Nickels_12e_UB_PPT_Instructor_Ch01_S(1).pptx

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 reproducti...

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.  Chapter Contents Business and Wealth Building The Importance of Entrepreneurs to the Creation of Wealth The Business Environment The Evolution of U.S. Business ©McGraw-Hill Education.  Business and Wealth Building Business — Any activity that seeks to provide goods and services to others while operating at a 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 Successfully filling a market need 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.  _____ refers to the total amount of money a business takes in during a given period. A. Profit B. Loss QUESTION C. Revenue D. Risk ©McGraw-Hill Education.  Business and Wealth Building 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 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 Standard of Living and Quality of Life Standard of living — The amount of goods and services people can buy with the money they have. The United States has one of the highest standards of living in the world. Workers in other countries may make more money, but prices for products are higher. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building Standard of Living and Quality of Life continued Quality of life — The general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure that add to the satisfaction and joy of the population. High quality of life requires combined efforts of businesses, nonprofits, and government agencies. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building Responding to the Various Business Stakeholders Stakeholders — All the constituencies that are affected by the decisions and actions of a business or could affect the same. What is Stakeholder Management? A primary challenge is to recognize and respond to the needs of stakeholders. 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:  Business and Wealth Building Responding to the Various Business Stakeholders continued Outsourcing — Contracting with other companies (often in other countries) to do some of the functions of a firm, like production or accounting. Many foreign companies are opening offices and factories in the United States, which is called insourcing. LO 1-1 ©McGraw-Hill Education.  Business and Wealth Building Using Business Principles in Nonprofit Organizations Nonprofit organization — An organization whose goals do not include making a personal profit for its owners or organizers. Nonprofit organizations use financial gains to meet social or educational goals. LO 1-1 ©McGraw-Hill Education.  Management in Nonprofit Organizations The goals of nonprofit organizations are social and educational, not profit-oriented. The Red Cross, for example, provides assistance to around 30 million people annually, from refugees to victims of natural disasters. Why do good management principles apply equally to profit- seeking businesses LO 1-1 ©McGraw-Hill Education. © Jorge Guerrero/AFP/Getty Images  How do non-profits attract talent? 1. Offer flexible schedules. 2. Address a good cause. 3. Find ways to celebrate their employees good work. LO 1-1 ©McGraw-Hill Education. Source: Sumac, www.sumac.com, accessed November 2017.  The Importance of Entrepreneurs to the Creation of Wealth 1 The Positives to Being an Entrepreneur The freedom to succeed Make your own decisions Possible wealth The Negatives to Being an Entrepreneur The freedom to fail No paid vacations No health insurance LO 1-2 ©McGraw-Hill Education.  Importance of Entrepreneurs To create wealth for its citizens, a country requires more than natural resources. It needs the efforts of entrepreneurs and the skill and knowledge to produce goods and services. How can government support entrepreneurship and the spread of knowledge? LO 1-2 ©McGraw-Hill Education. © Rosemarie Gearhart/Getty Images RF  The Importance of Entrepreneurs to the Creation of Wealth 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.  The Business Environment 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 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 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 amount 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 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) LO 1-4 ©McGraw-Hill Education.  The Business Environment The Technological Environment continued Using Technology to Be Responsive to Customers Database — An electronic storage file for information. LO 1-4 ©McGraw-Hill Education.  The Business Environment 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 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.  Single-Parent Families More and more working families consist of single parents who must juggle the demands of a job and the responsibilities of raising children. What can managers do to try to retain valued employees who face such challenges? LO 1-6 ©McGraw-Hill Education. © Julie Toy/Photographer’s Choice/Getty Images  The Evolution of U.S. Business Progress in the Agricultural and Manufacturing Industries In the 1800s, the agricultural industry led economic development. Technology made large-scale farming successful. This led to fewer farmers with larger farms. (Dropped from 33% to 1% of the population) Industrialization in the 19th and 20th centuries moved jobs from farms to factories. As technology improved productivity, fewer workers were needed in factories. LO 1-8 ©McGraw-Hill Education.  The Evolution of U.S. Business Progress in Service Industries Services make up over 80 percent of the value of the U.S. economy. Since the mid-1980s, the service industry generated almost all the increases in employment. There are more high-paying jobs in service industries. Your Future in Business We’re in the midst of an information-based global and technical revolution. LO 1-8 ©McGraw-Hill Education.