

Many of these business owners are entrepreneurs, people, who take the risks necessary to organize and manage a business and receive the financial profits and nonmonetary rewards. The entrepreneur is expected to be innovative, practical, and strong willed. This view was actually established years ago by noted Austrian economist Joseph Schumpeter. He stated: “The function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, opening a new source of supply of materials or a new outlet for products, by recognizing a new industry”.

Employees

Employees supply the skills and abilities needed to provide a product or service and to earn a profit. Most employees expect to receive an equitable wage or salary and to be given gradual increases in the amount they are paid for the use of their skills and abilities. To compete with other businesses, a business enterprise needs a committed and effective team of employees.

Consumers

In the international marketplace the target of business activity is consumers. A consumer is a person or business who purchases a good or service for personal or organizational use. Consumers in economic system such as those in Japan, Germany, Canada, and the United States want more and better products and services. They want better automobiles, better homes, more luxuries, and better leisure equipment. They want to pay a fair price for the goods and services they purchase to be reliable.

A business enterprise attempts to satisfy consumer needs and desires while earning a profit. To do so, businesses must determine what those consumer needs and desires are. Because consumers continually want more and better things, new businesses are formed, and other businesses make adjustments to accommodate the demand. When a need or desire for products or services exists, a business can earn a profit by supplying it promptly and efficiently. The uncertainty and risk involved in assessing consumer needs and wants provide a challenge to the business decision maker attempting to earn a profit.

Reading tasks

A. Understanding main points. Answer these questions:

1. What is the universal element in all business activities?

2. Why do people need business?

3. Why do people invest money in business?

4. How many people can be owners of a business?

5. Who is responsible for operating the business?

6. What qualities should the entrepreneur possess?

7. What are employees expected to do?

8. Who is the target of business activity?

Date: 2016-04-22; view: 1195