Introduction to Business PDF

Your Main Source is your Textbook Chapter 1 Taking Risks and Making Profits within the Dynamic Business Environment ©McGraw-Hill Education. All rights reserved. Authorized only fo...

Your Main Source is your Textbook Chapter 1 Taking Risks and Making Profits within the Dynamic Business Environment ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. Course Description: An overview of the forces within the business environment (i.e., globalization, economics, government, and society), and an introduction to the key functional areas within the firm, such as marketing, operations, accounting, finance, management, and human resources. Students’ experience in this course will enable them to gain a better understanding of what business arena is all about, how a business operates and which business functions are needed in any business enterprise. The course will focus on business systems, workforce demographics, social responsibility, business ethics, forms of business organizations, entrepreneurship, small business and franchise systems, management processes, human resource management, marketing management, business finance, business decision‐making and the future dimensions of business opportunities in a global Economy. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Course Objectives: On successful completion of the program, student must be able to: Describe the context and purpose of business. Analyze the business environment. Acquire information about starting their own business. Describe and demonstrate decision-making skills in the marketing function. Describe the role and functions of a manager, and demonstrate management skills. Describe the function of Human Resource Management. Identify the potential marketing opportunities that are created by the population trends. Relate how business institutions operate in our modern day. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Text and Materials: William G. Nickels, James M. McHugh, Susan M. McHugh. (2019), “Understanding Business”, 12th Edition, Boston, Irwin/McGraw Hill. In addition, other textbooks and instructional materials will be determined by the instructor to ensure that current and relevant concepts and theories are present. Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved Grading System Midterm 1 20 Mid Term 2 20 Assignments 20 Final Examination 40 Total 100 Copyright © 2017, 2014, 2011 Pearson Education, Inc. All Rights Reserved  Learning Objectives LO 1-1 Describe the relationship between profit and risk, and show how businesses and nonprofit organizations can raise the standard of living for all. LO 1-2 Explain how entrepreneurship and the other factors of production contribute to the creation of wealth. LO 1-3 Analyze the effects of the economic environment and taxes on businesses. LO 1-4 Describe the effects of technology on businesses. LO 1-5 Demonstrate how businesses can meet and beat competition. LO 1-6 Analyze the social changes affecting businesses. LO 1-7 Identify what businesses must do to meet global challenges, including war and terrorism. LO 1-8 Review how past trends are being repeated in the present and what those trends mean for tomorrow’s college graduates. ©McGraw-Hill Education.  Business and Wealth Building 1 of 7 Business — Any activity that seeks to provide goods and services to others while operating at a profit. How to get the profit? Goods — Tangible products such as computers, food, clothing, cars, and appliances. Services — Intangible products (that can’t be held in your hand) such as education, health care, insurance, recreation, and travel. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building 2 of 7 filling a market need Successfully means you could make money for yourself. Entrepreneur — A person who risks time and money to start and manage a business. LO 1-1 ©McGraw-Hill Education. ©McGraw-Hill Education.  Business and Wealth Building 3 of 7 Revenues, Profits, and Losses Revenue — The total amount of money a business takes in during a given period by selling goods and services. Profit — The amount of money a business earns above and beyond what it spends for salaries and other expenses. Loss — When a business’s expenses are more than its revenues. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building 4 of 7 Matching Risk with Profit Risk — The chance an entrepreneur takes of losing time and money on a business that may not prove profitable. Not all enterprises make the same amount of profit. Businesses take risks, but with big risks could come big profits. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building 5 of 7 Standard of Living and Quality of Life Standard of living The amount of goods and services people can buy with the money they have. Quality of life — The general well-being of a society ❑ in terms of its political freedom, natural environment, education, health care, safety, and rewards that add to the satisfaction and joy that other goods and services provide. ❑ High quality of life requires combined efforts of businesses, nonprofits, and government agencies. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building 6 of 7 Responding to the Various Business Stakeholders Stakeholders — All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address. A primary challenge is to recognize and respond to the needs of stakeholders. Outsourcing — Contracting with other companies (often in other countries) to do some of the functions of a firm, like production or accounting. LO 1-1 ©McGraw-Hill Education.  Figure 1.1 A Business and Its Stakeholders Jump to long description in appendix LO 1-1 ©McGraw-Hill Education. Source: John Mackey and Raj Sisodia, Conscious Capitalism (Boston, MA: Harvard Business Review Press, 2013).  Exercise 1. Since all businesses make a profit, starting a business is not risky. ▪ TRUE ▪ FALSE THE ANSWER FALSE ©McGraw-Hill Education.  The term "standard of living" refers to the amount of debt people can incur on a given income. ▪ TRUE ▪ FALSE THE ANSWER FALSE ©McGraw-Hill Education.  Business and Wealth Building 7 of 7 Using Business Principles in Nonprofit Organizations Nonprofit organization — An organization whose goals do not include making a personal profit for its owners or organizers. ((public schools, civic associations, charities…). Nonprofit organizations use financial gains to meet social or educational goals. Example: Muhammad Yunus won the Nobel Prize for starting the Grameen Bank, a micro lending organization that provides small loans to entrepreneurs too poor to qualify for traditional loans. He also created a social business that provides cataract operations for a fraction of the usual cost. Red Cross LO 1-1 ©McGraw-Hill Education. ©McGraw-Hill Education.  Business and Wealth Building 7 of 7 Using Business Principles in Nonprofit Organizations To manage and work in a nonprofit organization, business skills such as information management, leadership, marketing and financial management are still needed. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building 7 of 7 LO 1-1 ©McGraw-Hill Education.  The Importance of Entrepreneurs to the Creation of Wealth 1 of 2 The Positives to Being an Entrepreneur The freedom to succeed Make your own decisions Opportunity and Possible wealth (you are able to own your own business and reap the profits from it) LO 1-2 ©McGraw-Hill Education.  The Importance of Entrepreneurs to the Creation of Wealth 1 of 2 The Negatives to Being an Entrepreneur The freedom to fail No paid vacations OR benefits (day care, a company car… You have to provide them for yourself ) No health insurance ©McGraw-Hill Education.  Opportunities for entrepreneurs Millions of people all over the world have succeeded by taking the entrepreneurial challenge: Number of Hispanic-owned businesses has grown dramatically in the USA. Women own a third of all businesses Example: Oprah Winfrey, Andrea Jung… Businesses owned by minority women are growing faster than those owned by men or nonminority women. ©McGraw-Hill Education.  The Importance of Entrepreneurs to the Creation of Wealth 2 of 2 The Five Factors of Production Factors of production — The resources used to create wealth. The five factors: 1. Land (or natural resources) 2. Labor (workers) 3. Capital 4. Entrepreneurship 5. Knowledge What makes rich countries rich today is entrepreneurship and knowledge. LO 1-2 ©McGraw-Hill Education.  Figure 1.2 The Five Factors of Production Peter Drucker recently said that the most important one is knowledge. LO 1-2 ©McGraw-Hill Education. Source: Drucker Institute, druckerinstitute.com, April 2017.  Comparison of the factors of production in rich and poor countries: → Some poor countries have plenty of land (Russia) → Some poor countries have plenty of laborers (Mexico) → Laborers need entrepreneurs to create jobs for them. → Capital is now easy to find for firms in world markets. ©McGraw-Hill Education.  The Business Environment 1 of 8 Business environment — The surrounding factors that either help or hinder the development of businesses. 1. Economic and legal environment 2. Technological environment 3. Competitive environment 4. Social environment 5. Global business environment LO 1-2 ©McGraw-Hill Education.  Figure 1.3 Today’s Dynamic Business Environment Jump to long description in appendix LO 1-2 ©McGraw-Hill Education.  The Business Environment 2 of 8 The Economic and Legal Environment Government can promote entrepreneurship by: 1. Allowing private ownership of businesses 2. Minimizing interference with the free exchange of goods and services 3. Passing laws that enable businesspeople to write enforceable contracts 4. Establishing a currency that’s tradable in world markets 5. Minimizing corruption LO 1-3 ©McGraw-Hill Education.  The Business Environment 3 of 8 The Technological Environment Technology — Everything from phones to computers and the various software programs that make business processes more effective, efficient, and productive. How Technology Benefits Workers and You Effectiveness — Producing the desired result. Efficiency — Producing goods and services using the least number of resources. Productivity — The amount of output you generate given the amount of input (e.g., hours worked). LO 1-4 ©McGraw-Hill Education.  The Business Environment 4 of 8 The Technological Environment continued The Growth of E-Commerce E- commerce — The buying and selling of goods over the Internet. Business-to-consumer (B2C) Business-to-business (B2B) Using Technology to Be Responsive to Customers Database — An electronic storage file for information. Identity theft — The obtaining of individuals’ personal information, such as Social Security and credit card numbers, for illegal purposes. LO 1-4 ©McGraw-Hill Education.  The Business Environment 5 of 8 The Competitive Environment Customers want good quality products at low prices with great customer service. Because business is more customer-driven, some managers give frontline employees more decision- making power. Empowerment — Giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests. LO 1-5 ©McGraw-Hill Education.  The Business Environment 6 of 8 The Social Environment Demography — The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income. LO 1-6 ©McGraw-Hill Education.  The Business Environment 7 of 8 The Global Environment Globalization has grown due to efficient distribution systems and communication systems such as the Internet. How Global Changes Affect You As businesses expand to serve global markets, new jobs will be created. Rapid changes create a need for continuous learning. LO 1-7 ©McGraw-Hill Education.  The Business Environment 8 of 8 The Global Environment continued The Ecological Environment Climate change — The movement of the temperature of the planet up or down over time. Greening — The trend toward saving energy and producing products that cause less harm to the environment. LO 1-7 ©McGraw-Hill Education.