Page 46 - Introduction to Business

20 PART 1 The Nature of Contemporary Business

entrepreneurs People with initiative of labor. We have engineers and scientists in various disciplines who constantly
who seize opportunities as they see work on enhancing and inventing new technologies that can be used for improving
them to get things done or make things
happen, generally for profit business processes. We have entrepreneurs, people with initiative who seize oppor-
tunities as they see them to get things done or make things happen for a profit.
While an entrepreneur does not invent things, he or she exploits in novel ways what
eBay founder Pierre Omidyar and
CEO Meg Whitman are entrepre- has already been invented and brings into existence new products or services or a
neurs who are responsible for cre- new business or industry. Entrepreneurs are a class of specialized labor not unlike
ating the world’s first, largest, and engineers and scientists. Pierre Omidyar changed the face of Internet commerce in
most profitable online person-to- 1995 when he created eBay (www.ebay.com), the world’s first online marketplace.
person trading, using the auction Looking for a way to create an efficient market, he pioneered the auction format
format.
for online person-to-person trading. Entrepre-
neurs, as you can see, play an important role
in business creation and development. The
supply of human resources is generally not a
response to economic conditions, but is deter-
mined by social and biological factors. Land and
labor are generally called primary factors of pro-
duction because their supplies are not deter-
mined by the economic system; that is, neither
land nor labor is regarded as an output in the
business sense.
Capital comes in two major forms. First,
money (also called financial capital) is utilized to
start businesses and run operations (paying
salaries and buying raw materials). Sources of
money for entrepreneurs are their personal sav-
ings, loans from banks, and the issuance of
bonds (IOUs) and stocks. A second, equally
important type of capital (called capital goods
or physical capital) consists of durable goods
produced by the economy in order to produce
yet other goods. These durable goods include
machinery, construction equipment, trucks,
capital goods Finished goods like factories, computers, software, and so on, that you see every day. Unlike land and
machinery and equipment that can be labor, which are primary factors of production, capital goods are produced
used as inputs for further production of goods that can be used as inputs for the further production of more goods and
goods and services
services.
Technology makes the production process more efficient through the introduc-
tion of better and cheaper ways of getting things done (providing goods and serv-
ices). The information technology (IT) industry, for example, utilizes fiber-optic
cables or wireless telephone and broadband networks to relay data, information,
and audio and video messages within companies and across national boundaries
instantaneously. Developments in information technology and the Internet are
something unique. They are like the birth of electricity, the railroad, the telephone,
and the telegraph years ago, each of which brought about massive changes in busi-
ness and economic growth. These marvelous developments are constantly being
used by business to improve production management. Companies like SAP in
Germany and I-2 Technologies and Oracle in the United States are world famous
suppliers of software that helps improve planning, production efficiency, and inven-
tory control, thereby bringing down the cost of the final output to the customer.

reality
CH ECK What factor of production is most abundant in your state?

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