Page 4 - Technology Education

cte_ch05.fm Page 103 Wednesday, September 26, 2007 3:13 AM

Capital ENGAGE
Using the example of “Resources for
Capital is another of the seven technological resources. To Running” on page 101, discuss with
build houses or factories, to make toasters or automobiles, to students what might happen to run-
move people or goods, capital is needed. Any form of wealth ning shoe manufacturing if each
resource, in turn, were not available.
is capital. Cash, stock, buildings, machinery, and land are all As an example, if manufacturing
forms of capital (Figure 5.2). information was inadequate, would
it be possible to manufacture the
A company needs capital to operate. To raise capital, a
shoes? Ask students, “Why not?
company may sell stock, which allows people to own a small What might happen if manufacturers
piece of that company. Each share of stock has a certain did not know enough? Has this situ-
ation ever occurred in industry
value. When people buy stock in a company, their money is before?”
then used to operate or expand the business. These inves-
tors become part owners (shareholders) in the company.
Shareholders hope that the company will do well and that
their stock will become more valuable. When a company has
done well, it may turn back some of its profits to investors in
the form of payments called dividends.
Companies also borrow money from banks, for which the
banks charge a fee, or interest. This means that the
amount of money that will have to be paid back is more than
the amount borrowed. A company borrows money with the
hope that profits will pay for both the loan and the interest.
Another reason that capital is such an important resource
is that companies use it to pay their employees, the people
who not only come up with new ideas but also produce and
manufacture the products that are based on those ideas.
Capital is often directed to the development of new technol-
ogy in order to help a company increase its business.

Figure 5.2 Capital resources,
such as cash, are necessary for
any technological project.
Applying How might insuffi-
cient capital affect the schedule for
a project?

People, Capital, Time, and Information 103