A business provides goods and/or services with the main goal of making profit.

Profit is the
difference between revenue and expenses. The person who risks time and money to manage
and start a business is named an entrepreneur. Entrepreneurs might risk losing time and
money on a business. The reward of taking risk is profit. On the contrary, if the company has
done not so well, this occurs in a loss (expenses>revenues).

Secondly, there is another type of organization, called a non-profit organization. It´s goal is
not making a personal profit for its owners or organizers. Besides the entrepreneur, the
stakeholders have a great interest in the development and profit of the company as well.
Stakeholders are for example; customers, employees, stockholders and bankers. The
challenge is to balance the needs of the stakeholders as best as possible. A decision of
management can be ‘outsourcing’. This means that several functions are assigned outside
organizations. This can be an example for conflict between stakeholders and management in
a company (employment versus maximum profit).

The quality of life is the general well-being of a society in terms of education, health care,
safety and political freedom. The standard of living is the amount of goods and services
people can buy with the money they own. These are important factors which can create
satisfaction/joy and determine the level of quality in your life.

Running a business can increase the standard of living as well as the quality of life. First of
all, businesses can increase the level of wealth/quality in life because they provide
employment for people. Secondly, tax is being paid by employees as well as by businesses.
The government uses this money to build hospitals and for example schools. The wealth that
businesses generate and the taxes that they pay, may help everyone in their communities.
Which can lead to an increased quality of life.

Several factors of production are considered as the “building stones” of a company:

 Land: Natural resources

The business environment consists of surrounding factors that either develop or hinder
business:

1. The global business environment: The global business environment is very important
because it surrounds all other environmental influences (economic and legal etc). Two
major environmental changes in the last years have been the increase of free trade
among nations and the growth of international competition.
2. Economic and legal environment: The government can influence the level of risk of
starting a business and can therefore increase entrepreneurship and wealth in a
country. This is done by: keep taxes and regulations to a minimum, allow private
ownership establish a tradable currency, eliminate corruption establish laws that
enable people to create contracts that are enforceable in court
3. Technological environment: good technology has to be available and easily
accessible. The use of internet, bar codes or databases can improve productivity
 significantly. On top of that, using technology can increase your responsiveness to
customers. For example, bar codes can be used to display what products a consumer
bought. This information is inserted in a database. A database is an electric storage
file where information is kept about customers and their past purchases. Companies
trade database information to know what the local population wants.
4. Social environment: Business have to respond to demographic changes because they
can affect business and can lead to new opportunities and threats. On top of that,
businesses have to hire a diverse workforce which represents the diversity of the
customers and what they want. Finally, the changing situations of families have a
major effect on businesses as well. If you are a single parent, for example, it cost a lot
of effort to work full-time and raise a family. Therefore, businesses have to take such
thing into account and offer special programs.
5. Competitive environment:  If a business wants to stay competitive, it has to meet
stakeholders’ and employees’ wishes. On top of that, it is important that the products
or services exceed customers’ expectations. These days, an important goal for many
companies is offering high quality products at competitive prices with excellent
customer service. Restructuring the organization and emphasizing on empowerment
of frontline workers is also a part of customer service. It is not allowed to make
mistakes in products (zero defects).

To meet the needs of customers, empowerment can be used. Empowerment is that you give
employees more freedom, authority and responsibility to do their work. E-commerce is
purchasing and selling of goods and services over the internet. It can be divided in two major
types of transactions; Business-to-consumer(B2C) and Business-two-business (B2B).

Technology is everything that makes business processes more effective, efficient and
productive. That are for example software programs, phones and computers. You reach the
highest efficiency if you use the least amounts of recourses, when producing goods and
services. Effectiveness is producing the desired result that you wanted to have. The third
factor, productivity is the amount of output you generate, given the amount of input.
Goods are concrete products (which you can touch) such as a bike or for example pizza.
However, services are intangible. Examples of services are education or treatment in a
hospital.