BA 1301 Business Principles PDF

Week 1 BA 1301 Business Principles Chapter 1: The Dynamics of Business and Economics Prof. Flores © McGraw Hill, LLC 1  Because learning changes everything. ® Chapt...

Week 1 BA 1301 Business Principles Chapter 1: The Dynamics of Business and Economics Prof. Flores © McGraw Hill, LLC 1  Because learning changes everything. ® Chapter 1 The Dynamics of Business and Economics © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.  The Nature of Business 1 Businesses—Individuals or organizations who try to earn a profit by providing products that satisfy people’s needs. Products include: Tangible goods. Automobile, smartphone, jeans. Service. Dry cleaning, telemedicine visit, movie, sports event. Idea. Accountants, attorneys. © McGraw Hill, LLC 3  The Nature of Business 2 The Goal of a Business Goal is to earn a profit. While maintaining social responsibility. Business has to pay for all expenses necessary to operate. Nonprofit organizations. Do not share the purpose of earning profits. May provide goods or services. Engage in fund-raising. Engage in management, marketing, and finance to reach goals. Stakeholders—Groups that have a stake in the success and outcomes of a business. © McGraw Hill, LLC 4  The Nature of Business 3 The People and Activities of Business Management. Planning, organizing, leading, and controlling. Marketing. Focus of all marketing activities is satisfying customers. Finance. Refers to all activities concerned with obtaining money and using it effectively. © McGraw Hill, LLC 5  Figure 1.1 Overview of the Business World Access the text alternative for slide images. © McGraw Hill, LLC 6  The Nature of Business 4 Why Study Business? Develop skills and acquire knowledge to prepare for your future career. Understand activities needed to provide goods and services. Become a well-informed consumer and member of society. © McGraw Hill, LLC 7  The Economic Foundations of Business 1 Economics—The study of how resources are distributed for the production of goods and services within a social system. Resources. Natural resources. Human resources (labor). Financial resources (capital). Intangible resources. © McGraw Hill, LLC 8  The Economic Foundations of Business 2 Economic Systems—A description of how a particular society distributes its resources to produce goods and services. Communism. Socialism. Capitalism (free enterprise). Pure capitalism (free-market system). Modified capitalism. Mixed economies. © McGraw Hill, LLC 9  Table 1.1 Comparison of Communism, Socialism, and Capitalism 1 Topic Communism Socialism Capitalism Business Most businesses The government Individuals own ownership are owned and owns and operates and operate all operated by the some basic businesses. government. industries; individuals own businesses. Competition Government Restricted in basic Encouraged by controls industries; market forces and competition and encouraged in other government the economy. business. regulations. Profits Excess income Profits earned by Individuals and goes to the businesses may be businesses are government. The reinvested in the free to keep profits government business; profits from after paying taxes. supports social government-owned and economic industries go to the institutions. government. © McGraw Hill, LLC 10  Table 1.1 Comparison of Communism, Socialism, and Capitalism 2 Topic Communism Socialism Capitalism Product Consumers have Consumers have Consumers have a availability and a limited choice of some choice of wide choice of goods price goods and goods and and services; prices services; prices services; prices are determined by are usually high. are determined supply and demand. by supply and demand. Employment Little choice in More choice of Unlimited choice of options choosing a career; careers; many careers. most people work people work in for government- government owned industries jobs. or farms. © McGraw Hill, LLC 11  The Economic Foundations of Business 3 The Free-Enterprise System Many large economies are free-enterprise, such as U.S., Canada, and Japan. Many communist and socialist countries apply free- enterprise principles, such as China and Russia. Allows a company to succeed or fail on the basis of market demand. © McGraw Hill, LLC 12  The Economic Foundations of Business 4 The Free-Enterprise System Continued Basic individual and business rights must exist for free enterprise to work. Right to own property. Right to earn profits and use them as one wishes. Right to determine business operations. Right to choose a career, where to live or locate a business, what goods/services to purchase, and more. © McGraw Hill, LLC 13  The Economic Foundations of Business 5 The Forces of Supply and Demand Demand—The number of goods and services that consumers are willing to buy at different prices at a specific time. Supply—The number of products that businesses are willing to sell at different prices at a specific time. Equilibrium price—the price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time. © McGraw Hill, LLC 14  The Economic Foundations of Business 6 The Nature of Competition Competition—the rivalry among businesses for consumers’ dollars. Four types of competitive environments: Pure competition. Monopolistic competition. Oligopoly. Monopoly. © McGraw Hill, LLC 15  The Economic Foundations of Business 7 Economic Cycles and Productivity Economic expansion. Inflation—a condition characterized by a continuing rise in prices. Economic contraction. Recession—a decline in production, employment and income. Unemployment—a percentage of the population wants to work but is unable to find jobs. Depression—unemployment is very high, consumer spending is low, and business output is sharply reduced. © McGraw Hill, LLC 16  Figure 1.3 Annual Average Unemployment Rate, Civilian Labor Force, 16 Years and Over Sources: Bureau of Labor Statistics, “Labor Force Statistics from the Current Population Survey,” http://data.bls.gov/timeseries/LNS14000000 (accessed July 20, 2021). Access the text alternative for these images. © McGraw Hill, LLC 17  The Economic Foundations of Business 8 Economic Cycles and Productivity Continued Measuring the economy. Gross domestic product (GDP)—the sum of all goods and services produced in a country during a year. Budget deficit—the condition in which a nation spends more than it takes in from taxes. © McGraw Hill, LLC 18  Figure 1.4 Change in U.S. Gross Domestic Product Source: U.S. Department of Commerce Bureau of Economic Analysis, “National Economic Accounts,” www.bea.gov/national/index.htm#gdp (accessed July 20, 2021). Access the text alternative for these images. © McGraw Hill, LLC 19  Table 1.2 How Do We Evaluate Our Nation’s Economy? Unit of Measure Description Trade balance The difference between our exports and our imports. If the balance is negative, as it has been since the mid-1980s, it is called a trade deficit and is generally viewed as unhealthy for our economy. Consumer Price Measures changes in prices of goods and services purchased for Index consumption by typical urban households. Per capita income Indicates the income level of “average” Americans. Useful in determining how much “average” consumers spend and how much money Americans are earning. Unemployment rate Indicates how many working-age Americans are not working who otherwise want to work. Inflation Monitors price increases in consumer goods and services over specified periods of time. Used to determine if costs of goods and services are exceeding worker compensation over time. Worker productivity The amount of goods and services produced for each hour worked. © McGraw Hill, LLC 20  The American Economy 1 United States economy Mixed economy. Foundation based on capitalism. Standard of living—the level of wealth and material comfort that people have available to them. © McGraw Hill, LLC 21  The American Economy 2 The Importance of the American Economy Open economy—an economy in which economic activities occur between the country and the international community. Economy assessed on several factors. Growth in GDP and jobs. Government public policy. Tax revenue from individuals and businesses. © McGraw Hill, LLC 22  The American Economy 3 A Brief History of the American Economy The early economy. The Industrial Revolution. The manufacturing and marketing economies. The service and new digital economy. © McGraw Hill, LLC 23  The American Economy 4 Technology and the Economy Technology—includes the methods and processes creating applications to solve problems, perform tasks and make decisions. Artificial intelligence (AI). Big data. Blockchain. Drones. © McGraw Hill, LLC 24  Figure 1.5 AI in Relation to Its Enablers Access the text alternative for these images. © McGraw Hill, LLC 25  The American Economy 5 The Role of the Entrepreneur Entrepreneurs—an individual who risks money, time, and effort to develop for profit an innovative product or way of doing something. Let the free-enterprise system help them to succeed. Change business practices through new technology and innovative management techniques. © McGraw Hill, LLC 26  Mobile Payment Systems Apple Pay is a mobile payment system that allows users to store their credit card or debit card information. When checking out at stores, users can bring up their credit card with two taps and use the information to pay for their purchases. Access the text alternative for these images. © McGraw Hill, LLC ©How Hwee Young/Epa/REX/Shutterstock 27  The American Economy 6 The Role of Government in the American Economy Best described as modified capitalism. Regulate business to preserve competition and protect consumers through laws and regulations. Intervene occasionally to regulate economy and spur growth. © McGraw Hill, LLC 28  The American Economy 7 The Role of Ethics and Social Responsibility in Business Promote public confidence in corporate America. Foster business ethics. Encourage socially responsible behavior. Push for diversity in workforce. Enhance reputation and drive profits. © McGraw Hill, LLC 29