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Foundation of Business
and Economics
4. Business Objectives
Businesses must achieve their objectives to
remain in their operation.
Business objectives can be categorized as -
A. Profit
Business Profit The difference between business
income (revenue) and business expenses (costs)
Business profit is calculated by subtracting all costs,
including taxes, from the revenue received from selling
a product or service in the marketplace.
4. Business Objectives
A. Profit
Business Profit (continued)
By conducting a number of activities, business
enterprise earns profit. These are-
4. Business Objectives
A. Profit
Business Profit (continued)
Efficient
management
4. Business Objectives
A. Profit
Economic Profit Economic profit is what
4. Business Objectives
A. Profit
Opportunity cost Example:
Mr. Anis has a part-time job that pays him Tk. 1000
per week. He would like to spend a week at the beach
during spring break, and his employer has agreed to
give him the time off, but without pay. What is the
opportunity cost here?
Ans: The Tk. 1000 in lost wages would be an
opportunity cost of taking the week off to be at the
beach.
4. Business Objectives
A. Profit
Opportunity cost Example:
Ms. Mita Chowdhury is employed with a company that
pays her a salary of Tk. 240,000 per year. She is
thinking about leaving the company and returning to
University for attending MBA classes. Since returning
to university would require that she gives up her
Tk. 240,000 salary, the foregone salary would be an
opportunity cost of seeking further education.
4. Business Objectives
B. Survival
This is an obvious objectives. Other objectives can
be attained only if the business survives.
C. Growth
Growth is an objective because the business does
not stand still. Market share increase and increased
productivity are important growth objectives.
D. Social responsibility
Businesses, like each person in society, must accept
their responsibilities in areas such as pollution
control, eliminating discriminatory practices, and
energy conservation.
5. DEFINE ECONOMICS
c. Labor resources
Labor resources represent the human talent, skills
and competence, available in a nation doctors,
operators, teachers and so on.
Without human resources, no productive use of
either natural or capital resources is possible.
Needs
Food, clothing, shelter,
medical care, etc.
Wants
Fashionable clothes,
luxury vacations,
Camcorder etc.
C. Allocation
The process of choosing how resources will be
used to meet a societys needs and wants.
6.Economic Systems
6. ECONOMIC SYSTEMS
An economic system is an accepted way of:
organizing production,
establishing the rights and
freedom of ownership,
using productive resources
and governing business transactions in a society.
6. ECONOMIC SYSTEMS
Economic Systems
Capitalism or
Free-Market System
Right to ownership
Entitled to all profits
Right to choose job
Decide what to
produce
How to produce
Whom to sell to
Mixed
Freedom to start a
business
Both state and
private owned
industries
Profits mostly in
private sector
Communism or
Planned Economy
Planned system
State owns
industries
Profits not
recognized
State decides
occupation
6. ECONOMIC SYSTEMS
Economic Systems (continued)
A. Communism/ Planned Economy
An economy in which the government owns the
productive resources, financial enterprises, retail
stores and banks
B. Capitalism/ Free Market Private enterprise
can produce almost everything
C. Mixed Economy both private and government
produce and distribute goods and services