BA 101 Introduction to Business

1. Fundamentals of Business and Economics

What is a Business?

Knowledge

Entrepreneurs

For-ProfitFor-ProfitFor-ProfitFor-Profit

• GoodsGoods

• ServicesServices

• Job creationJob creation

• Tax-baseTax-base

• InvestmentsInvestments

• GoodsGoods

• ServicesServices

• Job creationJob creation

• Tax-baseTax-base

• InvestmentsInvestments

Non-ProfitNon-ProfitNon-ProfitNon-Profit

• EducationEducation

• LibrariesLibraries

• MuseumsMuseums

• Social servicesSocial services

• CharitiesCharities

• EducationEducation

• LibrariesLibraries

• MuseumsMuseums

• Social servicesSocial services

• CharitiesCharities

Re

sou

rces C

ap

ital

Categories of Business

Providing ServicesProviding ServicesProducing GoodsProducing Goods

Capital Intensive Labor Intensive

Service Sector Growth

More disposable incomeMore disposable income

Lifestyle and demographic changesLifestyle and demographic changes

Complex goods and technologiesComplex goods and technologies

Need for professional adviceNeed for professional advice

Low barriers to entryLow barriers to entry

What is Economics?

Microeconomics Microeconomics

MacroeconomicsMacroeconomics

Economic SystemEconomic System

Factors of Production

Resources

Capital

Entrepreneurs

Knowledge

Economic Systems

CapitalismMixed

CapitalismSocialism Communism

Privatization

Free-MarketSystem

PlannedSystem

MicroeconomicsMicroeconomics

The Forces of Supply and Demand

Supply and Demand

Supply: Specific quantity of a product that the seller is able and willing to provide

Demand: Buyers’ willingness and ability to purchase products

Advertising andAdvertising andPromotion SpendingPromotion Spending

Advertising andAdvertising andPromotion SpendingPromotion Spending

Consumer IncomeConsumer IncomeConsumer IncomeConsumer Income Consumer PreferencesConsumer PreferencesConsumer PreferencesConsumer Preferences

Price ofPrice ofSubstitute ProductsSubstitute Products

Price ofPrice ofSubstitute ProductsSubstitute Products

Price of Price of Complementary GoodsComplementary Goods

Price of Price of Complementary GoodsComplementary Goods

Expectations AboutExpectations AboutFuture PricesFuture Prices

Expectations AboutExpectations AboutFuture PricesFuture Prices

Price

High

erLo

wer

Demand

LowerHigher

Understanding Demand

Understanding Supply

Goods andServices

Supply

Price

Variables Variables

Higher

MoreLess

Lower

The Relationship between Supply and Demand Variables that affect supply and

demand change simultaneously and continually, thus creating changes in the equilibrium price.

Both production levels and prices reflect the interaction of supply and demand.

MacroeconomicsMacroeconomics

Issues for the Entire Economy

PurePureCompetitionCompetition

MonopolisticMonopolisticCompetitionCompetitionOligopolyOligopoly

MonopolyMonopoly

Free-Market Competition

Price

Speed

Quality

Service

Innovation

Competitive AdvantageCompetitive Advantage

The Role of Government

Fostering competitionFostering competition

Regulating industriesRegulating industries

Deregulating industriesDeregulating industries

Protecting stakeholders’ rightsProtecting stakeholders’ rights

Contributing to economic stabilityContributing to economic stability

Fostering Competition

AntitrustLegislation

Mergers andAcquisitions

Regulating and Deregulating Industries

GovernmentGovernmentRegulationRegulation

FreeFreeCompetitionCompetition

Fair CompetitionFair CompetitionFair CompetitionFair Competition

Business EthicsBusiness EthicsBusiness EthicsBusiness Ethics

Working ConditionsWorking ConditionsWorking ConditionsWorking Conditions

Public SafetyPublic SafetyPublic SafetyPublic Safety

Contributing to Economic Stability

EconomicEconomicExpansionExpansion

EconomicEconomicContractionContraction

RecoveryRecovery

RecessionRecession

BusinessBusinessCycleCycle

BusinessBusinessCycleCycle

MonetaryMonetaryPolicyPolicy

FiscalFiscalPolicyPolicy

InterestInterestRatesRates

Revenue andRevenue andSpendingSpending

Major Economic Indicators

Housing StartsHousing Starts

Durable-GoodsDurable-GoodsOrdersOrders

Interest RatesInterest Rates

UnemploymentUnemploymentStatisticsStatistics

Measuring Price Changes

InflationInflation DeflationDeflation

Consumer Price Index (CPI)

Purchasing PowerPurchasing Power

Measuring National Output

Gross NationalProduct (GNP)

Gross DomesticProduct (GDP)Dollar ValueDollar Value

YesYesYesYesFinal Goods Final Goods and Servicesand Services

YesYesYesYesDomestic BusinessesDomestic Businesses

NoNoYesYesForeign-Owned Foreign-Owned BusinessesBusinesses

YesYesNoNoOverseas OperationsOverseas Operations

Ten Economic Performance Indicators

Prime Interest RatePrime Interest Rate

Housing StartsHousing Starts

Labor Productivity RateLabor Productivity Rate

Rate of InflationRate of Inflation

Consumer Price IndexConsumer Price Index

Unemployment RateUnemployment Rate

Durable-Goods OrdersDurable-Goods Orders

Balance of TradeBalance of Trade

Producer Price IndexProducer Price Index

Gross Domestic ProductGross Domestic Product

What does the future hold?

The aspect of terrorism China in the global economy Work mobility Deficits in budget and balance of trade E-business

Challenges of Globalization

Quality products and servicesQuality products and services

Changing needs of customersChanging needs of customers

Managing a small businessManaging a small business

Globalization and workforce diversityGlobalization and workforce diversity

Ethics and social responsibilityEthics and social responsibility

Technology and electronic commerceTechnology and electronic commerce