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Ferrell Hirt Ferrell
BUSINESS
A CHANGING WORLDEIGHTH EDITION
1
FHF
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
part
CHAPTER 3 Business in a Borderless World
CHAPTER 2 Business Ethics and Social Responsibility
1
CHAPTER 1 The Dynamics of Business and Economics
FHF
Business in aChanging
World
FHF
What is a business?Individuals or organizations trying to earn a
profit by providing products that satisfy people's needs.
The Nature of Business
1-3
FHF
What is a product?A good or service with tangible and intangible
characteristics that provide satisfaction and benefits.
The Nature of Business
1-4
FHF
The Primary Goal of Business
Earn a profit
The difference between what it costs to make and sell a product and what a customer pays for it.
1-5
[ ]FHF
Profit Is:
The difference between what it costs to make and sell a product and what a customer pays for it
1-6
FHF
Non-Profit Organizations
Not all organizations are for-profit businesses
Nonprofit organizations
Provide goods and services but
Do not have the fundamental purpose of earning profits
1-7
[ ]FHF
Stakeholders
Customers, employees, investors, government regulators, community and society. Those that have a stake in the success and outcomes of a business are
considered stakeholders
1-8
FHF
The Activities of Business
Management – Focus on employeesMotivating employees toward business
goals
Coordinating employee’s actions
Organizing people for efficiency
1-10
FHF
Management: Production and Manufacturing
Another element of managementPlan activitiesOrganize staffControl tasks of
the organization
1-11
FHF
Marketing
Focus on satisfying customerso Determine what products customers want
o Plan and develop products
o Determine:
Distribution
Place
Promotion
Price
1-12
FHF
Finance
Finance is the primary responsibility of owners
Obtaining money
Using money effectively
Accountants, stockbrokers, bankers
1-13
FHF
Why Study Business?
o Develop skills for career success
o Understand business activities
o Learn the importance of profitability
Individual businesses
Local and regional impact
Global economic impact
1-14
FHF
Business Impact
Purchase raw materials
Hire employees
Attract capital
Create products
Fuel the global economy
Contribute to society
1-15
FHF
The Economic Foundations of Business
Economics• Distribution of resources for the production of
goods and services within a social system
Resources (sometimes called factors of production)
• Natural resources (land, forests, minerals, water)
• Human resources (labor)
• Financial resources (capital)
• Intangible (good reputation, quality products)
1-16
FHF
Economic Systems
How a society distributes its resources to produce goods and services Central issue of economics
How to fulfill an unlimited demand for goods and services with a limited supply of resources
1-17
FHF
Communism
A society in which the people, without regard to class, own all the nation’s resources.
China
North Korea
Cuba
1-18
FHF
Socialism
System in which the government owns and operates basic industries but individuals own most businesses.
Sweden
Israel
India
1-19
FHF
Capitalism
Free Enterprise Individuals own and operate
majority of businesses providing goods and services
United StatesJapanAustralia
1-20
FHF
Pure Capitalism vs Modified Capitalism
Pure CapitalismFree Market
All economic decisions made without government intervention
Modified CapitalismGovernment intervenes and regulates
business to some extent
1-21
[ ]FHF
Mixed Economies
No country practices pure capitalism, socialism, or communism. Economic systems can be mixtures and often
contain various elements of government intervention
1-22
FHF
The Free-Enterprise System
o Basic individual and business rights
Right to own property
Right to earn profits and use them as one wishes (within constraints of law)
Right to make business decisions
Right to choose (careers, what goods/services to purchase, etc.)
1-23
FHF
Supply and Demand
Distribution of resources and products is determined by supply and demand
Demand Number of goods/services consumers buy at a
given price at a specific time
Supply Number of products businesses will sell at different
prices at a specific time
1-24
FHF
Nature of Competition
Competition Rivalry among businesses for consumers’ dollars
Pure Competition Many small businesses in same product market
Monopolistic Competition Small number of businesses
Little difference in products
Oligopoly Very few businesses selling a product
1-25
FHF
Economic Cycles & Productivity
Economic ExpansionEconomy is growing and consumers are spending money
Economic ContractionSpending declines, layoffs, economy slows down
1-26
FHF
Economic Cycles
Inflation Condition characterized by continuing rise in prices
Recession Decline in production, employment, and income
Depression Unemployment very high; consumer spending low;
business output sharply reduced
Unemployment % of population that wants to work but unable to find
jobs
1-27
FHF
A Brief History of the U.S. Economy
The early economy The Industrial Revolution The manufacturing economy The marketing economy The service economy The new digital economy
1-28
FHF
Entrepreneurship
Entrepreneur: An individual who risks his/her wealth, time and effort to develop for profit an innovative product or way of doing something.
Entrepreneurship requires:
Risk
Innovation
Creativity
Reward
1-29
FHF
The Role of Government in the U.S. Economy
Modified Capitalismo The government regulates industry to
encourage competition and protect stakeholders like consumers, employees, or the environment
o Laws force businesses to adhere to government standards
o Government agencies like the U.S. Federal Reserve Board or the Department of Commerce occasionally intervene to regulate the economy and spur growth
1-30
FHF
Ethics & Social Responsibility in Business
Business ethics refers to standards and principles used by society to define appropriate behavior at work
Stakeholders increasingly demand that businesspeople behave ethically and socially responsibly
Business reputation depends on profit and ethical conduct and social responsibility
1-31