1 Business in a Changing World Chapter

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Business in a Changing World Chapter 1 The Dynamics of Business and Economics Mc.

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Crocs focuses on core competencies Market opportunities, timing, and circumstances 1 -

The Nature of Business What is a business? Individuals or organizations trying to earn a profit by providing products that satisfy people's needs. 1 -

The Nature of Business What is a product? A good or service with tangible and intangible characteristics that provide satisfaction and benefits 1 -

Products Tangible Goods & Services Tangible Goods Services Automobile Computer Loaf of bread Television Dry cleaning Photo processing Checkup at doctor’s Movie star performance 1 -7

The Primary Goal of Business Earn a Profit The difference between what it costs to make and sell a product and what a customer pays for it. 1 -

The Primary Goal of Business PROFIT -The reward for the risks that businesses take in providing products. 1 -

Non-Profit Organizations Not all organizations are businesses. Nonprofit organizations provide goods and services but do not have the fundamental purpose of earning profits. 1 -

Maintaining Profitability Quality products Efficient operations Management skills • Planning • Organizing • Controlling • Leading Profitability Marketing Expertise • Products • Price • Promotion • Distribution Social responsibility Business ethics 1 -11

Stakeholders Customers, employees, investors, government regulators, community and society. Those that have a stake in the success and outcomes of a business are considered stakeholders. 1 -12

Stakeholders & the Environmentally Friendly Practices • Hewlett-Packard • Cummins, Inc. • Diversity Pipeline Alliance • Home Depot • U-Haul 1 -

The People & Activities of Business 1 -14

The People & Activities of Business Management – Focus on employees • Coordinating employee’s actions • Organizing people for efficiency • Motivating employees toward business goals . 1 -

The People & Activities of Business Management – Production and Manufacturing • Plan activities • Organize staff • Control tasks . 1 -

The People & Activities of Business Marketing – Focus on satisfying customers • Determine what products customers want • Plan and develop products • Determine distribution • Determine place • Determine promotion 1 -

The People & Activities of Business Marketing & Promotion • Advertising • Personal selling • Sales promotion • Publicity 1 -

The People & Activities of Business Finance – Primary responsibility of owners • Obtaining money • Using money effectively • Accountants, stockbrokers, bankers 1 -

Why Study Business • Develop Skills for career success • Understand business activities • Importance of profitability • Individual businesses • Local and regional economic impact • Global economic impact 1 -

Why Study Business impact • Purchase raw materials • Hire employees • Attract capital • Create products • Fuel the global economy • Contribute to society 1 -

The Economic Foundations of Business Distribution of resources for the production of goods and services within a social system. Resources - • Natural resources (land, forests, minerals, water) • Human resources (labor) • Financial resources (capital) 1 -

Factors of Production -Natural, human, and financial resources used to produce goods and services -1 -23

Economic Systems How a society distributes its resources to produce goods and services Central issue of economics – • How to fulfill an unlimited demand for goods and services with a limited supply of resources 1 -

Economic Systems How a society distributes its resources to produce goods and services Three Important questions – 1. What types and quantities of goods/services will satisfy consumer needs? 2. How will goods/services be produced? By whom? With what resources? 3. How are goods/services distributed to consumers? 1 -

Comparison of Communism, Socialism, and Capitalism 1 -26

Economic Systems Communism A society in which the people without regard to class, own all the nation’s resources. • China • North Korea • Cuba 1 -

Economic Systems Socialism System in which the government owns and operates basic industries but individuals own most businesses. • Sweden • India • Israel 1 -

Economic Systems Capitalism Free Enterprise – individuals own and operate majority of businesses providing goods and services • United States • Japan • Australia • Canada 1 -

Economic Systems Pure Capitalism Modified Capitalism Free Market -- All economic decisions made without government intervention (pure capitalism) Government intervenes and regulates business to some extent (modified capitalism) 1 -

Economic Systems Mixed Economies No country practices pure capitalism or pure socialism/communism. Economic systems contain various elements of government intervention 1 -

Supply & Demand Distribution of resources and products determined by supply and demand Demand -- number of goods/services consumers buy at given price at a specific time Supply -- number of products businesses will sell at different prices at a specific time 1 -

Forces of Supply & Demand Price at which number of products supplied equal amount of products consumers are willing to buy at a specific time = equilibrium price 1 -33

Nature of Competition Rivalry among businesses for consumers’ dollars. Pure competition – many small businesses in same product market Monopolistic competition – small number of businesses little difference in products Oligopoly– very few businesses selling a product 1 -

Economic Cycles and Productivity Expansion and Contraction Economic Expansion – economy is growing and consumers are spending money Economic Contraction – spending declines, layoffs, economy slows down 1 -

Economic Cycles • Inflation– condition characterized by continuing rise in prices • Recession– decline in production, employment, and income • Unemployment– % population wants to work but unable to find jobs • Depression– unemployment very high; consumer spending low; business output sharply reduced 1 -

Overall Unemployment Rate U. S. Civilian Labor Force 1920 - 2007 1 -37

Measuring the Economy • Gross Domestic Product (GDP) 1 -

Evaluating Our Nation’s Economy 1 -39

Entrepreneurship Risk, innovation, creativity, reward Bill Gates Michael Dell Frederick Smith Ben & Jerry’s Sam Walton 1 -

Ethics & Social Responsibility Business reputation depends on profit AND ethical conduct and responsibility Enron MCI World. Com Emission Standards Global Warming Going “Green” 1 -