MYP 5 The Role of Business Class Summary MYP5 002-11-09-17

MYP 5 The Role of Business Class Summary MYP5 002-11-09-17

Summary ROLE OF A BUSINESS.
According to Paul Hoang, a business is a decision making organization involved in the process of using inputs to produce goods and/or to provide services. (Hoang, 2014)
According to Peter Drucker, the purpose of a business is to combine human, physical and financial resources to create goods and services in order to satisfy the needs and wants of people, organizations and governments. (Drucker, 2014)
Needs are basic necessities that an individual requires to survive, while Wants are people’s desires.  
A production process has 3 steps (Inputs are transformed by a process to get outputs). The Business Dictionary defines a production process as “mechanical or chemical steps used to create an object, usually repeated to create multiple units of the same item. Generally, involves the use of raw materials, machinery and manpower to create a product.” (Web Financial Inc., 2017)
A production process adds value. Value added is the difference between the value of inputs (cost of production) and the value of outputs (the revenue received for the goods sold). For example – cocoa beans, milk and sugar are transformed into chocolate bars. The chocolate bars sell for a higher price than the ingredients used to make them.
Outputs are products, which can be goods or services.
Products can be classified in consumer goods and capital goods (both of them are tangible). Consumer goods (sold to the general public) can be durable and non-durable. Durable goods are those that last a long time and can be used repeatedly. For example – cars, computers, home furniture, etc. Non-durable goods are those that need to be consumed shortly after their purchase as they do not last or cannot be reused. For example – fresh food, beverages, medicine and newspapers.
There are also products called services, which are not tangible. Remember, the service is not tangible, but results are tangible. For example – health care, financial services, education, etc.

Bibliography
Drucker, P. (2014). En P. Hoang, Business Management (pág. 1). Victoria: IBID Press.
Hoang, P. (2014). Business Management. Victoria: IBID Press.

Web Financial Inc. (11 de 09 de 2017). Business Dictionary. Obtenido de http://www.businessdictionary.com/definition/production-process.html

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