BUSINESS

ESSENTIALS

EBERT AND GRIFFIN

PART 1: BIZ WORLD

1. Business Environment

2. Business Ethics and Social

Responsibility

3. Entrepreneurship, New Ventures

and Business Ownership

4. The Global Context of Business

BUSINESS

ENVIRONMENT

BIZ ENVIRONMENT

1. The Concept of Business and Profit

2. The External Environment of Business

3. Economic Systems

4. Economic and Market Systems

5. Economic Indicators

THE CONCEPT OF

BUSINESS

Business: organization that provides goods or

services to earn profit

Consumer choice: consumers have freedom of

choice. In choosing how to pursue profits, businesses

must take into account what consumers want and/or

need.

Opportunity: If enterprising business people can spot

a promising opportunity and then develop a good plan

for capitalizing on it, they can succeed.

EXTERNAL

ENVIRONMENTS

Domestic business environment: the environment in

which a firm conducts its operations and derives its

revenue.

Global business environment: international forces

that affect a business, i.e. international trade

agreements, international economic conditions,

political unrest, and so forth.

Technological environment includes all the ways by

which firm create value for their constituents.

EXTERNAL

ENVIRONMENTS

Political-legal environment: reflects the relationship

between business and government, usually in the form

of government regulation of business.

Sociocultural environment: includes the customs,

mores, values, and demographic characteristics of the

society in which an organization functions.

Economic environment: refers to relevant conditions

that exist in the economic system in which a company

operates.

ECONOMIC SYSTEMS

Economic systems is a nations system for allocating its resources among its citizens, both individuals and

organizations.

A basic difference between economic systems is

the way a system manages its factor production, i.e.

labor and capital.

Entrepreneurs is person who accept the risk and

opportunities entailed in creating and operating a new

business.

ECONOMIC SYSTEMS

Physical resources: tangible things that organization

use to conduct their business.

Information resources: the production of tangible

goods once dominated most economic system.

TYPES OF ECONOMIC

SYSTEMS

Planned economy relies on a centralized government

to control all or most factors of production and to make

all or most production and allocation decision. There

are two basic forms: communism and socialism.

In communism, government owns and operates all

factors of production. Government would assign

people to jobs, it would also own all business and

control business decisions.

Mixed market economy featuring characteristics of

both planned and market economies

TYPES OF ECONOMIC

SYSTEMS

Market economies allow individuals control

production and allocation decision through supply and

demand.

Market is mechanism for exchange between buyers

and sellers of a particular good or service.

When government is making a change from a planned

economy to a market economy, it usually begins to

adopt market mechanism through privatization the process of converting government enterprises into

private owned companies.

TYPES OF ECONOMIC

SYSTEMS

In partial planned system called socialism, the

government owns and operates selected major

industries.

In mixed market economies, the government may

control banking, transportation, or industries producing

such basic goods as oil and steel. Smaller business,

such as clothing stores and restaurant, are privately

owned.

MARKET SYSTEMS

Market price (equilibrium price): profit-maximizing

price at which the quantity of goods demanded and the

quantity of good supplied are equal.

Demand and supply schedule: assessment of the

relationship among different levals of demand and

supply at different price levels.

DEGREE OF

COMPETITION

Perfect

Competition

Monopolistic

Competition

Oligopoly Monopoly

Number of

competitors

many Many but

fewer than in

Perfect Com

Few None

Entry level easy Fairly easy difficult Regulated

Products identical similar Can be

similar or

different

No

competing

poducts

Level of

price control

Price taker Some Some Price maker

ECONOMIC

INDICATORS

A statistic that helps assess the performance of an

economy.

Business cycle: short-term pattern of economic

expansion and contractions.

Standard of living: total quantity and quality of goods

and services people can purchase with the currency

used in their economic system.

Gross Domestic Product (GDP) is total value of all

goods and services produced within a given period by

a national economy through domestic factors of

production.

WORLD ECONOMIC

GROWTH

GDP GROWTH 2014

GDP PER CAPITA

INCOME PER CAPITA

INDONESIA RICHEST

WORLD

DEVELOPMENT INDEX

HAPPINESS INDEX

THE BIGGEST

COMPANIES