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Chapter One: The World of Business and its Environments

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Learning Outcomes

1. Define and explain business and its basic terms.

2. Explain the evolution of business in the United States.

3. Describe different classifications of business.4. Describe the five elements of the business

environment.5. Understand your options in the world of

business in the future.

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Types of Businesses

Business – Definition Defining Business

Wealth Opportunity Entrepreneurs

Profit, Revenue, Loss, Risk and Reward Definitions Standard of Living

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Evolution of American Business

Progress in the Agricultural and Manufacturing Industries Strong economic development Agriculture Manufacturing industry

Outsourcing – define

Progress in Service Industries Employment – shift from manufacturing to service More high-paying jobs

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Defining Business

Business can be classified according to Size Profit-motive Manufacturing versus service (sector) Let’s discuss each in detail…

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Business Classifications

By Size No concrete measures, but usually the

number of employees is a good measureLarge BusinessSmall to Medium Size (SME)Microenterprises

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Business Classifications

By Profit Motive Non-Profit Organization

Goals do not include making a personal profit

Stakeholders Anyone who cares about the success

of a business (customers, suppliers)

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Business Classifications

Manufacturing and Service Manufacturing firms produce a

tangible product Service products are intangible

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The Business Environment

The Business Environment: Can help or hinder success Understanding these factors is

important Reading is key to understanding these

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The Business Environment

Economic and Legal

Technological Competitive Social Global

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The Economic and Legal Environment

Business has to work within laws and the economic environment

Conditions such as fear of losing jobs and not having enough will cause people to spend less Of course, this affects all business!

Return on Investment Money gained from taking a business venture risk

Businesses operate within framework of legal and regulatory forces

Businesspeople benefit from awareness of current laws.

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The Economic and Legal Environment

What Can Government Do? Allow private ownership Pass laws that enable people to write enforceable

contracts Uniform Commercial Code (UCC)

Covers things like contracts and warranties

Tradable currency Laws to minimize corruption and illegal activities

Ethical lapses

Capitalist system

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The Technological Environment

Business have always been affected Information Technology (IT) Increased Productivity

Technology Effectiveness Efficiency Resources Productivity Greater Profit

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The Technological Environment

Making Buying and Selling easier E-Commerce

Business-to-Customer (B2C) Business-to-Business (B2B)

Success through quality and service Responsiveness to Customers

Use of technology Uniform Product Code (UPC)

Databases Social Networking as communications tool

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The Competitive Environment

Value Companies must be competitive based on the

value Awareness of what competitors are doing Constantly improve products and processes

Customer-Driven Organizations Companies that offer high value to customers Employee empowerment is a factor

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The Social Environment

Diversity Increase in minority owners and employees Business concerned about diverse

workforce and customer base Boomers, Generations X and Y

Aging consumers Baby Boomers growing older Catering to Baby Boomers

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The Social Environment

Dual Incomes Result of dual income trend Cafeteria-style benefits Part-time work

Single parents Work-life balance

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The Global Environment

Two important changes Growth of international competition Increased free trade

All business compete in global marketplace

How wars and terrorism affect the way business is done

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Stakeholders

All the people and organizations that stand to gain or lose from the activities of a business

Competitors Individuals or businesses that offer similar

products or services and contending for the same customers

Companies need to offer value

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Stakeholders

Customers Individual or business that is going to

purchase Customer-driven organizations

High quality High value

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Stakeholders

Suppliers Individuals or companies that produce

products Distributors

Individuals or companies that sell the products or services for another company

Special Interest Groups A group of people with a common interest

to promote change

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Stakeholders

Employees A company’s biggest asset Empowerment as a way to motivate and keep

employees Culture

The overall environment of a company that sets it apart from other companies

Owners Stakeholder vs. Shareholder

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Your Future in Business

Entrepreneurship vs. Working for Others Two ways to succeed:

Working for other businesses Entrepreneurial challenge

Creation of wealth Five factors What makes countries rich?

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Your Future in Business

Working for a Non-Profit Organization or Government Agency Businesses can’t do everything for communities Social entrepreneur Government agency Business concepts applicable

Why study business? Business major or not: concepts still apply!

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