Business Now: Change Is The Only Constant PDF

Business Now: Moving at Breakneck Speed ======================================= The Fast-Paced Business World ----------------------------- - **Change is Constant:** Industries rise and fall quickly; technology connects globally; trends emerge and fade rapidly. - **Darwin's Principle:** S...

Business Now: Moving at Breakneck Speed ======================================= The Fast-Paced Business World ----------------------------- - **Change is Constant:** Industries rise and fall quickly; technology connects globally; trends emerge and fade rapidly. - **Darwin's Principle:** Survival depends on adaptability, not strength or intelligence. Businesses must respond to change to succeed. - **Successful Firms:** - Embrace change and seek opportunities. - Avoid pitfalls and evaluate risks carefully. - Understand their market and adhere to ethical practices. - Focus on generating long-term profits by delivering customers. Key Changes in the 21st Century (2000-2020) ------------------------------------------- - **Major Events:** - **2008 Great Recession:** Economic downturn impacting global markets. - **Social Media Growth:** Explosive rise of platforms like Facebook, Instagram, and Twitter. - **\#MeToo Movement:** Increased awareness of sexual harassment and gender inequality. - **Generation Z:** Growing influence in the workplace. - **Artificial Intelligence:** Rapid advancements and integration into industries. - **Historic Tax Reform:** Changes in U.S. tax policies. - **Alibaba's Dominance:** China's online retail giant becoming a global player. The Pivot Point: 2020 --------------------- - **COVID-19 Pandemic:** - Originated in Wuhan, China (Late 2019); declared a global pandemic by WHO in 2020. - **Impacts:** - Global shutdowns, school closures, and rising death tolls. - U.S. economic expansion halted, steepest quarterly drop in economic output. - Unemployment surged; food and housing insecurity increased. - **Vaccine Development:** - Two vaccines developed by late 2020. - Logistical challenges in distribution and public trust issues. - **George Floyd's Death:** - Unarmed Black man killed by police in Minneapolis (May 2020). - Video went viral, sparking nationwide protests against racism and police violence. - Protests continued through summer 2020, fueled by other high-profile shootings. Business Responses to Systemic Racism ------------------------------------- - **Starbucks:** - Hired first Chief Inclusion and Diversity Officer (Nzinga "Zing" Shaw). - Committed \$1 million in Neighborhood Grants for racial equity and inclusive communities. - **Quaker Oats:** - Retired the Aunt Jemima brand after 130 years due to its racial stereotype origins. - Committed to aligning brands with company values and consumer expectations. - **Washington Redskins:** - Owner Dan Snyder agreed to change the team's name (a racial slur against Native Americans). - Pressure from sponsors (FedEx, Nike) influenced the decision. Key Quote --------- - **Dr. Dre:** "When the ideas are coming, I don't stop until the ideas stop because that train doesn't come along all the time." - Emphasizes the importance of seizing creative opportunities in business and innovation. Summary of Key Themes --------------------- - **Adaptability:** Businesses must respond to rapid changes to survive and thrive. - **Ethics and Inclusion:** Companies are increasingly focusing on diversity, equity, and ethical practices. - **Global Challenges:** Events like COVID-19 and social movements have reshaped the business landscape. - **Innovation:** Embracing new technologies and ideas is critical for long-term success. 1-1a Business Basics: Some Key Definitions ========================================== Definition of Business ---------------------- - **Business:** Any organization or activity that provides goods and services to earn a profit. - **Profit:** Financial reward from running a business. - Calculated as **Revenue (sales) minus Expenses** (e.g., cost of goods, salaries). - **Loss:** Occurs when expenses exceed revenue. - Example: A music label may profit from hits but incur losses from unsuccessful releases. Entrepreneurs ------------- - **Entrepreneurs:** Individuals who risk time, money, and resources to start and manage a business. - **Incentive for Entrepreneurship:** The possibility of earning a profit motivates people to launch businesses. Business Mistakes: Funny Examples --------------------------------- - **Kim Kardashian's "Kimono" Shapewear:** - Tried to trademark "kimono" for shapewear in 2019. - Backlash due to cultural insensitivity (kimono is a traditional Japanese garment). - **Instagram Swipe Bait:** - Chinese sneaker brand Kaiwei Ni created a 2017 Black Friday ad with a fake "stray hair" on the screen. - Aimed to trick users into swiping up; ad removed by Instagram for policy violations. - **McDonald's Brazil's "Socially Distant Arches":** - Separated golden arches in 2020 to promote social distancing during COVID-19. - Consumers criticized the move as tone-deaf and exploitative. Entrepreneurial Impact on the Economy ------------------------------------- - **Wealth Creation:** - Entrepreneurs create wealth for themselves and others. - Example: A successful website (like Facebook) benefit: - The founder (personal wealth). - Local businesses (spending on clubs, stores, etc.). - Employees, advertisers, contractors, and governments (taxes). - **Job Creation:** - Fast-growing firms generate **10% of all new jobs annually**. - Thousands of entrepreneurs collectively boost the economy. Broader Impact of Business -------------------------- - **Standard of Living:** - Businesses improve quality of life by: - Providing products and services. - Creating jobs. - Driving innovation (e.g., cars, TVs, tablets). - **Tax Contributions:** - Taxes fund public projects (e.g., streetlights, environmental cleanup). - **Social Responsibility:** - Socially responsible firms advocate for societal well-being, contributing to the communities that support their success. Key Takeaways ------------- - **Profit Motive:** Drives entrepreneurship and economic growth. - **Entrepreneurship Ripple Effect:** Success benefits individuals, communities, and the broader economy. - **Business Role in Society:** Enhances standard of living, fosters innovation, and supports public infrastructure through taxes. 2. The History of Business: Putting It All in Context ================================================== Overview -------- - American business has evolved dramatically over the past 200-300 years. - Business historians divide this history into **five distinct eras**, which overlap during transitions. The Five Eras of American Business ---------------------------------- - **The Industrial Revolution (Mid-1700s to Mid-1800s)** - **Key Developments:** - Technological advances drove rapid industrialization. - Mass production replaced skilled artisan workshops. - Large factories hired semi-skilled workers for specialized tasks. - **Impact:** - Unprecedented production efficiency. - Loss of individual ownership and personal pride in production. - **The Entrepreneurship Era (Late 1800s)** - **Key Developments:** - Large-scale entrepreneurs (e.g., Andrew Carnegie, Cornelius Vanderbilt, JP Morgan, John D. Rockefeller) built business empires. - Industrial titans created enormous wealth, raising the standard of living. - **Negative Effects:** - Market domination, price manipulation, worker exploitation, and environmental damage. - **Government Intervention:** - Laws passed to regulate business, protect consumers and workers, and balance the economy. - **The Production Era (Early 1900s)** - **Key Developments:** - Focus on refining production processes and increasing efficiency. - Jobs became more specialized, boosting productivity and lowering costs. - **Henry Ford's Assembly Line (1913):** Revolutionized manufacturing, becoming standard across industries. - **Customer Focus:** - Customers were initially an afterthought. - During the Great Depression and WW2, businesses adopted the "hard sell" (aggressive persuasion) to drive sales. - **The Marketing Era (Post-World War 2)** - **Key Developments:** - Power Shifted from producers to consumers; markets flooded with choices. - Businesses developed **brands** to differentiate products. - Emergence of the **marketing concept:** Consumer focus permeates all levels of a company. - **Impact:** - Continues to influence business decisions amid global competition. - **The Relationship Era (Present Day)** - **Key Developments:** - Focus on building **long-term customer relationships**. - Satisfied customers become advocates, spreading word-of-mouth. - **Lisa Masiello's Insight:** "Happy customers are your biggest advocates and can become your most successful sales team." - **Tools:** - Technology and data collection enable businesses to better serve customers. - **Profitability:** - Retaining current customers is more profitable than constantly seeking new ones. Key Innovations --------------- - **Henry Ford's Assembly Line (1913):** - Revolutionized production, enabling mass output of products like the Model T. - Became a standard in manufacturing industries. Summary of Key Themes --------------------- - **Shift in Focus:** - From production efficiency to customer-centric strategies. - **Role of Technology:** - Enabled mass production (Industrial Revolution) and customer relationship management (Relationship Era). - **Government Regulation:** - Emerged to curb abuse during the Entrepreneurship Era. - **Customer Power:** - Evolved from being ignored (Production Era) to being central (Marketing and Relationship Eras). 3. Non-profits and the Economy: The Business of Doing Good ======================================================= Definition and Purpose of Non-profits ------------------------------------- - **Non-profit Organizations:** Business-like establishments that focus on improving quality of life in areas such as: - Health - Human Services - Education - Art - Religion - Culture - **Primary Goal:** Not focused on earning profits but on "doing good" (Chuck Bean, former executive director of the Non-profit Roundtable). Non-profits as Businesses ------------------------- - **Key Characteristics:** - Employ people. - Generate revenue. - Produce goods and services. - **Economic Contribution:** - Contribute to regional economic stability and growth. - Employ **1 in 10 workers nationwide**. - More paid workers than in the **construction industry**. - More than the **finance, insurance, and real estate sectors combined**. Economic Impact of Non-profits ------------------------------ - **Cultural and Educational Institutions:** - Non-profit museums, schools, theaters, and orchestras act as **economic magnets**. - Attract additional investment to communities. - **Community Development:** - Enhance quality of life, making areas more attractive for businesses and residents. Key Takeaways ------------- - **Non-profits vs. For-Profits:** - Non-profits prioritize social impact over financial gain. - Operate similarly to businesses in terms of structure and economic contribution. - **Economic Role:** - Significant employers and contributors to economic stability. - Drive community development and cultural enrichment. 4. Factors of Production: The Basic Building Blocks ================================================ Factors of Production --------------------- - **Definition:** Four fundamental resources required by businesses and non-profits to achieve their objectives. - **Importance:** A combination of these factors is essential for an economic system to function and create wealth. - **Cost:** Each factor comes at a cost (e.g., wages for human resources, profit incentives for entrepreneurs). The Four Factors of Production ------------------------------ - **Natural Resources:** - **Definition:** Inputs that offer value in their natural state (e.g., land, water, wind, mineral deposits). - **Characteristics:** - Must be extracted, purified, or harnessed. - Cannot be created by people (agricultural products are not natural resources). - **Value:** Increases with high demand, low supply, or both. - **Capital:** - **Definition:** Synthetic resources needed to produce goods or services (e.g., machines, tools, buildings, information, technology). - **Key Elements:** - Computers and telecommunications are critical across industries. - **Note:** Capital does not include money, but money is used to acquire and maintain capital. - **Human Resources:** - **Definition:** Physical, intellectual, and creative contributions of workers within an economy. - **Trends:** - Technology is replacing manual labor, increasing the importance of education and motivation. - Some experts (e.g., Peter Drucker) consider **knowledge** a separate factor due to its growing importance. - **Entrepreneurship:** - **Definition:** Individuals who take risks to launch and operate businesses, driven by profit incentives. - **Role:** - Identify opportunities and use resources to capitalize on them. - Kick-start economies by harnessing other factors of production. - **Requirements for Success:** - **Economic Freedom:** Freedom of choice, minimal regulation, and reasonable taxation. - Protection from corruption and unfair competition. Case Study: Esports Industry ---------------------------- - **Transformation:** - Video gaming has evolved from a recreational activity to a lucrative industry. - Esports tournaments fill stadiums (e.g., Staples Center, Madison Square Garden). - **Earnings:** - Top players earn up to **\$3.5 million** annually. - Streamers can make over **\$1 million** per month. - Industry is projected to generate **\$1.5 billion** in advertising, media rights, and sponsorships by 2021. - **Skills Developed:** - **Strategic Thinking:** Planning several moves ahead. - **Performing Under Pressure:** Responding to variables under tight deadlines. - **Teamwork:** Collaborating effectively to achieve goals. Importance of Entrepreneurship in Economic Growth ------------------------------------------------- - **Examples:** - **Russia and China:** - Rich in natural and human resources but lack wealth due to limited entrepreneurship. - Barriers: Corruption (Russia), government interference, and taxes (China). - **Hong Kong:** - Limited natural resources and small population. - Wealthy due to a government that encouraged entrepreneurship under the British legal and economic system. - **China's Recent Shift:** - Relaxed regulations and supported free enterprise, leading to significant economic growth. Collaboration between Businesses and Non-profits ------------------------------------------------ - **Impact:** - Businesses and nonprofits often work together to enhance community impact. - Example: Nonprofits rely on businesses for funding and resources, while businesses benefit from improved community relations. Key Takeaways ------------- - **Factors of Production:** - Natural resources, capital, human resources, and entrepreneurship are essential for economic success. - **Entrepreneurship as a Catalyst:** - Drives wealth creation and economic growth, especially in environments with economic freedom. - **Esports as an Emerging Industry:** - Demonstrates the economic potential of new industries and the transferable skills they develop. - **Global Examples:** - Highlight the critical role of entrepreneurship in transforming resource-rich but economically stagnant nations. 5. The Business Environment: The Context for Success ================================================= Overview -------- - **Business Environment:** External factors that influence the success or failure of individual businesses and the overall economy. - **Key Dimensions:** Five critical areas shape the business environment: - Economic Environment - Competitive Environment - Technological Environment - Social Environment - Global Environment Interconnectedness of Dimensions -------------------------------- - Each dimension influences both individual businesses and the broader economy. - Example: A technological advancement (Technological Environment) can create new industries (Economic Environment) and change consumer behavior (Social Environment). Key Takeaways ------------- - **External Factors**: Businesses must adapt to external conditions to succeed. - **Dynamic Environment**: The business environment is constantly evolving, requiring flexibility and strategic planning. - **Holistic View**: Understanding all five dimensions helps businesses anticipate challenges and seize opportunities. 1-5a The Economic Environment ============================= Economic Environment -------------------- - **Definition:** The overall health of the economy, including factors like inflation, unemployment, and economic growth. - **Impact:** - Affects consumer spending, business investment, and profitability. - Example: A recession can reduce consumer demand, hurting businesses. The 2008 Financial Crisis ------------------------- - **Overview:** - Worst fiscal crisis since the Great Depression. - Collapse of major financial institutions led to unprecedented government bailouts. - **Key Impacts:** - **Stock Market:** Lost over a third of its value. - **Unemployment:** 11.1 million Americans lost jobs. - **Housing Market:** Prices fell sharply; foreclosure rates hit record highs. - **Credit Freeze:** Fear in the banking industry restricted borrowing for businesses and individuals. - **Global Spread:** U.S. economic turmoil triggered a worldwide economic crisis. Recovery Efforts (2008-2013) ---------------------------- - **Federal Reserve Actions:** - Took unprecedented steps to stimulate economic recovery. - **Government Stimulus:** - Former President Barack Obama spearheaded a massive stimulus package. - Focused on job creation and infrastructure development (e.g., renewable energy). - Increased national debt as a trade-off. - **Recovery Signs:** - Economic recovery began in late 2012 and strengthened in 2013. - The U.S. experienced its longest economic expansion until the COVID-19 pandemic in early 2020. Government Support for Business ------------------------------- - **Policies to Reduce Risk:** - Low federal tax rates for individuals and businesses. - State-level incentives (e.g., tax deals in Alabama, Nevada) to attract new firms. - **Agencies Supporting Business:** - **Small Business Administration (SBA):** Provides resources and support for small businesses. - **Federal Trade Commission (FTC):** Promotes fair competition and enforces antitrust laws. - **Enforceable Contracts:** - The legal framework ensures contracts are binding. - Example: A supplier must deliver goods at the agreed price or face legal consequences. - Critical for reducing business risks, especially compared to developing countries where contracts may not be enforceable. Corruption and Ethical Challenges --------------------------------- - **Impact of Corruption:** - Increases business risks and undermines fair competition. - U.S. laws generally keep corruption low, ensuring a level playing field. - **Ethical Lapses:** - Examples: Shady accounting, corporate scandals (e.g., Enron). - **Government Response:** - Passed stricter regulations to increase corporate accountability. - Aimed to curb illegal and unethical practices, fostering fair competition. Key Quotes ---------- - **Mark Twain:** "A banker is a fellow who lends you his umbrella when the sun is shining but wants it back the minute it begins to rain." - Highlights the cautious nature of financial institutions during crises. Outlook for the U.S. Economy ---------------------------- - **Resilience and Flexibility:** - The U.S. economy has a proven ability to recover from crises. - **Cautious Optimism:** - Despite challenges, the economy is positioned to uncover new opportunities. - **Future Challenges:** - Recovery from COVID-19 and addressing long-term economic scars. Key Takeaways ------------- - **2008 Crisis:** A pivotal event that reshaped the global economy. - **Government Role:** Critical in stabilizing the economy and supporting businesses through policies, agencies, and enforceable contracts. - **Ethics and Corruption:** Low corruption and strong regulations are essential for fair competition and business success. - **Economic Resilience:** The U.S. economy's adaptability offers hope for future recovery and growth. 1-5b The Competitive Environment ================================ Competitive Environment ----------------------- - **Definition:** The level of competition within an industry, including the number of competitors and market share. - **Impact:** - Drives innovation, pricing strategies, and customer service. - Example: High competition may force businesses to lower prices or improve quality. Focus on Customer Satisfaction ------------------------------ - **Goal:** Build **long-term, mutually beneficial relationships** with customers. - **Benefits:** - Retaining current customers is **less expensive** than acquiring new ones. - Loyal customers become **advocates**, promoting the product/service more effectively than advertising. - **Examples:** - Companies like **Amazon**, **Coca-Cola**, and **Northwestern Mutual** lead their industries in customer satisfaction, driving higher profits. Delivering Value ---------------- - **Definition of Value**: The gap between **product benefits** and **price**. - Value exists when benefits ≥ price. - **Key Insight:** - The **cheapest product** isn't always the best value. - Example: A 99-cent toy that lasts a year offers better value than a similar toy that breaks quickly. - **Importance of Quality:** - Successful firms offer **top-quality products** relative to competitors. Global Brand Champions ---------------------- - **Interbrand Study:** - Highlights brands that deliver value through **imagination** and **innovation**. - **Top Performers:** - **Most Valuable Brands:** Apple, Amazon, Microsoft, Google, Samsung. - **Biggest Gainers:** Amazon (+60%), Microsoft (+53%), Spotify (+52%). - **Trend:** - Brands that innovate and adapt to consumer needs grow the fastest. Speed-to-Market and Competitive Advantage ----------------------------------------- - **Definition:** The rate at which a firm transforms concepts into products. - **Importance:** - Faster speed-to-market provides a competitive edge. - **Leading Edge vs. Bleeding Edge:** - **Leading Edge:** Launch products when the market is ready (e.g., Apple's iPod). - **Bleeding Edge:** Launch products too early, leading to failure (e.g., Webvan in the late 1990s). - Webvan failed because customers weren't ready for online grocery shopping, which later succeeded during COVID-19. Case Study: Apple's Leading-Edge Strategy ----------------------------------------- - **iPod Success:** - Apple didn't invent the MP3 player but created a superior product (iPod) with better design and ease-of-use. - **Continuous Innovation:** - Introduced **iPod Mini** and **iPod Nano** to stay ahead of competitors. - Focused on maintaining a **competitive lead** by preempting market trends. Key Takeaways ------------- - **Customer-Centric Approach:** - Focus on satisfaction and loyalty to drive long-term success. - **Value Creation:** - Deliver quality products that meet or exceed customer expectations. - **Innovation and Timing:** - Balance speed-to-market with market readiness to avoid bleeding-edge failures. - **Competitive Advantage:** - Continuous innovation and adaptation are critical for staying ahead. 1-5c The Workforce Advantage ============================ Employee Satisfaction and Financial Performance ----------------------------------------------- - **Key Insight:** Investing in worker satisfaction yields **tangible financial results.** - **Glassdoor Study:** - Each **1-star increase** in employee ratings correlates with a **7.9% average jump** in company market value. - **Contributing Factors:** - Employee satisfaction. - Excellent products. - Strong top management. Talent Management as a Competitive Issue ---------------------------------------- - **Baby Boomer Retirement:** - **Trend:** Baby boomers (77 million) are retiring, while the next generation is smaller (46 million). - **Impact:** - The 500 largest U.S. companies expect to lose **half of their senior managers** in the next 5--6 years. - Replacing their skills and experience will be challenging. - **Retirement Trends:** - Many baby boomers are **postponing retirement** or working **part-time** due to inadequate financial resources. - This may mitigate the talent shortage to some extent. Strategies for Competing in a Tight Talent Market ------------------------------------------------- - **Cultivating Human Resources:** - Firms that invest in employee satisfaction and talent development will have a **competitive edge**. - **Key Actions:** - Focus on **retention** and **employee engagement**. - Develop programs to attract and retain top talent. Key Takeaways ------------- - **Employee Satisfaction:** - Directly impacts on a company's financial performance and market value. - **Talent Shortage:** - The retirement of baby boomers creates a talent gap, making it crucial for firms to invest in human resources. - **Adaptation:** - Companies must prepare for a tighter talent market by fostering employee satisfaction and implementing effective talent management strategies. 1-5d The Technological Environment ================================== Technological Environment ------------------------- - **Definition:** The pace of technological advancements and their adoption in the market. - **Impact:** - Influences efficiency, product development, and communication. - Example: Businesses adopting AI and automation can reduce costs and improve productivity. Business Technology ------------------- - **Definition:** Tools that improve efficiency and effectiveness in business. - **Modern Focus:** Computers, telecommunications, and digital tools. - **Impact:** - **Transformative:** New industries emerged, others disappeared, and some fields (e.g., travel, banking, music) changed dramatically. - **Streamlined Processes:** Examples include computerized billing, digital animation, and robotic manufacturing. - **Competitive Advantage:** - Fast-moving firms gain an edge by adopting new technologies. - Slow adopters face significant threats. Space Tourism ------------- - **Overview:** A growing industry for recreational space travel, estimated to reach **\$30 billion by 2030**. - **Categories:** - **Suborbital Travel:** A few minutes in zero gravity. - **Orbital Travel:** A week or more in space. - **Key Players:** - **Virgin Galactic** (Richard Branson): - Focus: Suborbital tourism. - Price: 200,000--250,000 per trip. - **Blue Origin** (Jeff Bezos): - Focus: Suborbital tourism. - Price: Comparable to competitors. - **SpaceX** (Elon Musk): - Focus: Orbital tourism. - Price: \~\$50 million per person. - **Target Market:** - High-net-worth individuals initially; prices expected to drop over time. The Internet and E-Commerce --------------------------- - **Impact of the Internet:** - Transformed business and daily life. - Enabled global communication and data exchange. - **E-Commerce Growth:** - Slowed after the 2008 economic crisis but surged during COVID-19. - **Business-to-Business (B2B):** Dominates e-commerce sales and profits. - **Digital Networks:** - Businesses connect with suppliers and distributors for seamless operations. - **Personalized Buying Experience:** - Examples: eBay seller reviews, Amazon recommendations. - **Customization:** Companies like Burton (snowboards) and Nike (NikeID) offer personalized products at competitive prices. Key Takeaways ------------- - **Technology as a Driver** - Essential for efficiency, innovation, and competitive advantage. - **Space Tourism:** - A luxury market with potential for growth and price reduction over time. - **E-Commerce:** - Revolutionized global sales and personalized customer experiences. - **Adaptability:** - Companies that embrace and manage technological change will thrive. 1-5e The Social Environment =========================== Social Environment ------------------ - **Definition:** Cultural trends, demographics, and societal values that affect consumer behavior. - **Impact:** - Shapes demand for products and services. - Example: Growing awareness of sustainability drives demand for eco-friendly products. Diversity in the U.S. --------------------- - **Trends:** - U.S. population is becoming more ethnically diverse. - By **2045**, no single ethnic group will be a majority. - **Hispanic and Asian populations** are growing the fastest. - By **2060**, nearly 1 in 3 U.S. residents will be Hispanic. - **Impact on Business:** - Growing ethnic markets offer profit potential. - Example: Companies like **Coca-Cola**, **Toyota**, and **Walmart** target Hispanic consumers. - **Crossover Products:** Brands like Pharrell Williams' **Billionaire Boys Club** succeed by appealing to diverse audiences. Workforce Diversity ------------------- - **Benefits:** - Diverse teams drive **innovation** and better serve a diverse customer base. - **Corporate Initiatives:** - **Facebook:** Aims for 50% of its workforce from underrepresented communities by 2024. - **Adidas:** Responded to employee demands with commitments to diversity, including \$20 million in investments and hiring goals. - **Employee Activism:** - Workers are demanding greater diversity and inclusion, pushing companies to address systemic issues. Aging Population ---------------- - **Trends:** - U.S. population aged 65+ will more than double by **2060**. - Similar trends in **China**, **Japan**, and **Western Europe**. - **Opportunities:** - Growth in industries like healthcare, pharmaceuticals, travel, and financial management. - Reimagining products for older consumers (e.g., low-impact fitness programs, readable screens). - **Threats:** - Smaller labor pool increases competition for talent. - Higher taxes and reduced consumer spending due to elder care costs. Rising Worker Expectations -------------------------- - **Trends:** - Workers seek **flexibility**, **higher salaries**, and **meaningful work**. - Median job tenure is **4.1 years** (2020), reflecting lower loyalty. - **Corporate Response:** - Firms are fostering **mutual respect** through open communication, training, and shared goals. - Goal: Improve long-term performance by meeting employee expectations. Ethics and Social Responsibility -------------------------------- - **Trends:** - Consumers and workers demand higher ethical standards and corporate accountability. - **Sustainability:** Businesses focus on practices that don't harm future generations. - **Innovative Practices:** - **Upcycling:** Transforming waste into new products (e.g., Swedish Stockings). - **Legislation:** Federal laws require transparent financial management and executive accountability. Key Takeaways ------------- - **Diversity:** - Growing ethnic diversity offers opportunities for businesses to tap into new markets. - Workforce diversity drives innovation and customer reach. - **Aging Population:** - Presents opportunities in healthcare and tailored products but challenges in labor and taxes. - **Worker Expectations:** - Companies must adapt to demands for flexibility, respect, and meaningful work. - **Ethics and Sustainability:** - Businesses are increasingly held accountable for ethical practices and environmental responsibility. 1-5f The Global Environment =========================== Global Environment ------------------ - **Definition:** International factors such as trade policies, exchange rates, and global markets. - **Impact:** - Affects supply chains, export opportunities, and competition. - Example: Tariffs on imports can increase costs for businesses relying on foreign goods. Globalization and Technology ---------------------------- - **Global Economy:** - The U.S. economy interacts with other economies worldwide. - Technology and free trade have blurred national economic boundaries. - **Examples of Global Integration:** - **Outsourcing:** Companies establish help centers in Mumbai for U.S. customers or hire programmers in Buenos Aires for European firms. - **Job Migration:** Jobs move to countries offering the lowest costs and highest quality. Key Players in the Global Economy --------------------------------- - **China:** - Attracts manufacturing jobs due to low wages (\~\$5.50/hour) and a large population. - Wage inflation is closing the gap with developed countries. - **India:** - Attracts high-tech jobs due to skilled, English-speaking graduates willing to work for lower wages. - **Foreign Investment:** - Both China and India have grown rapidly due to significant foreign investment. Free Trade and Trade Agreements ------------------------------- - **General Agreements on Tariffs and Trade (GATT):** - Signed by 125 countries in 1995 to reduce tariffs and trade restrictions. - Result: Increased global trade and competition. - **Trade Blocs:** - **USMCA (United States--Mexico--Canada Agreement):** Replaced NAFTA to create a free-trade mega-market in North America. - **European Union (EU):** A free-trade bloc of 27 European countries, though weakened by financial crises. - **Impact of Free Trade:** - Lower prices and improved quality due to global competition. Global Threats to Business -------------------------- - **War, Terrorism, Disease, and Natural Disasters:** - **9/11 Attacks:** Devastated the travel industry and led to massive Homeland Security spending. - **Terrorism:** Attacks in Bali (2002) and Paris (2015) crippled tourism. - **Disease Outbreaks:** - SARS (2003): Impacted economies in Hong Kong, Beijing, and Toronto. - Ebola (2014): Devastated African economies. - **Natural Disasters:** - Indian Ocean Tsunami (2004): Destroyed fishing and tourism industries in India, Sri Lanka, and Thailand. - Hurricane Katrina (2005): Halted Gulf Coast oil production. - Hurricane Sandy (2012): Caused \$50 billion in economic damage. - Typhoon Haiyan (2013): Decimated the Philippines. - **Wars:** Conflicts in Afghanistan and Iraq boosted the defense industry but hindered economic growth in those regions. - **Rising Nationalism and Tensions:** - Growing religious and ethnic conflicts threaten global economic stability. Key Takeaways ------------- - **Globalization:** - Technology and free trade have integrated economies, enabling job migration and global competition. - **Free Trade Agreements:** - USMCA and EU have facilitated trade but face challenges like financial crises. - **Global Threats:** - War, terrorism, disease, and natural disasters have significant economic impacts, disrupting industries and regions. - **Business Implications:** - Companies must navigate global risks while leveraging opportunities in emerging markets.