Introduction to Business Concepts

What is Business?

• Profit-seeking activities and enterprises provide goods and services necessary for an economic system.
• Businesses can offer tangible goods, services, or a combination of both.
• Examples of tangible goods: Apple Computers
• Examples of services: Healthcare
• Examples of a combination of goods and services: Car dealerships

Participants of Business

• A buyer and a seller are involved in an exchange.
• Other business participants include owners, employees, and customers.

Business Targets

• Profits are the rewards earned by businesspeople who take risks.
• Profits provide an incentive to start and expand businesses.
• Businesses should consider social goals including people, profit, and the planet.

Not-for-Profit Organizations

• Nonprofit organizations have primary objectives other than returning profits to owners.
• Nonprofits focus on social and environmental goals.
• Nonprofits operate as tax-exempt entities.
• Managers of nonprofits need strong business skills and experience.
• Nonprofits can be public (e.g., government agencies) or private (e.g., museums).

Functional Areas of Business

• Management: Coordinating and overseeing resources to achieve organizational goals.
  • Management responsibilities include planning, organizing, staffing, directing, and controlling.
• Operations: Transforming resources (land, labor, capital, entrepreneurship) into final products.
  • Operations can produce tangible goods (e.g., iPhones) or intangible services (e.g., healthcare).
• Marketing: Identifying and satisfying customer needs.
  • Marketing focuses on product features, pricing, quality, delivery methods, and promotion.
  • Marketing aims to build relationships with customers.
• Accounting: Measuring, summarizing, and communicating financial and managerial information.
  • Financial accounting produces financial statements for internal and external users to assess company strength.
  • Managerial accounting provides information for internal use only.
• Finance: Planning for, obtaining, and managing a company's funds.
  • Finance addresses questions like how much money the company needs, where it will get the funds, how and when it will repay loans, and how to use its funds.

External Forces Influencing Business

• Economy: Economic conditions directly impact businesses.
• Government: Government regulations, taxes, and policies influence business operations.
• Consumer Trends: Shifts in consumer preferences and demands affect business decisions.
• Corporate Citizen Pressure: Businesses are increasingly expected to act responsibly towards society and the environment.

Economic Environment

• Economics: Studies the production, resource allocation, distribution, and consumption of goods and services.
• Factors of Production: Inputs required for economic activity:
  • Land: Natural resources, including land itself.
  • Labor: Physical and intellectual contributions of workers.
  • Capital: Technology, machinery, tools, facilities, and financial resources.
  • Entrepreneurial Skills: Skills and creativity in coordinating resources and taking risks.

Factors of Production in Action

• Shirt Production:

  • Land: Land used for the factory, electricity, and cotton
  • Labor: Workers involved in the production
  • Capital: Factory, equipment, and the money invested
  • Entrepreneurship: Coordination of all factors to produce the shirt

• Innovation with Factors of Production:

  • Netflix: Leveraged technology to shift from a DVD-by-mail service to streaming.
  • Walmart: Invested in drone technology for internal product transportation.

Factor of Production and Corresponding Payment

• Land: Rent
• Labor: Wages
• Capital: Interest
• Entrepreneurship: Profit

Current Business Workforce Trends

• Knowledge Economy: Focus on employees' intellectual capabilities rather than physical inputs.
• Integration of Technology: Machines and Artificial Intelligence are increasingly integrated into the workplace.

Changes in the Workforce

• Aging Population and Shrinking Labor Pool:
  • Multi-generational workforce with varying work styles, expectations, and technology skills.
  • Labor shortages are projected as Baby Boomers retire.
  • Knowledge workers with advanced technical skills are in high demand.
• Increasingly Diverse Workforce:
  • Diversity in terms of gender, age, ethnicity, culture, religion, and abilities.
  • Globalization and migration contribute to workforce diversity.
  • Diversity and inclusion are crucial for innovation and creativity and must be reflected in workplace policies and leadership positions.
• Outsourcing and the Changing Nature of Work:
  • Service sector relies heavily on skilled employees with knowledge, problem-solving abilities, and communication skills.
  • Outsourcing: Using external vendors for goods or services previously handled internally due to competitive pressures.
  • Offshoring: Relocating production or services to lower-cost locations overseas.
  • Nearshoring: Outsourcing production or services closer to a company's home base or customers for intellectual property protection and to support the local job market.
• Need for Flexibility and Mobility:
  • Millennials, the largest demographic group, prioritize training, flexibility, diversity, inclusion, and positive work relationships and are willing to work remotely.
  • Rise of freelancing, contract work, and technology-enabled online collaboration.
  • Employees seek exciting work opportunities, trusting relationships, and control over their schedules and work environment.
• Innovation through Collaboration:
  • Team structures encourage collaboration, creativity, and diverse skill sets.
  • Technology enables global collaborations and reduces the importance of a physical office space.
  • Crowdsourcing leverages information, opinions, and work from a diverse group of individuals, often through online platforms.

Today’s Manager

• Today's managers must adapt to a changing workforce and globalized business environment.
• They are responsible for leading and motivating a diverse team, leveraging technology, and navigating complex economic and social challenges.
• Managers must be knowledgeable about various functional areas of business and possess strong communication, problem-solving, and decision-making skills.

This quiz explores fundamental concepts of business, including profit-seeking activities, goods and services, and participants in business exchanges. It also discusses the goals of businesses and the role of not-for-profit organizations in society. Test your knowledge on these essential topics!