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• Business


  An organization that converts inputs or resources such as material, labor, and overhead into outputs which are usually either goods or services
• Three major types of business

  • Service companies
  • Merchandising companies
  • Manufacturing companies
• Service companies


  Firms that generally use their employees to provide intangible products or services to customers, including professional skills, advice, expertise, and other related products. The primary source of revenues of service companies is the performance of services, often referred to as service revenues.
• Operating cycle of service companies

  1. Paying out money for employees and other operating expenses

  2. Performing the services

  3. Collecting cash payments from customers
• One advantage of service companies is the absence of inventory or tangible goods held by the company
• Merchandising companies


  Businesses that buy finished or almost finished goods from their suppliers and resell the same to customers. Merchandising companies primarily earn revenues from the sale of the goods or merchandise, also known as sales revenue or sales.
• Types of merchandising companies


  • Retailers
  • Wholesalers
• Operating cycle of merchandising companies

  1. Purchase of goods to be held for resale (inventory)

  2. Selling the inventory to customers

  3. Receiving cash payments
• Existence of a tangible product provides a leeway to merchandising companies to make customers notice their products, thereby promoting sales
• Holding inventory involves cost and this becomes a disadvantage to merchandising companies
• Manufacturing companies


  Relatively complicated organizations that create their own products. They use raw materials, components, or parts which are processed using machines, computers, and labor to produce finished goods. Manufacturers typically employ large-scale production which is done in manufacturing plants. They earn revenues primarily from the sale of manufactured products.
• Manufacturers


  • Toyota
  • Unilever
  • 3M
• Operating cycle of manufacturing companies

  1. Acquiring raw materials from suppliers

  2. Hiring factory workers

  3. Investing in technology

  4. Manufacturing the products

  5. Ensuring quality standards

  6. Shipping the products to distributors and retailers

  7. Collecting cash payments from customers
• One advantage of manufacturing one's product is quality control wherein manufacturing companies can ensure that their products meet the standards set
• Manufacturers generally need initial capital outlay to run production facilities and that requires large sum of money