10/3/2010

Business Defined
The production and distribution
of goods and services
to satisfy the needs and wants of
the consumer
hopefully, at a profit
NICKELS • M CHUGH • M CHUGH
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

Chapter What Is Business?

One • Activity seeking profit
• Provides goods/services
• Satisfy standard of living-
Meeting the Challenge of quality of life
Today’s Dynamic • Nonprofit
Business Environment organizations

Business Environment
Objectives of Business (Figure 1.2)

Survival

Profit Social
Growth Responsibility

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Entrepreneurship
vs. Factors of Production
Employment
• Opportunities For Entrepreneurs Land Entrepreneurship
• Matching Risk With Profit
– Revenue - Expense = Profit(Loss) Labor
– Risk

Capital Knowledge

Government Affects Environments of Business

Business By Being:
• Economic
G A Customer
• Technological
GAn Overseer and • Social
Regulator
• Competitive
G A Tax Collector • Global

Economic Environment Technological Environment

• Internet
$ Freedom of ownership • E-commerce
$ Contract laws • Role of Intermediaries ?
$ Elimination of corruption • Responsiveness to
Customer
$ Tradable currency
• Information Management
$ Minimum taxes & regulation

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A Business and Its Stakeholders

(Figure 1.4 )
Average Skill
LevelRequired
58%
Average Skill
Level: 3.6
40%

2%

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6

Source: Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post

Current Skill Level The 21st Century Workforce

70.5% Contract
Average Skill Workers
Level: 2.6 15% Permanent
Employees
35%
Contingent
16.1% Workers
25%
6.6% Outsourced
6.8%
Suppliers
25%
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6

Source: Workforce Magazine, Jan. 1998

Changing Intermediaries Internet Impact

• Communications
• Access
• No Borders

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E-commerce Explosion Competitive Environment

• Transaction costs • Flexibility • Customer Service
– Customer Demands
• Size of purchase – Speed
• Catalog size
per transaction
• Community/Stakeholder Needs
• Integration • Customer
Interaction • Natural/Ecological Concern

Social Environment U.S. Population Shifts

• Diversity/Multicultural 80% 72%
70% 62%
• Aging/Graying 60%
50% White
• Two Income Families 40%
Hispanic
Afro-Amer.
• Single Parent Families 30%
18%
Asian
Amer. Indian
20% 12%12% 13%
6%
10% 4 % 1% 1%
0%
1999 2025

Source: Census Bureau

Dealing With A
Global Environment Multicultural Workforce
• Quality
ý Show Respect for Culture/Value of
Others
• Productivity ý Avoid Stereotyping
ý Include All Workers in Acculturalization
ý Be Empathetic But Be Yourself
• Changes
ý Avoid Imposing Your Culture/Values on
Others

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World Population Milestones Evolution of

American Business
9
8
7
• Agricultural/Manufacturing
6
Billions of 5
People 4 • Service Industries
3
2
1 • Future???
0
1804 1927 1960 1974 1987 1999 2013 2028 2054

Source:USA Today

Key Terms
• Revenue 7
• Business 4
• Risk 7
• Downsizing 5
• Services 25
• Entrepreneur 4
• Standard of living 4
• Factors of production 9
• Goods 24
• Loss 7
• Non profit organization 5
• Profit 4
• Quality 19
• Quality of life 4