Business in Action PDF Textbook

 MyBizLab : Improves Student Engagement ® Before, During, and After Class BREAKTHROUGH To better...

 MyBizLab : Improves Student Engagement ® Before, During, and After Class BREAKTHROUGH To better results Prep and OUGH KTHR BREA Engagement NEW! VIDEO LIBRARY – Robust video library with over 100 new book-specific videos that include easy-to-assign assessments, the ability for instructors to add YouTube or other sources, the ability for students to upload video submissions, and the ability for polling and teamwork. Decision-making simulations – NEW and improved feedback for students. Place your students in the role of a key decision-maker! Simulations branch based on the decisions students make, providing a variation of scenario paths. Upon completion students receive a grade, as well as a detailed report of the choices and the associated consequences of those decisions. Video exercises – UPDATED with new exercises. Engaging videos that bring business concepts to life and explore business topics related to the theory students are learning in class. Quizzes then assess students’ comprehension of the concepts covered in each video. Learning Catalytics – A “bring your own device” student engagement, assessment, and classroom intelligence system helps instructors analyze students’ critical-thinking skills during lecture. Dynamic Study Modules (DSMs) – UPDATED with additional questions. Through adaptive learning, students get personalized guidance where and when they need it most, creating greater Decision Making engagement, improving knowledge retention, and supporting subject-matter mastery. Also available on mobile devices. Critical Thinking Writing Space – UPDATED with new commenting tabs, new prompts, and a new tool for students called Pearson Writer. A single location to develop and assess concept mastery and critical thinking, the Writing Space offers automatic graded, assisted graded, and create your own writing assignments, allowing you to exchange personalized feedback with students quickly and easily. Writing Space can also check students’ work for improper citation or plagiarism by comparing it against the world’s most accurate text comparison database available from Turnitin. Additional Features – Included with the MyLab are a powerful homework and test manager, robust gradebook tracking, Reporting Dashboard, comprehensive online course content, and easily scalable and shareable content. http://www.pearsonmylabandmastering.com This page intentionally left blank  Global Edition Eighth Edition Business in Action Courtland L. Bovée Professor of Business C. Allen Paul Distinguished Chair Grossmont College John V. Thill Chairman and Chief Executive Officer Global Communication Strategies Boston Columbus Indianapolis New York San Francisco Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Vice President, Business Publishing: Donna Battista Project Manager: Nicole Suddeth Editor-in-Chief: Stephanie Wall Operations Specialist: Carol Melville Acquisitions Editor: Nicole Sam Creative Director: Blair Brown Editorial Assistant: Olivia Vignone Art Director: Janet Slowik Associate Acquisitions Editor, Global Editions: Ishita Sinha Vice President, Director of Digital Strategy and Assessment: Paul Gentile Associate Project Editor, Global Edition: Amrita Kar Manager of Learning Applications: Paul DeLuca Project Manager, Global Editions: Vamanan Namboodiri Digital Editor: Brian Surette Manager, Media Production, Global Edition: Vikram Kumar Director, Digital Studio: Sacha Laustsen Senior Manufacturing Controller, Production, Global Edition: Digital Studio Manager: Diane Lombardo Trudy Kimber Digital Studio Project Manager: Monique Lawrence Vice President, Product Marketing: Maggie Moylan Digital Studio Project Manager: Regina DaSilva Director of Marketing, Digital Services and Products: Jeanette Koskinas Digital Studio Project Manager: Alana Coles Field Marketing Manager: Lenny Ann Raper Digital Studio Project Manager: Robin Lazrus Product Marketing Assistant: Jessica Quazza Cover Image: gyn9037/Shutterstock Team Lead, Program Management: Ashley Santora Full-Service Project Management, Design, and Composition: Integra Program Manager: Denise Weiss Printer/Binder: Vivar Malaysia Team Lead, Project Management: Jeff Holcomb Cover Printer: Vivar, Malaysia Microsoft and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published as part of the services for any purpose. All such documents and related graphics are provided “as is” without warranty of any kind. Microsoft and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all warranties and conditions of merchantability, whether express, implied or statutory, fitness for a particular purpose, title and non-infringement. In no event shall Microsoft and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from the services. The documents and related graphics contained herein could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Microsoft and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time. Partial screen shots may be viewed in full within the software version specified. Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies throughout the world Visit us on the World Wide Web at: www.pearsonglobaleditions.com © Pearson Education Limited 2017 The rights of Courtland L. Bovee and John V. Thill to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Authorized adaptation from the United States edition, entitled Business in Action, Eighth Edition, ISBN 978-0-13-412995-2 by Courtland L. Bovee and John V. Thill, published by Pearson Education © 2017. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a license permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6–10 Kirby Street, London EC 1N 8TS. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. ISBN-10: 1-292-16063-2 ISBN-13: 978-1-292-16063-4 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library 10 9 8 7 6 5 4 3 2 1 Typeset in Albertina MT Pro Regular by Integra Printed and bound by Vivar, Malaysia This book is dedicated to the many instructors and students who have used this text and its predecessors Excellence in Business and Business Today. We appreciate the opportunity to assist you in your exploration of the world of business, and we wish you great success in this course and in your careers. Courtland L. Bovée John V. Thill  Contents in Brief Preface 15 Prologue: Using This Course to Help Launch Your Career 24 Part 1 Setting the Stage: the Business of Business 47 1 Developing a Business Mindset 48 2 Understanding Basic Economics 72 3 The Global Marketplace 95 4 Business Ethics and Corporate Social Responsibility 119 Part 2 Building the Framework: Business Ownership and Entrepreneurship 143 5 Forms of Ownership 144 6 Entrepreneurship and Small-Business Ownership 167 Part 3 Guiding the Enterprise: Leadership, Organization, and Operations 191 7 Management Roles, Functions, and Skills 192 8 Organization and Teamwork 216 9 Production Systems 244 Part 4 Supporting the Workforce: Motivation and Human resources 269 10 Employee Motivation 270 11 Human Resources Management 293 12 Labor Relations 319 Part 5 Satisfying the Customer: Marketing, Sales, and Customer Support 341 13 The Art and Science of Marketing 342 14 Product and Pricing Strategies 367 15 Distribution and Marketing Logistics 394 16 Customer Communication 417 Part 6 Managing the Money: accounting and Financial resources 441 17 Financial Information and Accounting Concepts 442 18 Financial Management 467 19 Financial Markets and Investment Strategies 491 20 The Money Supply and Banking Systems 515 appendixes APPEnDIx A Business Law 538 APPEnDIx B Risk Management 546 APPEnDIx C Information Technology 553 APPEnDIx D Personal Finance: Getting Set for Life 559 Glossary 574 Brand, Organization, name, and Website Index 592 Subject Index 594 6  Contents Preface 15 Achieving Professionalism 65 Prologue: Using this Course to Help Striving to Excel 65 Launch Your Career 24 Being Dependable and Accountable 66 Being a Team Player 66 Communicating Effectively 67 Demonstrating Etiquette 67 Part 1 Making Ethical Decisions 68 Setting the Stage: the Business Maintaining a Confident, Positive Outlook 68 of Business 47 BEHInD THE SCEnES YOLAnDA DIAz GROWS MIRADOR EnTERPRISES InTO A MULTIMILLIOn-DOLLAR SUCCESS CHaPtEr 1 STORY 68 Developing a Business Mindset 48 KEY TERMS 69 TEST YOUR KnOwLEDgE 70 BEHInD THE SCEnES YOLAnDA DIAz: BUILDInG ExPAnD YOUR KnOwLEDgE 70 HER DREAM WITH HARD WORk AnD STROnG PRACTICE YOUR SKILLS 71 BUSInESS SEnSE 48 Introduction 49 Understanding What Businesses Do 49 CHaPtEr 2 Adding Value: The Business of Business 49 Understanding Basic Economics 72 Competing to Attract and Satisfy Customers 50 Accepting BEHInD THE SCEnES COULD YOU PREDICT SALES OF Risks in the Pursuit of Rewards 50 APPLE’S nExT BESTSELLER? 72 Identifying Major Types of Businesses 50 Making the Leap from Buyer to Seller 52 Introduction 73 Seeing Business from the Inside Out 52 What Is This Thing Called the Economy? 73 Appreciating the Role of Business in Society 53 Factors of Production 73 Using This Course to Jump-Start Your Career 55 The Economic Impact of Scarcity 74 Recognizing the Multiple Environments of Business 56 Economic Systems 75 The Social Environment 56 Free-Market Systems 75 The Technological Environment 57 Planned Systems 76 The Economic Environment 58 nationalization and Privatization 77 The Legal and Regulatory Environment 59 The Forces of Demand and Supply 78 The Market Environment 59 Understanding Demand 78 Identifying the Major Functional Areas in a Business Understanding Supply 79 Enterprise 60 Understanding How Demand and Supply Interact 80 Research and Development 61 The Macro View: Understanding How an Economy Manufacturing, Production, and Operations 61 Operates 81 Marketing, Sales, Distribution, and Customer Support 61 Competition in a Free-Market System 81 Finance and Accounting 61 Business Cycles 82 Human Resources 62 Unemployment 83 Business Services 62 Inflation 83 Exploring Careers in Business 62 Government’s Role in a Free-Market System 85 Operations Manager 63 Protecting Stakeholders 85 Human Resources Specialist 63 Fostering Competition 85 Information Technology Manager 63 Antitrust Legislation 86 Merger and Acquisition Marketing Specialist 63 Approvals 87 Sales Professional 64 Encouraging Innovation and Economic Accountant 64 Development 87 Financial Manager 64 Stabilizing and Stimulating the Economy 87 7 8 Contents Economic Measures and Monitors 88 Introduction 120 Price Indexes 89 Ethics in Contemporary Business 120 national Economic Output 90 what Is Ethical Behavior? 121 BEHInD THE SCEnES RACInG TO SUPPLY OnE OF THE Factors Influencing Ethical Behavior 122 HOTTEST PRODUCTS In HISTORY 91 Cultural Differences 122 Knowledge 122 Organizational Behavior 122 KEY TERMS 92 Ethical Decision Making 122 TEST YOUR KnOwLEDgE 92 Corporate Social Responsibility 125 ExPAnD YOUR KnOwLEDgE 93 The Relationship Between Business and Society 125 PRACTICE YOUR SKILLS 93 Philanthropy Versus Strategic CSR 125 Perspectives on Corporate Social Responsibility 126 CHaPtEr 3 Minimalist CSR 126 the Global Marketplace 95 Defensive CSR 127 Cynical CSR 128 BEHInD THE SCEnES H&M: FIRST SWEDEn, Proactive CSR 128 THEn THE WORLD 95 Resolving the CSR Dilemma 128 Introduction 96 CSR: The Natural Environment 129 Fundamentals of International Trade 96 Efforts to Conserve Resources and Reduce Pollution 130 why nations Trade 97 The Trend Toward Sustainability 132 How International Trade Is Measured 97 CSR: Consumers 133 Foreign Exchange Rates and Currency Valuations 99 The Right to Buy Safe Products—And to Buy Them Safely 133 Conflicts in International Trade 100 The Right to Be Informed 134 Free Trade 100 The Right to Choose which Products to Buy 134 government Intervention in International Trade 101 The Right to Be Heard 134 International Trade Organizations 102 CSR: Employees 135 Organizations Facilitating International Trade 102 The Push for Equality in Employment 135 The World Trade Organization 102 The International Affirmative Action 135 People with Disabilities 136 Monetary Fund 103 The World Bank 103 Occupational Safety and Health 136 Trading Blocs 103 BEHInD THE SCEnES nIkE BUILDS A SUSTAInABLE North American Free Trade Agreement 103 The BUSInESS THROUGH SUSTAInABLE DESIGn AnD European Union 105 The Asia-Pacific Economic MAnUFACTURInG 137 Cooperation 105 The Trans-Pacific Partnership 105 The Global Business Environment 106 KEY TERMS 139 Cultural Differences in the global Business Environment 106 TEST YOUR KnOwLEDgE 139 Legal Differences in the global Business Environment 107 ExPAnD YOUR KnOwLEDgE 139 PRACTICE YOUR SKILLS 140 Forms of International Business Activity 109 Importing and Exporting 109 International Licensing 110 International Franchising 110 Part 2 International Strategic Alliances and Joint Ventures 110 Foreign Direct Investment 111 Building the Framework: Strategic Approaches to International Markets 111 Business Ownership and Organizational Strategies for International Expansion 111 Functional Strategies for International Expansion 112 Entrepreneurship 143 BEHInD THE SCEnES H&M ExPAnDS IT GLOBAL CHaPtEr 5 FOOTPRInT, BUT nOT WITHOUT COMPETITIOn AnD CHALLEnGES 114 Forms of Ownership 144 KEY TERMS 115 BEHInD THE SCEnES CISCO TACkLES THE CHALLEnGE TEST YOUR KnOwLEDgE 115 OF STAYInG On TOP In A FAST-MOvInG InDUSTRY 144 ExPAnD YOUR KnOwLEDgE 116 Introduction 145 PRACTICE YOUR SKILLS 116 Sole Proprietorships 145 Advantages of Sole Proprietorships 145 CHaPtEr 4 Disadvantages of Sole Proprietorships 147 Business Ethics and Corporate Social Partnerships 148 Advantages of Partnerships 148 responsibility 119 Disadvantages of Partnerships 149 BEHInD THE SCEnES nIkE’S GLOBAL PRESEnCE Keeping It Together: The Partnership Agreement 149 PUTS IT On THE FROnT LInES OF CORPORATE SOCIAL Corporations 150 RESPOnSIBILITY 119 Advantages of Corporations 151  Contents 9 Disadvantages of Corporations 151 The Franchise Alternative 184 Special Types of Corporations 152 Types of Franchises 184 Corporate Governance 154 Advantages of Franchising 184 Shareholders 154 Disadvantages of Franchising 185 Board of Directors 155 How to Evaluate a Franchising Opportunity 185 Corporate Officers 156 BEHInD THE SCEnES BUILDInG An AUTHEnTIC AnD Mergers and Acquisitions 157 PURPOSEFUL BUSInESS AT SISTER SkY 186 Advantages of Mergers and Acquisitions 157 KEY TERMS 187 Disadvantages of Mergers and Acquisitions 157 TEST YOUR KnOwLEDgE 188 Merger and Acquisition Defenses 159 ExPAnD YOUR KnOwLEDgE 188 Strategic Alliances and Joint Ventures 160 PRACTICE YOUR SKILLS 189 Strategic Alliances 160 Joint Ventures 160 BEHInD THE SCEnES CISCO TURnS OnE OF THE Part 3 TOUGHEST MOvES In BUSInESS InTO A STRATEGIC ADvAnTAGE 161 Guiding the Enterprise: Leadership, KEY TERMS 162 Organization, and Operations 191 TEST YOUR KnOwLEDgE 163 ExPAnD YOUR KnOwLEDgE 163 CHaPtEr 7 PRACTICE YOUR SKILLS 164 Management roles, Functions, and Skills 192 BEHInD THE SCEnES WEGMAnS SATISFIES CUSTOMERS CHaPtEr 6 BY PUTTInG EMPLOYEES FIRST 192 Entrepreneurship and Small-Business Introduction 193 Ownership 167 The Roles of Management 193 BEHInD THE SCEnES BRInGInG TRADITIOnAL HEALInG Interpersonal Roles 193 WISDOM TO MODERn COnSUMERS AT SISTER SkY 167 Informational Roles 194 Decisional Roles 195 Introduction 168 The Planning Function 195 The Big World of Small Business 168 Defining the Mission, Vision, and Values 196 Economic Roles of Small Businesses 168 Assessing Strengths, weaknesses, Opportunities, Characteristics of Small Businesses 170 and Threats 197 Factors Contributing to the Increase in the number of Small Developing Forecasts 197 Businesses 170 Analyzing the Competition 198 E-Commerce, Social Media, and Other Technologies 170 Establishing goals and Objectives 199 Growing Diversity in Entrepreneurship 170 Downsizing Developing Action Plans 199 and Outsourcing 171 The Organizing Function 200 The Entrepreneurial Spirit 171 Top Managers 200 why People Start Their Own Companies 172 Middle Managers 201 Qualities of Successful Entrepreneurs 172 First-Line Managers 201 Innovating without Leaving: Intrapreneurship 172 The Leading Function 202 The Start-Up Phase: Planning and Launching a New Developing an Effective Leadership Style 203 Business 174 Coaching and Mentoring 204 Small-Business Ownership Options 174 Managing Change 204 Blueprint for an Effective Business Plan 175 Building a Positive Organizational Culture 205 The Growth Phase: Nurturing and Sustaining a Young The Controlling Function 206 Business 177 The Control Cycle 206 The new Business Failure Rate 177 Establishing Performance Standards 206 Measuring Advice and Support for Business Owners 178 Performance and Responding as Needed 207 Government Agencies and Not-for-Profit Organizations 178 Crisis Management: Maintaining Control in Extraordinary Business Partners 179 Mentors and Advisory Circumstances 208 Boards 179 Print and Online Media 179 Networks Essential Management Skills 209 and Support Groups 179 Business Incubators 180 Interpersonal Skills 209 Financing Options for Small Businesses 181 Technical Skills 209 Private Financing 181 Conceptual Skills 210 Banks and Microlenders 181 Venture Capitalists 182 Decision-Making Skills 210 Angel Investors 182 Credit Cards and Personal Lines of Credit 183 Small Business Administration Assistance 183 BEHInD THE SCEnES CUSTOMERS BELIEvE In Public Financing 183 WEGMAnS BECAUSE WEGMAnS BELIEvES In ITS Crowdfunding 183 EMPLOYEES 212 10 Contents KEY TERMS 213 The Offshoring Controversy 249 TEST YOUR KnOwLEDgE 213 Supply Chain Management 252 ExPAnD YOUR KnOwLEDgE 214 Supply Chains Versus Value Chains 252 PRACTICE YOUR SKILLS 214 Supply Chain Systems and Techniques 253 Production and Operations Management 254 CHaPtEr 8 Lean Systems 254 Mass Production, Customized Production, and Mass Organization and teamwork 216 Customization 256 BEHInD THE SCEnES CEMEx REInvEnTS A CEnTURY- Facilities Location and Design 256 OLD COMPAnY TO COMPETE In A nEW BUSInESS Forecasting and Capacity Planning 257 WORLD 216 Scheduling 257 The Unique Challenges of Service Delivery 258 Introduction 217 Perishability 258 Designing an Effective Organization Structure 217 Location Constraints 259 Identifying Core Competencies 217 Scalability Challenges and Opportunities 259 Identifying Job Responsibilities 218 Performance Variability and Perceptions of Defining the Chain of Command 219 Quality 259 Span of Management 219 Centralization Versus Customer Involvement and Provider Interaction 259 Decentralization 220 Product and Process Quality 260 Organizing the Workforce 222 Quality and Complexity 260 Functional Structures 222 Strategies for Ensuring Product Quality 261 Divisional Structures 222 Continuous Improvement 261 Statistical Process Matrix Structures 223 Control 261 Six Sigma 262 ISO 9000 216 network Structures 224 Organizing in Teams 225 BEHInD THE SCEnES kIESEL’S PRODUCTIOn SYSTEM what Is a Team? 225 SATISFIES DEMAnDInG GUITARISTS 263 Types of Teams 225 KEY TERMS 264 Problem-Solving Teams 225 Self-Managed Teams 226 TEST YOUR KnOwLEDgE 264 Functional Teams 226 Cross-Functional Teams 226 ExPAnD YOUR KnOwLEDgE 265 Virtual Teams 226 Social Networks and Virtual PRACTICE YOUR SKILLS 265 Communities 227 Ensuring Team Productivity 228 Advantages and Disadvantages of working in Teams 229 Characteristics of Effective Teams 230 Part 4 Fostering Teamwork 232 Supporting the Workforce: Team Development 232 Team Conflict 233 Motivation and Human Causes of Team Conflict 233 Solutions to Team Conflict 234 resources 269 Managing an Unstructured Organization 235 Potential Benefits of Unstructured Organizations 236 CHaPtEr 10 Potential Challenges of Unstructured Organizations 237 Employee Motivation 270 BEHInD THE SCEnES An InnOvATIvE COLLABORATIOn BEHInD THE SCEnES TAkInG A SECOnD LOOk AT THE PLATFORM AT CEMEx “MAkES A BIG COMPAnY LOOk CAREER LADDER 270 LIkE A SMALL COMPAnY” 239 Introduction 271 KEY TERMS 239 TEST YOUR KnOwLEDgE 240 What Motivates Employees to Peak Performance? 271 what Is Motivation? 271 ExPAnD YOUR KnOwLEDgE 241 Classical Theories of Motivation 273 PRACTICE YOUR SKILLS 241 Taylor’s Scientific Management 273 The Hawthorne Studies and the “Hawthorne Effect” 273 Maslow’s Hierarchy of CHaPtEr 9 Needs 274 Theory X and Theory Y 274 Herzberg’s Production Systems 244 Two Factors 275 McClelland’s Three Needs 275 Explaining Employee Choices 276 BEHInD THE SCEnES CUSTOMIzInG DREAMS Expectancy Theory 276 AT kIESEL GUITARS 244 Equity Theory 277 Introduction 245 Motivating with Challenging Goals 278 The Systems View of Business 245 Management by Objectives 279 Thinking in Systems 245 Risks and Limitations of goal-Setting Theory 280 Managing Systems for Peak Performance 246 Redesigning Jobs to Stimulate Performance 281 Value Chains and Value Webs 248 The Job Characteristics Model 281 Redefining Organizations with Value webs 248 Approaches to Modifying Core Job Dimensions 282  Contents 11 Reinforcing High-Performance Behavior 283 CHaPtEr 12 Types of Reinforcement 283 Unintended Consequences of Reinforcement 284 Labor relations 319 Motivational Strategies 285 BEHInD THE SCEnES BOEInG AnD THE IAM: Providing Timely and Frequent Feedback 285 A HIGH-STAkES BATTLE WITH THOUSAnDS OF Making It Personal 285 jOBS On THE LInE 319 gamifying for Healthy Competition 286 Introduction 320 Adapting to Circumstances and Special The Role of Labor Unions 320 needs 287 Unionization: The Employee’s Perspective 321 Addressing workplace negativity 287 Unionization: Management’s Perspective 322 Being an Inspiring Leader 287 Unionization in Historical Perspective 323 Motivating Yourself 287 Power to the Unions: The wagner Act of 1935 324 BEHInD THE SCEnES MOTIvATInG InDIvIDUALS BY Power to the Owners: The Taft-Hartley Act of 1947 325 PERSOnALIzInG CAREERS AT DELOITTE 288 Power to Union Members: The Landrum-griffin Act of 1959 325 KEY TERMS 289 The Organizing Process 326 TEST YOUR KnOwLEDgE 289 Union Security and Right-to-work Laws 326 ExPAnD YOUR KnOwLEDgE 290 Types of Unions 326 PRACTICE YOUR SKILLS 290 How Unions Are Structured 327 Union Organizing Drives 328 Management Efforts to Avoid Unionization 329 CHaPtEr 11 The Collective Bargaining Process 330 Human resources Management 293 negotiating an Agreement 331 BEHInD THE SCEnES An UnCOnvEnTIOnAL Exercising Options when negotiations Break Down 331 APPROACH TO FInDInG UnCOnvEnTIOnAL Labor’s Options 331 Management’s Options 332 EMPLOYEES 293 Grievance, Discipline, and Arbitration Procedures 333 Unfair Labor Practices 333 Introduction 294 Resolving Employee grievances 334 Keeping Pace with Today’s Workforce 294 Disciplining Employees 334 Contemporary Staffing Challenges 294 Arbitrating Disputes 334 Planning for a Company’s Staffing needs 295 The Future of Labor 335 Evaluating Job Requirements 295 Forecasting Supply and Demand 295 BEHInD THE SCEnES BOEInG AnD THE IAM: Alternative work Arrangements 296 A PROjECT SAvED, BUT STRIFE REMAInS 337 Managing a Diverse Workforce 297 KEY TERMS 337 Dimensions of workforce Diversity 297 TEST YOUR KnOwLEDgE 338 Age 298 Gender 298 Race and Ethnicity 300 ExPAnD YOUR KnOwLEDgE 338 Religion 300 Ability 301 Diversity Initiatives 301 PRACTICE YOUR SKILLS 339 Managing the Employment Life Cycle 302 Hiring Employees 302 Terminating Employees 302 Replacing Retiring Employees 304 Part 5 Developing and Evaluating Employees 305 Satisfying the Customer: Marketing, Appraising Employee Performance 305 Sales, and Customer Support 341 Training and Developing Employees 305 Promoting and Reassigning Employees 307 CHaPtEr 13 Administering Employee Compensation 307 Salaries and wages 308 the art and Science of Marketing 342 Incentive Programs 308 BEHInD THE SCEnES RED AnTS PAnTS GIvES WORkInG Employee Benefits and Services 310 WOMEn A CHOICE THAT FITS 342 Insurance 310 Retirement Benefits 310 Introduction 343 Stock Options 311 Marketing in a Changing World 343 Other Employee Benefits 311 The Role of Marketing in Society 343 Needs and Wants 343 Exchanges and BEHInD THE SCEnES FOR zAPPOS, FInDInG THE Transactions 344 The Four Utilities 344 RIGHT EMPLOYEES MEAnS REjECTInG THE OLD WAY The Marketing Concept 344 OF DOInG BUSInESS 313 Challenges in Contemporary Marketing 346 KEY TERMS 314 Involving the Customer in the Marketing Process 346 TEST YOUR KnOwLEDgE 314 Making Data-Driven Marketing Decisions 348 ExPAnD YOUR KnOwLEDgE 315 Marketing with greater Concern for Ethics and Etiquette 348 PRACTICE YOUR SKILLS 315 Understanding Today’s Customers 350 12 Contents The Consumer Decision Process 350 Pricing Methods 384 The Organizational Customer Decision Process 352 Cost-Based Pricing 385 Identifying Market Opportunities 353 Value-Based Pricing 385 Examining the Current Marketing Situation 354 Optimal Pricing 385 Reviewing Performance 354 Evaluating Skim Pricing 385 Competition 354 Examining Internal Strengths Penetration Pricing 386 and Weaknesses 354 Analyzing the External Loss-Leader Pricing 386 Environment 355 Auction Pricing 386 Assessing Opportunities and Setting Objectives 355 Participative Pricing 387 Crafting a Marketing Strategy 356 Free and Freemium Pricing 387 Dividing Markets into Segments 356 Price Adjustment Tactics 387 Choosing Your Target Markets 357 BEHInD THE SCEnES BUILDInG THE AnnIkA Staking out a Position in Your Target Markets 358 BRAnD 389 The Marketing Mix 359 KEY TERMS 390 Products 360 TEST YOUR KnOwLEDgE 390 Pricing 360 ExPAnD YOUR KnOwLEDgE 391 Distribution 360 PRACTICE YOUR SKILLS 391 Customer Communication 361 BEHInD THE SCEnES AGGRAvATIOn LEADS TO CHaPtEr 15 InSPIRATIOn FOR SARAH CALHOUn OF RED AnTS PAnTS 362 Distribution and Marketing Logistics 394 KEY TERMS 363 BEHInD THE SCEnES COSTCO kEEPS CUSTOMERS TEST YOUR KnOwLEDgE 364 COMInG BACk FOR MORE 394 ExPAnD YOUR KnOwLEDgE 364 Introduction 395 PRACTICE YOUR SKILLS 365 The Role of Marketing Intermediaries 395 wholesaling Versus Retailing 395 CHaPtEr 14 Contributions of Marketing Intermediaries 395 Wholesaling and Industrial Distribution 398 Product and Pricing Strategies 367 Major Types of wholesalers 398 BEHInD THE SCEnES TRAnSFORMInG A WORLD-CLASS The Outlook for wholesaling 398 ATHLETE InTO A WORLD-CLASS BRAnD 367 Retailing 399 Retailing Formats 400 Introduction 368 The Outlook for Retailing 401 Characteristics of Products 368 Distribution Strategies 403 Types of Products 368 Customer needs and Expectations 404 Consumer Products 369 Industrial and Commercial Product Support Requirements 404 Products 369 Segmentation, Targeting, and Positioning 404 The Product Life Cycle 370 Competitors’ Distribution Channels 404 Introduction 371 Growth 371 Maturity 371 Established Industry Patterns and Decline 371 Requirements 405 The New-Product Development Process 372 Considerations in Channel Design and Idea generation 372 Idea Screening 372 Management 405 Business Analysis 373 Channel Length 405 Prototype Development 373 Market Coverage 407 Test Marketing 374 Distribution Costs 407 Commercialization 374 Channel Conflict 407 Channel Organization and Control 407 Product Identities 375 Brand name Selection 375 Physical Distribution and Logistics 409 Brand Ownership 376 Forecasting 410 Packaging 376 Order Processing 410 Labeling 377 Inventory Control 410 warehousing 411 Product-Line and Product-Mix Strategies 378 Transportation 411 Product Lines 378 Product Mix 378 BEHInD THE SCEnES COSTCO PUSHES ITS SUPPLY Product Expansion Strategies 380 CHAIn TO SATISFY CUSTOMERS 412 Product Strategies for International Markets 381 KEY TERMS 413 Pricing Strategies 381 TEST YOUR KnOwLEDgE 414 Strategic Considerations in Pricing 382 ExPAnD YOUR KnOwLEDgE 414 Cost Structure and Break-Even Analysis 382 PRACTICE YOUR SKILLS 415  Contents 13 CHaPtEr 16 Sarbanes-Oxley 447 Fundamental Accounting Concepts 448 Customer Communication 417 The Accounting Equation 448 BEHInD THE SCEnES HOW THE QUEST FOR A BETTER Double-Entry Bookkeeping and the Matching Principle 449 CAMERA STRAP TRIGGERED THE GROWTH OF OnE OF Using Financial Statements: The Balance Sheet 450 TODAY’S HOTTEST COMPAnIES 417 Understanding Financial Statements 450 Introduction 418 Balance Sheet 450 Assets 453 Liabilities 453 Owners’ Equity 453 Customer Communication: Challenges, Strategies, and Issues 418 Using Financial Statements: Income Establishing Communication goals 418 and Cash Flow Statements 454 Defining Customer Messages 419 Income Statement 454 Assembling the Communication Mix 420 Statement of Cash Flows 456 Communication Laws and Ethics 421 Analyzing Financial Statements 457 Advertising 422 Trend Analysis 457 Types of Advertising 423 Ratio Analysis 458 Advertising Appeals 423 Types of Financial Ratios 458 Advertising Media 425 Profitability Ratios 458 Liquidity Ratios 458 Activity Ratios 458 Leverage, or Debt, Ratios 460 Direct Marketing 427 Direct Marketing Techniques 427 BEHInD THE SCEnES GOOGLE THIS: “COST Direct Marketing Media 427 COnTROL” 461 Personal Selling 428 KEY TERMS 462 Contemporary Personal Selling 429 TEST YOUR KnOwLEDgE 463 The Personal-Selling Process 429 ExPAnD YOUR KnOwLEDgE 463 Sales Promotion 431 PRACTICE YOUR SKILLS 464 Consumer Promotions 431 Trade Promotions 432 Social Media and Public Relations 433 CHaPtEr 18 Social Media in the Marketing Process 433 Financial Management 467 Communication Strategies for Social Media 434 Brand BEHInD THE SCEnES CHARGInG AHEAD: Communities 435 vISA SEARCHES FOR FUnDS 467 Public Relations 436 Introduction 468 BEHInD THE SCEnES FAnATICAL CUSTOMERS The Role of Financial Management 468 HELP PUSH GOPRO InTO BILLIOn-DOLLAR Developing a Financial Plan 469 TERRITORY 437 Monitoring Cash Flow 469 KEY TERMS 438 Managing Accounts Receivable and Accounts TEST YOUR KnOwLEDgE 438 Payable 470 Managing Inventory 470 ExPAnD YOUR KnOwLEDgE 439 Managing Cash Reserves 471 PRACTICE YOUR SKILLS 439 The Budgeting Process 472 Budgeting Challenges 472 Types of Budgets 473 Part 6 Financing Alternatives: Factors to Consider 475 Managing the Money: accounting Debt Financing Versus Equity Financing 475 and Financial resources 441 Length of Term 476 Cost of Capital 476 Risk 476 Interest Rates 476 Opportunity Cost 477 CHaPtEr 17 Financing Alternatives: Short-Term Debt 478 Financial Information Credit Cards 478 and accounting Concepts 442 Trade Credit 478 Secured Loans 479 BEHInD THE SCEnES REALITY COMES knOCkInG Unsecured Loans 479 AT THE GOOGLEPLEx 442 Commercial Paper 480 Introduction 443 Factoring and Receivables Auctions 480 Understanding Accounting 443 Financing Alternatives: Long-Term Debt 481 what Accountants Do 443 Long-Term Loans 481 Private Accountants 444 Leases 482 Public Accountants 444 Corporate Bonds 482 Major Accounting Rules 445 Financing Alternatives: Equity 483 generally Accepted Accounting Principles (gAAP) 446 Venture Capital and Other Private Equity 484 Non-GAAP Metrics 446 Global Reporting Standards 447 Public Stock Offerings 484 14 Contents BEHInD THE SCEnES vISA FUnDS ITS FUTURE WITH The Money Supply 516 RECORD-SETTInG IPO 486 The Meaning of Money 516 Monitoring and Managing the Money Supply 516 KEY TERMS 487 TEST YOUR KnOwLEDgE 488 The Federal Reserve and Other Federal Financial ExPAnD YOUR KnOwLEDgE 489 Institutions 518 PRACTICE YOUR SKILLS 489 The Fed’s Major Responsibilities 518 The Fed’s Tools for Implementing Monetary Policy 519 The Federal Funds Rate 519 The Discount Rate 520 CHaPtEr 19 Other government Banking Agencies and Institutions 520 Financial Markets and Investment Investment Banking 521 Strategies 491 Services Offered by Investment Banks 521 Types of Investment Banks 522 BEHInD THE SCEnES CHESAPEAkE EnERGY SEARCHES FOR STABILITY In A vOLATILE WORLD 491 Commercial Banking and Other Financial Services 523 Commercial Banking Services 523 Introduction 492 Other Financial Services 524 Stocks 492 Banking’s Role in the Great Recession 524 Types of Stock 492 Building the Perfect Bubble 525 Stock Valuation 493 Recovering from the Dot-Com Bubble 525 Creating a New Bonds 495 Bubble in Housing 525 Securitizing Debt 527 Advantages and Disadvantages of Bonds 496 The Bubble Bursts: The Meltdown of 2008 528 Bond Issuers 497 The great Recession 529 Mutual Funds 498 Efforts to Regulate and Reform the Banking Advantages and Disadvantages of Mutual Funds 499 Industry 530 Choosing Mutual Funds 499 Lessons to Be Learned 530 Derivatives 502 Efforts to Prevent Another Banking Crisis 531 Options and Financial Futures 503 BEHInD THE SCEnES ALLIAnT CREDIT UnIOn: Commodities Futures 504 Currency Futures 504 A MEMBER-DRIvEn APPROACH TO MEETInG Credit Derivatives 504 CUSTOMER nEEDS 533 Financial Markets 505 KEY TERMS 534 The Stock Market 505 TEST YOUR KnOwLEDgE 535 The Bond Market 505 ExPAnD YOUR KnOwLEDgE 535 The Money Market 506 PRACTICE YOUR SKILLS 535 The Derivatives Market 506 Investment Strategies and Techniques 506 Establishing Investment Objectives 507 Learning to Analyze Financial news 508 appendixes Creating an Investment Portfolio 508 Buying and Selling Securities 509 aPPEnDIx a BEHInD THE SCEnES CHESAPEAkE EnERGY HEDGES, Business Law 538 THEn DOESn’T, THEn DOES 510 aPPEnDIx B KEY TERMS 512 risk Management 546 TEST YOUR KnOwLEDgE 512 ExPAnD YOUR KnOwLEDgE 513 aPPEnDIx C PRACTICE YOUR SKILLS 513 Information technology 553 aPPEnDIx D CHaPtEr 20 Personal Finance: Getting Set for Life 559 the Money Supply and Banking Systems 515 Glossary 574 BEHInD THE SCEnES CAn A nOT-FOR-PROFIT CREDIT UnIOn COMPETE In A PROFIT-DRIvEn WORLD? 515 Brand, Organization, name, and Website Index 592 Introduction 516 Subject Index 594  Preface Major Changes and Improvements in This Edition Here are the major changes in the Eighth Edition of Business in Action: Five new chapter-opening vignettes with chapter-ending case studies: Chapter 2: The forecasting challenges faced by Apple when the company was planning the launch of its iPhone 6 models Chapter 3: Cisco’s successful merger-and-acquisition process, defying the odds when it comes to buying other companies Chapter 8: The Mexican building-materials giant Cemex’s innovative use of custom collaboration platform to help its global workforce solve pressing business challenges Chapter 11: Zappos’ unconventional strategies for finding and attracting unconventional employees Chapter 16: GoPro’s smart use of social media to build awareness of and demand for its rugged action cameras More than three dozen new review, analysis, and application questions and student projects Fourteen all-new exhibits and 45 updated or redesigned exhibits, further expanding Business in Action’s unmatched selection of value-added instructional visuals Coverage of the revolution in mobile connectivity and the many ways mobile is reshaping business New or substantially revised sections include The Technological Environment (Chapter 1), highlighting the disruptive effects of mobile communication and connectivity The Trans-Pacific Partnership (PTT) (Chapter 2), highlighting the controversy surrounding this major new trade agreement Legal Differences in the Global Business Environment (Chapter 2), updating the European taxation controversy that has forced Google, Amazon, Starbucks, and other U.S. companies to change their business practices Blueprint for an Effective Business Plan (Chapter 6), adding a discussion of the contrary view about the value of conventional business plans and the use of canvases instead Social Networks and Virtual Communities (Chapter 8), adding an overview of Zappos’s reliance on social networking to keep its growing workforce connected Gamifying for Healthy Competition (Chapter 10), describing how companies are using game principles to motivate employees Gender (Chapter 11, in Dimensions of Workforce Diversity), updating the discussion of gender pay imbalance and uncovering the major issues behind the often-quoted statistics about women earning only 70 percent of what men earn Test Marketing (Chapter 14), expanding the coverage with the new phenomenon of crowdsourced test marketing and crowdfunding as a way to identify potential hit products 15 16 Preface Packaging (Chapter 14), broadening the discussion of how packaging decisions are often a tug-of-war between competing economic and environmental concerns The Outlook for Wholesaling (Chapter 15), adding discussion of how e-commerce technologies let companies such as Amazon jump into traditional wholesaling and distribution channels be- cause some incumbent players were too slow to adapt The Outlook for Retailing (Chapter 15), expanding the discussion points of overcapacity, the emergence of mobile commerce, the growth of multichannel retailing, and data security and privacy concerns stemming from personalized marketing efforts Physical Distribution and Logistics (Chapter 15), using Amazon’s new same-day delivery service and experimentation with delivery drones to highlight the importance of competitive physical distribution in the marketing mix. Public Relations (Chapter 16), explaining how social media have upended the traditional practice of public relations Business in Action: An Ideal Text for Your Introduction to Business Course Business in Action is the ideal text for courses that aim to cover the full spectrum of contem- porary business topics in the most efficient and successful manner possible. HIGH-EFFICIEnCY LEarnInG WItHOUt COMPrOMISES Business in Action offers instructors and students a much-needed alternative to texts that are either overstuffed and overwhelming or so skimpy that they compromise essential coverage. With a full 20 chapters, including chapters dedicated to employee motiva- tion, customer communication, financial markets, and banking, it has the same scope as other comprehensive texts while being up to 20 percent shorter. There is no filler and no fluff, and the examples were chosen carefully to illustrate important points, without overloading the text. We invite you to do side-by-side comparisons with any other busi- ness text to see which one will make the best use of students’ limited time and energy for studying. VIGnEttES anD CaSE StUDIES tHat BrInG BUSInESS COnCEPtS tO LIFE Every chapter is bookended with a vignette/case study pair that help students grasp the principles covered in the chapter. The chapter-opening vignette introduces a company faced with a major strategic challenge and encourages students to imagine how they would address that challenge. The chapter-closing case study describes the strategic choices the company’s leaders made, including how they applied the concepts students just learned in the chapter. Three critical thinking questions require students to apply the concepts cov- ered in the text. Plus, students can find out more about the company featured in the case by completing the “Learn More Online” exercise. In this edition, six of the vignette/case studies are all new, and the rest have been updated to reflect the most recent decisions faced by each featured company. OBjECtIVE-DrIVEn DESIGn WItH InFOrMatIOn CHUnkInG anD IntErIM CHECkPOIntS Every chapter is divided into six concise segments, each focused on its own learning objec- tive and offering a comprehensive checkpoint to help students review and reinforce what they’ve learned. With this approach, each learning objective segment is treated almost as a mini-chapter within the chapter, letting students pace their intake and memorization, rather than having to review an entire chapter at once. The consistent six-part structure  Preface 17 also simplifies course planning and class time allocation for instructors, and it helps stu- dents organize their reading, review, and test preparation. VISUaL LEarnInG FOr a nEW GEnEratIOn OF StUDEntS Business in Action takes efficiency and student-friendly design to an entirely new level, with more than 150 Exhibits That Teach. These unique diagrams, infographics, and other exhibits address the challenge of getting students to read long passages of text by presenting vital concepts visually. The emphasis throughout is on productive learning—on helping stu- dents minimize the time they spend reading while maximizing their learning outcome. This value-added approach to visuals is in sharp contrast to books that try to entertain with decorative photos, cartoons, or fractured page designs that disrupt the flow of read- ing and thereby force students to spend even more time reading. Healthy connection between risk and reward Company Company makes a decision that involves some risk. Outcome If outcome is positive, company reaps the rewards. If outcome is negative, company suffers the consequences. Moral hazard: Link between risk and reward is broken Company Company makes a decision that involves some risk. Outcome If outcome is positive, company reaps the rewards. If outcome is negative, someone else (including other companies, consumers, or taxpayers) suffers the consequences. 18 Preface Extending the value of Your Textbook with Free Multimedia Content Business in Action’s unique Real-Time Updates system automatically provides weekly con- tent updates, including interactive websites, podcasts, PowerPoint presentations, online videos, PDFs, and articles. You can subscribe to updates chapter by chapter, so you get only the material that applies to your current chapter. Visit http://real-timeupdates.com/bia8 to register. 1 See breaking news on hot business topics. 2 Read messages from the 3 Click on any chapter to see authors, access special the updates and media items instructor-only media files, for that chapter. and join online communities for instructors. 5 Subscribe via RSS to individual chapters to get 4 Scan headlines and click updates automatically for on any item of interest to read the chapter you’re currently the article or download the teaching. media item. Building Skills, Awareness, and Insight Each chapter contains a rich set of questions and projects to help students verify their learning, expand their knowledge, and practice important skills: Test Your Knowledge. Fourteen carefully selected questions help you review infor- mation, analyze implications, and apply concepts. Highlighted questions involve ethi- cal considerations and concept integration from other chapters. Expand Your Knowledge. Discovering Career Opportunities tasks give students a chance to explore career resources on campus, observe professionals at their jobs, interview businesspeople, and perform self-evaluations to assess their own career skills and interests. Improving Your Tech Insights tasks students to research and summarize an important technical development and explain its business implications; this feature introduces them to such revolutionary developments as nanotechnology, location and tracking technologies, and assistive technologies for people with disabilities. Practice Your Skills. Sharpening Your Communication Skills addresses one of the key skill concerns among today’s hiring managers; this exercise lets students practice listen- ing, writing, and speaking in a variety of real-life scenarios. Building Your Team Skills teaches important team skills, such as brainstorming, collaborative decision making, developing a consensus, debating, role playing, and resolving conflict. Developing Your Research Skills familiarizes students with a wide variety of business reference materials and offers practice in developing research skills.  Preface 19 Full Support for AACSB Learning Standards The American Association of Collegiate Schools of Business (AACSB) is a not-for-profit cor- poration of educational institutions, corporations, and other organizations devoted to the promotion and improvement of higher education in business administration and account- ing. A collegiate institution offering degrees in business administration or accounting may volunteer for AACSB accreditation review. The AACSB makes initial accreditation decisions and conducts periodic reviews to promote continuous quality improvement in management education. Pearson Education is a proud member of the AACSB and is pleased to provide advice to help you apply AACSB Learning Standards. Curriculum quality is one of the most important criteria for AACSB accreditation. Although no specific courses are required, the AACSB expects a curriculum to include learning experiences in the following areas: Written and oral communication Ethical understanding and reasoning Analytical thinking Information technology Interpersonal relations and teamwork Diverse and multicultural work environments Reflective thinking Application of knowledge Throughout Business in Action, you’ll find student exercises and activities that support the achievement of these important goals, and the questions in the accompanying test bank are tagged with the appropriate AACSB category. Course Planning Guide The structure of Business in Action makes it easy to adapt to courses of any length and with any specific instructional goals. The following table suggests one possible sequence and schedule for covering the chapters in the textbook, with time allocations based on the total number of class hours available. Hours Devoted to Each Chapter 30-Hour 45-Hour 60-Hour Chapter Course Course Course Chapter 1: Developing a Business Mindset 1 2 3 Chapter 2: Understanding Basic Economics 2 2 3 Chapter 3: The Global Marketplace 1 2 3 Chapter 4: Business Ethics and Corporate Social Responsibility 2 3 3 Chapter 5: Forms of Ownership 1 2 3 Chapter 6: Entrepreneurship and Small-Business Ownership 1 2 3 Chapter 7: Management Roles, Functions, and Skills 2 3 3 Chapter 8: Organization and Teamwork 1 2 3 Chapter 9: Production Systems 1 2 3 Chapter 10: Employee Motivation 1 2 3 Chapter 11: Human Resources Management 1 2 3 Chapter 12: Labor Relations 1 2 3 Chapter 13: The Art and Science of Marketing 2 2 2 Chapter 14: Product and Pricing Strategies 2 2 2 Chapter 15: Distribution and Marketing Logistics 1 1 2 Chapter 16: Customer Communication 1 2 2 Continued on next page 20 Preface Hours Devoted to Each Chapter 30-Hour 45-Hour 60-Hour Chapter Course Course Course Chapter 17: Financial Information and Accounting Concepts 2 3 3 Chapter 18: Financial Management 2 2 3 Chapter 19: Financial Markets and Investment Strategies 1 2 3 Chapter 20: The Money Supply and Banking Systems 2 2 3 Appendix A: Business Law - 1 1 Appendix B: Risk Management 1 1 1 Appendix C: Information Technology - - 1 Appendix D: Personal Finance: Getting Set for Life 1 1 1 Resources for Instructors and Students Instructor’s Resource Center At the Instructor Resource Center, www.pearsonglobaleditions.com/Bovee, instructors can easily register to gain access to a variety of instructor resources available with this text in downloadable format. If assistance is needed, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit http://247pearsoned.custhelp.com/ for answers to frequently asked questions and toll-free user-support phone numbers. The following supplements are available with this text PowerPoints. A full set of PowerPoint slides is provided. The slides are divided by chapter and are suitable for leading class lectures and discussion. The slides contain the relevant material from each chapter along with reproductions of key tables and figures. Instructor’s Resource Manual. The Instructor’s Resource Manual makes it easy to plan lectures and incorporate all resources offered with Business in Action. Each chapter con- tains a chapter outline, classroom activities, and answers to all end-of-chapter material. Test Bank. The test bank contains approximately 100 questions per chapter, including multiple-choice, true/false, and essay questions. TestGen® Computerized Test Bank (and various conversions). TestGen is a test- generating software program that allows instructors to add, edit, or delete questions from the test bank; analyze test results; and organize a database of exams and student results. Customer Service If you have questions related to this product, please contact our customer service depart- ment online at http://247pearsoned.custhelp.com/.  Preface 21 About the Authors Courtland L. Bovée and John V. Thill have been leading textbook authors for more than two decades, introducing millions of students to the fields of business and business communication. Their award-winning texts are distinguished by proven pedagogical fea- tures, extensive selections of contemporary case studies, hundreds of real-life examples, engaging writing, thorough research, and the unique integration of print and electronic resources. Each new edition reflects the authors’ commitment to continuous refinement and improvement, particularly in terms of modeling the latest practices in business and the use of technology. Professor Bovée has 22 years of teaching experience at Grossmont College in San Di- ego, where he has received teaching honors and was accorded that institution’s C. Allen Paul Distinguished Chair. Mr. Thill is a prominent business consultant who has worked with organizations ranging from Fortune 500 multinationals to entrepreneurial start-ups. He formerly held positions with Pacific Bell and Texaco. Courtland L. Bovée Acknowledgments A very special acknowledgment goes to George Dovel, whose superb writing and editing skills, distinguished background, and wealth of business experience assured this project of clarity and completeness. Also, we recognize and thank Jackie Estrada for her outstanding skills and excellent attention to details. The supplements package for Business in Action has benefited from the able contribu- tions of numerous individuals. We would like to express our thanks to them for creat- ing a superb set of instructional supplements. We’d like to sincerely thank the following contributors for taking the time to create new content for MyBizLab for this edition: Todd Jamison, Chadron State College; Storm Russo, Valencia College, and Susan C. Schanne, Eastern Michigan University. We want to extend our warmest appreciation to the devoted professionals at Pearson. They include Paul Corey, president; Stephanie Wall, editor-in-chief; Nicole Sam; acquisi- tions editor; Denise Weiss, program manager; Lenny Ann Raper, marketing manager; John V. Thill Jeff Holcomb, senior managing editor of production; Nicole Suddeth, production project manager; all of Prentice Hall Business Publishing; and the outstanding Prentice Hall sales representatives. Courtland L. Bovée John V. Thill Pearson would like to thank and acknowledge Robin Cheng (Taylor’s University, Malaysia) for her contribution to the Global Edition, and Anushia Chelvarayan (Multimedia University, Malaysia), Benjamin Bader (Leuphana University of Lüneburg, Germany), Kitty Szeto (The Chinese University of Hong Kong) and Pinn Tananone (Payap University, Thailand) for reviewing the Global Edition.  real-time Updates—Learn More Real-Time Updates—Learn More is a unique feature you will see strategically located through- out the text, connecting students with dozens of carefully screened online media. These elements—categorized by the icons shown below representing interactive websites, podcasts, PDFs, articles, videos, and PowerPoints—complement the text’s coverage by providing contemporary examples and valuable insights from successful professionals. Real -T im e Up daTes R ea l-T ime Upd aT e s Learn More by Reading This Article Learn More by Listening to This Podcast Ready to start a business? Get this insider advice 50 A closer look at the equilibrium point 80 Managing your career in today’s workplace: One expert’s view 55 Transforming M&A into a strategic advantage 158 Is a higher minimum wage really the job killer some claim Bold vision: Dream big and don’t back down 197 it to be? 76 Taking teams to the top 229 Why aren’t wages rising faster? 82 Keep small tiffs from escalating into major battles 234 Which companies do U.S. consumers like and loathe Hear from experts on business law 541 the most? 120 Starting and growing a successful partnership 149 The innovation advantage of intrapreneurs 172 Learn from the failure of other entrepreneurs 177 R ea l-T ime Upd aT e s Looking for an angel? 183 Learn More by Watching This Video What makes the digital enterprise effective? 199 The mobile business advantage 57 A company needs bosses, right? 201 Are corporations putting too much emphasis on Management is not leadership 202 shareholder value? 127 The benefits of mobile collaboration 229 Hear what 1,000 global CEOs think about sustainability 132 Three factors that distinguish smart teams 231 Young entrepreneurs changing the world 171 Givers, takers, and matchers: How giving can be How managers tackle today’s leadership challenges 204 a source of motivation 271 Building trust in virtual teams 228 Eight mistakes that demotivate employees 287 Watch robots build a Tesla electric car 261 An in-depth tutorial on labor unions 326 See what Google employees have to say about diversity 301 How established companies are trying to compete Dr. Philip Kotler on the importance of brand equity 375 against “digital disrupters” 358 Yield management in the hotel industry 385 Marketing a museum in the social media age 358 Watch Walmart’s march across America 396 The fundamental steps to building your brand 377 The future of retail: some possible innovations 401 Ten successful brand extensions 380 Essential points on the income statement 456 Social media etiquette guide for businesses 434 Can this company pay its bills? 460 How social media changed public relations 436 The basics of exchange traded funds 499 Introduction to the accounting equation 449 Free personal investing videos 564 Get a grip on balance sheets 453 Build a better budget 472 Free tutorials to help you get started in investing 508 Did we learn anything from the banking R ea l-T ime Upd aT e s crisis? 531 Learn More by Reading This PDF Smart tips for buying life insurance 550 Simple steps to protect your privacy 556 Want to pitch to investors? Learn from the pros first 176 Don’t sign that franchise agreement before you read this 185 A closer look at union versus nonunion pay 321 Can you pass the seven-point test? 484 Free consumer advice from the Federal Reserve 519 22  Real-Time Updates—Learn More 23 Real -Tim e Up daTes R ea l-T ime Upd aT e s Learn More by Watching This Presentation Learn More by Exploring This Interactive Website Satisfying the four fundamental drives of employee behavior 272 Use this powerful search tool for easier online searches 53 Five tips for reading a balance sheet 452 Explore the wide range of career possibilities 63 Do a Deep Dive into Balance of Trade Data 97 Get an interactive look at global economic data 103 Explore NAFTA trading flows, city by city 103 Explore the Latest Data on Europe’s Financial Health 105 Real -Tim e Up daTes See how one of the world’s biggest energy consumers Learn More by Visiting This Website is reducing, reusing, and recycling 128 Create a more sustainable product with Nike’s interactive tool 130 Working to Eradicate Corruption Around the World 108 Watch lean manufacturing in action 254 Ready to take a business international? 110 Plot your career path 279 Want to make an impact with your entrepreneurial efforts? 128 Quick summaries of key motivational concepts 285 Know your rights as a consumer 134 Take a closer look at how the United States is changing 300 Get help from a Small Business Development Center 146 Explore the salary potential for virtually any business career 308 Benefit corporations and B Corp certification 152 See the strategies behind the world’s strongest brands 377 Interested in shareholder activism? 155 How much does that fund really cost? 500 Find an incubator to nurture your new venture 180 Find the funds that are right for you 500 Management tools and trends 208 Practice your investment skills 505 The effort to bring manufacturing activities back to the Interested in working for an investment bank? 522 United States 250 Use these free online financial calculators 563 Sustainability at Walmart 252 Interested in a career in supply chain management? 253 Which companies rank highly in quality of work life? 294 R ea l-T ime Upd aT e s Looking for jobs at diversity-minded companies? 298 Learn More by Reading This Infographic Get the facts on gender gaps in corporation leadership 299 See how the NLRB investigates charges and oversees elections 329 Can you run an entire company from a smartphone? 57 Learn more about careers in marketing 344 The Staggering Scale of International Tax Havens 108 Insights for marketing—and career building 348 Mutual funds: The fundamental concepts 499 Marketing to the mobile buyer 346 Mutual funds: The fundamental concepts 271 New research into consumer-generated content marketing 347 Outlining a risk management strategy 547 What’s Hot in Global Consumer Markets? 351 Mint.com’s Life After Graduation roadmap 566 Love the retail experience? 400 See the hottest new concepts in retailing 402 See how big Amazon’s distribution operations look from the inside 411 See the latest ads from all around the world 426 Issues in database marketing 427 See what one of the leading voices in contemporary business has on his mind 434 Content marketing and blogging tips 434 Considering a career in accounting? 445 The latest coverage of crowdfunding 475 Getting your credit report is essential—and free 477 Debt financing programs at the Small Business Administration 482 Get the inside scoop on IPO activity 486 Learn the basics of successful bond investing 497 Free money advice from Mint.com 523 Legal advice for small businesses 539 The Electronic Frontier Foundation’s position on the DCMA 542 Money Management Strategies to Get Your Finances Under Control 559  Prologue Using This Course to Help Launch Your Career You might not be thinking about your long-term career path as you dive into this business course, but this is actually the perfect time to start planning and preparing. Even though you may not have decided which area of business interests you the most, it’s never too early to start accumulating the skills, experiences, and insights that will give you a competitive advantage when it’s time to enter (or reenter) the business job market. By thinking ahead about the qualifications you’d like to have on your résumé when you graduate, you can se- lect courses, seek out part-time employment and internship opportunities, and pursue ex- tracurricular activities that will give you the professional profile that top employers look for. This prologue sets the stage by helping you understand today’s dynamic workplace, the steps you can take to adapt to the job market, and the importance of creating an employment portfolio and building your personal brand. UnDErStanDInG tHE CHanGInG WOrLD OF WOrk Even as the U.S. economy recovers from the Great Recession and employment levels im- prove, you’re likely to encounter some challenges as you start or continue on with your busi- ness career. As companies around the world try to gain competitive advantages and cost efficiencies, employment patterns will vary from industry to industry and region to region. The ups and downs of the economic cycle are not the only dynamic elements that will affect your career, however. The nature of employment itself is changing, with a growing number of independent workers and loosely structured virtual organizations that engage these workers for individual projects or short-term contracts, rather than hiring employees. In fact, one recent study predicted that independent workers will outnumber conventional employees in the United States by 2020.1 This new model of work offers some compelling advantages for workers and companies alike. Companies can lower their fixed costs, adapt more easily to economic fluctuations and competitive moves, and get access to specialized talent for specific project needs.2 Workers can benefit from the freedom to choose the clients and projects that interest them the most, the flexibility to work as much or as little as they want, and (thanks to advances in communication technology) access to compelling work even if they live far from major employment centers such as New York City or California’s Silicon Valley.3 On the other hand, this new approach also presents some significant challenges for all parties. These flexibilities and free- doms can create more complexity for workers and managers, Peter Bernik/Shutterstock diminished loyalties on both sides, uncertainty about the fu- ture, issues with skill development and training, and problems with accountability and liability.4 Many of these challenges involve communication, making solid communication skills more important than ever.