Taking Risks and Making Profits within the Dynamic Business Environment 2024 Lecture PDF

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SensationalCombinatorics4409

Uploaded by SensationalCombinatorics4409

DE-GTK, Institute of Finance and Accounting

2024

Hajnalka Madai

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business environment entrepreneurship business management business

Summary

This document is a lecture on Introduction to Business, 2024, covering concepts like business, enterprise, consumer demand and various business groupings by sectors and ownership. The lecturer is Hajnalka Madai.

Full Transcript

Taking Risks and Making Profits within the Dynamic Business Environment Introduction to Business 2024 Lecture 1. by Hajnalka Madai Requirements 1. Attendance at lectures (> 50%) Seminars (> 80%) 2. Seminars : extra points for tasks…. ocassionally 3. The ex...

Taking Risks and Making Profits within the Dynamic Business Environment Introduction to Business 2024 Lecture 1. by Hajnalka Madai Requirements 1. Attendance at lectures (> 50%) Seminars (> 80%) 2. Seminars : extra points for tasks…. ocassionally 3. The exam details: Writing a test during the examination period or pre – exam earlier… - Register for the exam in the Neptun system (by 12:00 the day before the exam). - Tests must be completed through e-learning (obligatory), personally. - The duration of the exam is 50 minutes, during which time 50 test questions must be answered. The rating is 5 grades: 1 insufficient(91 %). Learning Goal 1 Understanding business operation and the relationship between profit and risk, and show how businesses and nonprofit organizations can raise the standard of living for all. Actually a competition for Profit – or sustainabilty??? The concept of enterprise It is a human activity whose basic purpose is to satisfy consumer demands by making a profit. The concept of consumer demand The need for a product or service for which effective demand appear on the market. The concept of business (enterprise) Long-term economic activity with own or rented assets and labor, for profit. Features: 1. Organizationally separate, formally independent 2. Its creators provide the financial conditions necessary for its establishment and commencement of operations. 3. Profit oriented 4. It risks the investments of the founders, the income of the participants in the business Grouping of enterprises 1. By sectors 2. By form of ownership 3. According to organizational form 4. By field of activity 5. According to the size of the business 6. According to independence 7. Based on the nature of the activity 8. Based on the purpose of the activity 9. According to taxation 1.By sectors Primary sector (extractive industries, agriculture) Secondary sector (manufacturing, construction) production equipment manufacturer (machine, tool) consumer goods manufacturer (clothing, food, etc.) Tertiary sector (services, trade) 2. By form of ownership 1. Private 2. State-owned 3. Mixed ownership 4. Municipally owned 5. Other community-owned (social organizations, foundations) 3. According to organizational form 1. Sole Proprietorship 2. Joint Ventures 3. Operating Agreements 4. Partnerships 5. Corporation 6. Limited Liability Companies 7. Co-operatives 4. By field of activity 1. Industrial 2. Agricultural 3. Trade 4. Financial institution 5. Transport 6. Other 5. According to the size of the business 6. According to independence 7. Based on the nature of the activity 1. Producer 2. Service provider 3. Mixed 8. Based on the purpose of the activity 1. Profit oriented 2. Non-profit 8. According to taxation 1. Individual enterprises subject to personal income tax, self- employed persons, sole proprietorship 2. Simplified corporate taxpayers (max turnover ex.50 million HUF 3. Corporate companies subject to the Corporate Tax Act (sole proprietorships may also be included under the current legislation), 4. Non-tax, budgetary bodies (Among the actors of economic life, the institutions of the state and the organizations performing public tasks by the state are significant.) Basic Definitions Business: Def: Any activity of a person, company, firm, farm… that seeks to provide goods and services to others while operating at a profit. Goods: Def: Tangible products such as computers, food, clothing, cars, and appliances. Services: Def: Intangible products (products that can’t held in your hand) such as education, health care, insurance, travel and tourism. Basic Def, cont. Material Services Material Services always aim some kind of goods/products. e.g.: delivering - you will transport sg. from one place to another, a car mechanic - will repair your car. Non-material Services A non-material services always aim the people. e.g.: doctor, policeman, army, theatre, etc. Basic def. cont. Revenue Def: The total amount of money a business takes in during a given period by selling goods and services. Profit Def: The amount of money a business earns above and beyond what it spends for salaries and other expenses needed to run the operation. Loss Def: When a business’s expenses are more than its revenues. If a business loses money over time, it will likely have to close, putting its employees out of work. What is RISK and Profit? Risk: Def: Risk is the chance an entrepreneur takes of losing time and money on a business that may PROFIT: Profit calculation: e.g.: selling hot dogs from a cart in the summer time Costs: - rental fees - material costs - pay for someone to run the business - your salary - taxes After you payed the costs, any money left over would be profit. Keep in mind that profit is over and above the money you pay yourself in salary! Matching Risk with Profit Not all enterprises make the same amount of profit. Those they take the most risk may take the most profit? e.g.: open a business in an inner city (centre)or in suburban areas Which has higher risks and why? Business in an inner city (centre) the risk is higher, because insurance and rent are usually higher, than in suburban areas, but reduced competition makes substantial profit possible Big risk, big profits! Standard of Living and Quality of Life Why we pay taxes? Who should pay it? What happen with the money we pay in? What would happen if no one pay taxes? - Businesses and their employees pay taxes that the government and local communities use to build hospitals, schools, libraries, playgrounds, roads and other public facilities. (Where the taxes from? – Important!) - Also help to keep the environment clean, support people in need and provide police and fire protection. - Taxes help everyone in their communities. What would happen if no one pay taxes? - Businesses are part of an economic system (the basic Unit of the Economy) that contributes to the standard of living and quality of life for everyone in the country. Standard of Living What is it mean? Where is the highest in the world? Def: Standard of living refers to the amount of goods and services people can buy with the money they have. (GDP/CAPITA, Gov. Speding on Education and Healthcare…, Income or wages/capita? How can it be measured? The USA has the highest standards of living in the world? Interesting question: workers earn average more money per our in other countries e.g.: Germany, Japan, than in the USA. - How can that be? - Prices for goods and services in Germany and Japan are higher than in the States, so a person in those countries can buy less than what a person in the USA can buy with the same amount of money. bottle of beer: 7 in Japan and only 3 in USA Reasons: higher taxes, stricter gov. regulations Quality of life Def: Quality of life refers to the general well-being of a society. It means political freedom, natural environment, education, healthcare, safety, amount of leisure and rewards that add to than satisfaction and joy that other goods and services provide. The more successful businesses operate, the more is potentially available to improve the quality of life for everyone. Working to build a higher standard of living may cause lower quality of life if it means less time with the family or more stress. Higher differences within the society (rich –poor- middle classes) The Quality of Life index One of the most comprehensive equations is Numbeo' Quality of Life Index, s which measures eight indices: purchasing power (including rent) safety health care cost of living property price to income ratio traffic commute time pollution climate. Purchasing power, cost of living, and property price to income ratio are measures of the average citizen's financial wherewithal in a country, which connects directly to the standard of living. Traffic commute time is self-explanatory but vital (as any commuter will testify). The safety index covers concerns about robberies, car theft, and other crimes, as well as the prevalence of drugs, property crime, violent crimes, and corruption and bribery. https://www.numbeo.com/quality-of-life/rankings_by_country.jsp Standard of living (how to measure) Standard of living refers to the level of wealth, comfort, necessities, and material goods available to a particular geographic area. Numbeo's Quality of Life Index, the U.S. News Best Countries Report, and the United Nations' Human Development Index provide distinct methodologies to measure and rank countries' quality of life or standard of living. Norway, Denmark, Finland, Switzerland, and Netherlands consistently ranked in the top 10 countries in terms of quality of life or standard of living according to the most recent data from all three mentioned institutions. Safety, health care, economic factors (including affordability), and education are factors commonly used in assessments by Numbeo, U.S. News, and the United Nations. https://worldpopulationreview.com/country-rankings/standard-of-living-by-country What do we need to run a Business (Entrepreneurship) Factors of Production: (Resources…) Land ---> natural resources ==> used to make homes, cars, …. Labor ---> workers ==> produce goods and services. contacts Capital ---> machines Entrepreneurship (knowledge, ability,) ==> possible to determine wants and needs quickly. Information (contacts, sources, being up-to date or ahead….) (Comateatiteve Adventages and disadventages…. External and (Business) environment Technological Competitors Consumers Suppliers „ORGANIZATION” Financial corporations Natural environment External Environment (Macro level) The Political, Economic and Legal environment The way for government to actively promote entrepreneurship is: to allow private ownership of businesses.  In some countries: government owns most businesses & little incentive for people to work hard or create profit. The best thing to develop countries: minimize interference with the free exchange of goods and services. Legal Environment When currency is tradable in world’s markets, it lets people buy and sell goods and services anywhere in the world. “Easily exchanged” If Chinese didn’t want to trade their yuan for US dollar, it is hard to imagine how Coca-Cola or Disney would be able to sell their products and services. Minimizing corruption in business and its own ranks: Where governments are corrupt, it’s difficult to build a factory or open a store without permission. Many laws in US attempt to reduce corruption because corrupt and illegal activities affect negatively on business and economy as whole. Technological Environment Technology: everything from phones and copiers to computers, medical imaging devices, personal digital assistants , and the various software programs that make business processes more effective, efficient, and productive. Productivity: is the amount of output you generate given the amount of input Technological Environment E-commerce: the buying and selling goods over the internet. Two major types of e-commerce (commerce in generaly) transaction: Business to Customer (B2C) Business to Business (B2B) Database: An electronic storage file for information. The scanner at the checkout counter identifies the price and also can put the all purchase information. Identify Theft: (Digital security, the obtaining of individuals’ personal information, such as Social Security and credit card numbers, for illegal purpose. Limit who you gave your personal information. Put antivirus software on computer. Monitor your credit card report. Social Environment Demography: the statistical study of the human population with regard to its size, density, and other characteristics. “age, gender, income” Diversity and Gender means much more than recruiting and keeping minority and female employees. Now it includes seniors, disabled people, extroverts, ….etc. Consumer habits, requirement, choices - so diverse Travelling and tourism The Global Factors of Environment Globalization has grown by the development of efficient distribution systems and communication advances. “Internet” China and India have become major US competitors. “Lenovo, Chinese firm, bought IBM’s PC unit” The Global Factors of the Environment Climate change: The movement of the temperature of the planet up or down over time. Some of the world’s largest firms say the evidence for climate change is overwhelming. Greening: The trend toward sabing energy and producing products that cause less harm to the environment. It has become such a pervasive issue that we devote boxes to that subject throughout the text Global Trends Biotechnology Waste managenet Digitalization Turism and Gastronomy Effecting Factors Global Chellenges of Food Sector Feeding the World Population Rising prices in agricultural commodities have forced food makers to hike prices. The current challenge for the food industry’ businesses is to accomplish economic success with a focus to improve energy savings and ensure social as well as environmental performance. The competitive Environment (Business Environment (Micro level – competion within an Industry) To meet the needs of customers, firms must give their frontline workers. Empowerment: the process which is giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests. Stakeholder Def: Stakeholder are all the people who stand to gain or lose by the policies and activates of a business and whose concerns the business needs to address. They include customers, employees, stockholders, suppliers, dealers (retailers), bankers, people in the surrounding communities, the media, environmentalists and elected government leader. Outsourcing Def: Outsourcing means contracting with other companies (often in other countries) to do some or all the functions of a firm, like production or accounting tasks. Def: Outsourcing means contracting with other companies (often in other countries) to do some or all the functions of a firm, like production or accounting tasks. Outsourcing has had serious consequences in some states where jobs have been lost to overseas competitors. The other side of the outsourcing coin is insourcing. Insourcing creates many new jobs and helps off-set those being outsourced. Thank you for your attention!

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