Question

Business: Builder of Residential Housing

Discussion Post

• For each type of business, identify the factor that you believe is most likely to limit potential output capacity.
• Suggest several ways (other than raising prices) the business can maximize the contribution margin per unit of this limiting resource. (Hint: These businesses often do implement the types of strategies you are likely to suggest. Thus, your solution to this case may explain basic characteristics of businesses that you personally have observed.)

Answer 1

Ans.(1)

Factors limiting the potential output capicity

Type of business	Factors Limiting production
Builder of Residential Housing	1. Availability of Direct labor 2. Availability of raw material

Ans.(2)

Basic characteristics of business

1. BUSINESSMAN: For the establishment of business, there must be someone to take initiative the businessman(entrepreneur) visualizes a business.

2. FINANCING: Finance, money or capital plays very important role in business. It is required by all types of business whether small or large. Without basic finance they can't move or take any step forward.

3. MANAGEMENT: Management is very important characteristic of business. Because without management the business cannot be controlled, managed and run.

4. ECONOMIC ACTIVITIES: The activities which are involved in the production or distribution of goods and services for with economic motive are a part of a business. But production made for manufacturer own use is not include in business.

5. PROFIT MOTIVE: Profit is a driving force in any business activity. Businessman can seek profit from business and avoid from loss.

6. ELEMENT OF RISK: There is an element of risk and uncertainty involved in every business. If a firm is not able to control or minimize the risk involved in business it suffers losses.

7. REGULARITY: There must be a regular work of purchases and sales of goods or services. So, a single deal may generate profit but can't be treated as a business.

8. CONSUMER'S SATISFACTION: In business it is necessary to point out that what goods or services are required by the customer. The satisfaction of consumer is a main tool for earning more profit.

9. CREATION OF UTILITIES: It is very important characteristic that create those commodities which can satisfy any human need. Business creates utility which gives benefits to the entire society as well as the businessman.

10. ORGANIZATION: Every business needs as organization for successful working. A proper organization is helpful in the smooth running of business and achieving the objects.

11. UNCERTAINTY: Business activity is undertaken to earn profit, yet there is no assurance that it will definitely earn profit.

12. COMPETITION: There may be competitors in the market those are introducing same kind of products or services.

13. SALE OR TRANSFERRING: The sale of transferring of goods of services for money is necessary for business. If goods are produce and keep with him, there will be no chance of making any transaction.

14. DEALING ON GOODS OR SERVICES: Every business deals with the sale, purchase, production and exchange of goods and services for some profit.

15. PRODUCING OR PURCHASING: Business has two basic conditions that it deal in production of goods and then sale them or it deals in purchasing the final goods and resell in same conditions.

16. EMPLOYMENT OPPORTUNITIES: Business is a good source of employment for its owners or partners as well as for other people. i.e# employees, agents, brokers, transporters, etc.

17. DECREASE IN INFLATION: If there are more than one producers of the same product in the market. The prices of the commodities will be reduced.

18. NATURE: The nature of every business is not same such as some business produce the cosmetics and some manufacture the furniture.

19. SYSTEMATICALLY: Only under a well-planned system a business can make progress. It means every business needs the well-planned system. Only under a well-planned system a business can make progress.