Ch 1 Basic Business

8/9/2019 Ch 1 Basic Business

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Chapter 1The Changing Face of ContemporaryBusiness

LearningGoa

ls

Distinguish between business and

not-for-profit organizations.

Identify and describe the factors

of production.Describe the private enterprise

system.

Identify the six eras of business

and explain the relationship era.

Explain how todays business

workforce is changing.

Describe how the nature of work

is changing.Identify skills and attributes of

!st-century managers.

"utline the characteristics

that make a company

admired.

1

2

3

4

5

6

7

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WHAT IS BUSINESS?

#usinessAll profit-seeking activities and enterprises that provide goods andservices necessary to an economic system.

$rofitRewards for businesspeople who take risks involved to offer goods andservices to customers.

Not-for-Prot Organizations

Businesslike establishments that have primary objectives other than returning

profits to owners.

Murray States athletic departments, U.S. Postal Service, American

Cancer Society

Face many of the same challenges as for-profit organizations.

See Fortune 500for a list of major U.S. companies.
http://money.cnn.com/magazines/fortune/fortune500/http://money.cnn.com/magazines/fortune/fortune500/


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Factors of Production

Fourbasic inputs an economic system requires:

%atural &esourcesAll production inputs that areuseful in their natural state.

'apitalTechnology, tools, information, andphysical facilities.

(uman &esourcesAnyone who works, includingthe CEO and a self-employed mechanic.

EntrepreneurshipWillingness to take risks tocreate and operate a business.

Example: Under Armour
http://www.underarmour.com/shop/http://www.underarmour.com/shop/


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THE PRIVATE ENTERPRISE SYSTEM$rivate Enterprise )ystemAn economic system that rewards firms for their

ability to see and meet the needs and demands of consumers. Also called

capitalism.

'ompetitionBattle among businesses for customer acceptance;

Adam Smiths invisible hand that requires firms to engage in competitive

differentiation to set themselves apart from competitors. Smith is the father

of capitalism.

Competition is the battle among businesses for consumeracceptance.

To succeed, firms must adjust to market changes and competitors actions

Example: McDonaldsstrives to meet consumers preference for healthier items

in the battle against Wendys, Sonic, etc.
http://www.mcdonalds.com/usa.htmlhttp://www.mcdonalds.com/usa.html


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Basic Rights in the Private EnterpriseSste!

Right to own,

use,buy, sell, and

bequeath most

forms of property.

Owner legally and

ethically entitled toincome in excess

of costs, after taxes

paid.

Citizen choice in

employment, purchases,

and investments.

Fairness ensured byrules and laws set in

public sphere.


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"he Entrepreneurship #lternative

EntrepreneurA risk taker in the private enterprise system. Also calledcapitalism.

Entrepreneurship fuels the growth of the U.S. economy:

1 in every 7 firms in the United States began operations in the last year.

Of the 20 million U.S. businesses currently in operation, 15 million are self-employed people without any employees.

Nearly 12 million U.S. employees currently work for a business with fewer

than ten employees.

Small companies tend to be more flexible and innovative in their use of the

factors of production.

Large firms adopt entrepreneurial approaches to enhance flexibility,

improve innovation, and open new market opportunities


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SIX ERAS IN THE HISTORY OF U.S.BUSINESS

"he $olonial Period %pre-&''()

Emphasized rural and agricultural production.

Colonists depended on England for finished products and financial backing.

"he *ndustrial Revolution %&'(+-&,+)

Move from one-by-one production of goods by skilled laborers to factory

systems and mass production. Factories profited from savings realized through large-scale production.


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"he #ge of *ndustrial Entrepreneurs %late&,++s)

Inventors created an endless array of commercially useful products and new

production methods.

Eli Whitney introduced concept of interchangeable parts.

Robert McCormick introduced horse-drawn reaper than reduced the laborinvolved in harvesting wheat.

Vanderbilt (railroads), Morgan (banking), and Carnegie (steel) started new

businesses and reaped great benefits.

"he Production Era %through the &./+s)

Emphasis on efficient production of goods through huge, labor-saving factories.

Focus on internal processes rather than external influences,

e.g., Henry Fords assembly lines. Assembly lines
https://www.google.com/search?q=ford+assembly+lines&espv=210&es_sm=122&tbm=isch&tbo=u&source=univ&sa=X&ei=A6bWUunFHsXx2QXJwoD4Cg&ved=0CCoQsAQ&biw=1440&bih=775https://www.google.com/search?q=ford+assembly+lines&espv=210&es_sm=122&tbm=isch&tbo=u&source=univ&sa=X&ei=A6bWUunFHsXx2QXJwoD4Cg&ved=0CCoQsAQ&biw=1440&bih=775


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"he 0ar1eting Era %&.+s-&..+s)

Drop in income during Great Depression focused businesses on marketing goods

and services through sales and advertising.

Development of consumer orientation, a marketing approach that focuses on

determining what consumers want and need and developing products to satisfy

those needs

Businesses increasingly distinguished their products from competitors through

branding:


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"he Relationship Era %2egan in &..+s)

Businesses take a long-term approach to interactions with customers to build

loyalty and improve customer retention.

Examples: Citibank and Burger King
http://www.youtube.com/watch?v=ZF86Rb-uFNEhttp://www.youtube.com/watch?v=ZF86Rb-uFNE


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0anaging Relationships through"echnolog

&elationship *anagement Collection of activities that build and maintain

ongoing, mutually beneficial ties with customers and other parties.

Involves gathering knowledge of customer needs and preferences and applying

this understanding. Many of these activities are based on technology, the business application of

knowledge based on scientific discoveries, inventions, and innovations.

Communication with customers often aided by technology, particularly the

Internet, e.g., Stonyfield Farms use of blogs to reinforce customer

relationships.

Bovine Bugle
http://stonyfield.typepad.com/bovine/http://stonyfield.typepad.com/bovine/


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Strategic #lliances and Partnerships

Businesses affiliate with each other through partnerships to take advantage of

new opportunities.

Firms form a strategic allianceto create a competitive advantage.

Example: A partnership between an online company such as eBayandtraditional retailers such as Bloomingdales, Home Depot, and Motorola.

Example: Pepsi and Apple partnering in short-term promotion of Pepsis soft

drinks and Apples iTunes Music Store.
http://www.ebay.com/http://www.ebay.com/


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TODAYS BUSINESS WORKFORCEA skilled and knowledgeable workforce

Fosters strong ties with customers and partners

Improves efficiency and quality

Promotes innovationAll of these provide a foundation for competitive differentiation.


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$hanges in the 3or1force

Aging of t! Po"#$%tionThe number of Americans 65 and older will double

by 2030; trend is similar globally.

Many baby boomers are hitting the peak of their careers, while Generations X

and Y are launching their careers.

Technology has intensified the hiring challenge by requiring workers to have ever

more advanced skills.

S&in'ing (%)o& Poo$The U.S. may soon face a shortage of 10 million

workers. Technology requires workers with advanced skills.

+ The two fastest-growing ethnic populations in the United States are

Hispanics and people of Asian origin.

Immigrants represent one of every seven workers, one of every two new

workers.


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O#t*o#&+ing %n, t! C%nging N%t#&! of Wo&'U.S. output is shifting

from manufacturing to services such as financial management and

communications.

"utsourcing is using outside vendors to produce goods or fulllservices and functions that were previously handled in-houseor in-country.

"ffshoringis the relocation of business processes to lower-costlocations overseas.


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N!- E"$o/!&0E"$o/!! P%&tn!&*i"Lifetime employment with one

company is largely a thing of the past. Todays model is partnership.

Companies recognize value of a partnership with employees and many

routinely share financial data with them.

Companies offer stock, profit-sharing, and employee training geared toward

career advancement.


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THE 12ST0CENTURY MANA3ER*!portance of 4ision

Visionis the ability to perceive marketplace needs and what an organization must

do to satisfy them.

*!portance of $ritical "hin1ing and$reativit

Critical thinkingis the ability to analyze and assess information to pinpoint

problems or opportunities.

Creativityis the capacity to develop novel solutions to perceived organizational

problems.

#2ilit to Steer $hange

Changes are driven by technology, marketplace demands, and

global competition.


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WHAT MAKES A COMPANY ADMIRED?Business ethicsstandards of conduct and moral values involving decisions made

in the work environment.

Social responsibilitymanagement philosophy that includes contributing

resources to promote the well-being of the general public.

Todays ListBuffet
http://fortune.com/worlds-most-admired-companies/apple-1/http://en.wikipedia.org/wiki/Warren_Buffetthttp://en.wikipedia.org/wiki/Warren_Buffetthttp://fortune.com/worlds-most-admired-companies/apple-1/


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he 'hanging 2orkforce

!. #y 3435 what percent of the 6.). population will be

made up of 7sians5 (ispanics5 7frican-7mericans5 and

other nonwhite groups8

a.9: percent c. ;: percent b. 4: percent d. :: percent


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. he most dramatic workforce change since the !1 d. women


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. he most dramatic workforce change since the !1 d. women


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?. "f the 9? million 7mericans who have disabilities5 3

million are of working age /!; to ;91. (ow many of this

group are employed8

a. @ million c. !million b. !4 million d. !< million


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?. "f the 9? million 7mericans who have disabilities5 3

million are of working age /!; to ;91. (ow many of this

group are employed8

a. @ million c. !million b. !4 million d. !< million


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9. #y the year 3!45 what percent of the workforce will be

44 years of age or older8

a. !4 percent c. 93 percent

b. 4 percent d. 43 percent


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9. #y the year 3!45 what percent of the workforce will be

44 years of age or older8

a. !4 percent c. 93 percent

b. 4 percent d. 43 percent


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4. 2hat percent of the total 6.). population speaks a

language other than English at home8

a. 9 percent c. 9 percent

b. !9 percent d. ?9 percent


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4. 2hat percent of the total 6.). population speaks a

language other than English at home8

a. 9 percent c. 9 percent

b. !9 percent d. ?9 percent


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;. 2hat are the two most racially and ethnically diverse

states in the 6.).8

a. Alorida5 %ew Bork c. %ew Bork5 'alifornia

b. Alorida5 'alifornia d. %ew *exico5 'alifornia


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;. 2hat are the two most racially and ethnically diverse

states in the 6.).8

a. Alorida5 %ew Bork c. %ew Bork5 'alifornia

b. Alorida5 'alifornia d. %ew *exico5 'alifornia


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:. 2hat are the two least ethnically and racially diverse

states8

a. %orth5 )outh Dakota c. *aine5 Cermont

b. 2yoming5 %evada d. 7rkansas5 Illinois


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:. 2hat are the two least ethnically and racially diverse

states8

a. %orth5 )outh Dakota c. *aine5 Cermont

b. 2yoming5 %evada d. 7rkansas5 Illinois


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Ch 1 Basic Business