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McGraw-Hill © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter One: The World of Business and its Environments
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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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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