Business Trends PDF

# Business Trends: Cultivating a Business in Diverse, Global Environments ## Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment ### What is a business? - Any activity that seeks to provide goods and services to others while operating at a profit. ### Goods and Ser...

# Business Trends: Cultivating a Business in Diverse, Global Environments ## Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment ### What is a business? - Any activity that seeks to provide goods and services to others while operating at a profit. ### Goods and Services - **Goods:** Tangible products such as computers, food, clothing, cars, and appliances - **Services:** Intangible products (i.e., products that can't be held in your hand) such as education, healthcare, insurance, recreation, and travel and tourism ### Entrepreneur - A person who risks time and money to start and manage a business. ### 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. ### Matching Risk with Profit - **Risk:** The chance an entrepreneur takes of losing time and money on a business that may not prove profitable. - **Profit** is the amount of money a business earns above and beyond what it pays out for salaries and other expenses. ### 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, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide. ### 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. - Stakeholders include customers, employees, stockholders, suppliers, dealers (retailers), bankers, people in the surrounding community, the media, environmentalists, competitors, unions, critics, and elected government leaders. ### Outsourcing and Insourcing - **Outsourcing:** Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks. - **Insourcing:** When foreign companies are setting up design and production facilities in the United States. ### Using Business Principles in Nonprofit Organizations - **Nonprofit Organization:** An organization whose goals do not include making a personal profit for its owners or organizers. ### Entrepreneurship Versus Working for Others - Entrepreneurship is riskier, but often more exciting, than working for others. - The advantage of working for others is that somebody else assumes the company's entrepreneurial risk and provides you with benefits like paid vacation time and health insurance. - Entrepreneurs gain the freedom to make their own decisions, more opportunity, and possible wealth. ### The Importance of Entrepreneurs to the Creation of Wealth - The five factors of production are land, labor, capital, entrepreneurship, and knowledge. - **Knowledge** is the most important factor of production in today's economy. ### The Business Environment - The business environment consists of the surrounding factors that either help or hinder the development of businesses. - The five elements of the business environment: * The economic and legal environment, * The technological environment, * The competitive environment, * The social environment * The global business environment ### The Economic and Legal Environment - The business environment either encourages or discourages entrepreneurship. ### The Technological Environment - Technology enables workers to be more effective, efficient, and productive. ### The Competitive Environment - Competition among businesses has never been greater. ### The Social Environment - Today's customers want not only good quality at low prices but great service as well. - Businesses must give their frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests (this is known as empowerment). - Businesses have to deal with the increasing diversity of society. ### The Global Environment - Globalization has greatly improved living standards around the world. ### The Ecological Environment - Climate change is the movement of the temperature of the planet up or down over time. - Greening is the trend toward saving energy and producing products that cause less harm to the environment. ### The Evolution of U.S. Business - The U.S. economy has progressed from an agricultural economy to a manufacturing economy, and now to a service-based economy. - Service industries are the fastest-growing segment of today's economy, although the service sector is starting to level off, and a new, information-based global revolution is underway. ### Developing Workplace Skills #### Exercises: 1. **Climate Change:** Discuss the pros and cons of minimizing human effects on the environment. 2. **Outsourcing:** Research how many jobs have been lost to outsourcing in your area. 3. **Standard of Living vs. Quality of Life:** Discuss the relationship between standard of living and quality of life. 4. **Impact of Social Trends:** Research how social trends might affect businesses in your area, both positively and negatively. 5. **Technological and e-commerce revolutions:** Discuss the impacts of technology and e-commerce on shopping. #### Taking it to the Net 1. Explore the National Taxpayers Union website (www.ntu.org) to investigate how income taxes are distributed among various income groups. Do businesses pay their fair share? 2. Explore the Census Bureau's website (www.census.gov) to investigate the latest population data for the United States. What trends are most important to you and to businesspeople in general? 3. Explore some business blogs and write a brief paragraph about one. ### Video Case: Thomas Lennon, Actor and Entrepreneur - The entertainment industry presents a number of risks for aspiring entrepreneurs, however, those who successfully create their own projects can reap significant rewards. - Thomas Lennon has found success as a writer and entrepreneur in Hollywood, demonstrating the value of taking risks.