Business
Management
Chapter 1
All businesses engage in 3
major activities:
 1.
Production – the making of a product
or providing a service
 2.
Marketing – how goods or services are
exchanged between producers and
consumers
 3.
Finance – deals with all money matters
related to running a business
What we pay for something is
based upon supply and
demand
 Supply
– the number of similar products
that will be offered for sale at a particular
time and at a particular price.
 Demand
– the number of similar products
that will be bought at a given time at a
given price.
2 Types of Businesses:
 1.
industrial – these produce goods used
by other businesses or organizations to
make things.
 2.
commercial – engaged in marketing
(wholesalers and retailers), in finance
(banks and investment companies), and
in furnishing services (medical offices,
athletic centers, and motels)
Changing Nature of Business
 Most
businesses react quickly to change:

Innovations: clothing used to be made
from natural fibers; now scientists have
invented synthetic fibers

Computers: first there was only Apple; now
there’s numerous types of computers
Global Competition
 For
years American businesses have led
the way. Other countries bought
everything from us.
 Over the last 30 years other countries
have become more industrialized and
have learned how to invent and produce
better products for consumers.
 Now we buy from other countries.
Achieving Effectiveness
 Business
focus on making the right decisions about
what products or services to offer customers and
how to produce and deliver them.
 Firms
today focus on gathering information from
customers, studying their buying habits, testing new
products with customers, and adding new features.
 Customers

also want high-quality products.
(ex. Buying foreign made cars)
Achieving Efficiency
 Producing
needed goods or services quickly
and at a low cost.
 Efficiency is achieved in 3 ways:

1. Specialization of effort – hiring people
specialized in a particular field/trade.

2. Better technology and innovation

3. Reorganization – letting employees make
some decisions
Chapter
 For
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1 TEST Friday
Study:
Notes (from today)
Your outline you created last week
Vocabulary
Study Guide
Business Growth and Prosperity
 The
first measure of a nation’s economic wealth
is the gross domestic product (GDP). It’s the total
market value of all goods and services produced
in a country in a year.
 Income
that escapes being recorded in the GDP
is referred to as the underground economy.
 The
 The
total GDP for the U.S. is around $10 trillion.
second measure is individual well-being.
(how financially stable we are)
Entrepreneurship
 Businesses
are growing because of people
wanting to own their own business.
 Small
businesses are booming because they are
fairly cheap to start.
 Small
 Ex.:
businesses have few employees.
restaurants, gift shops, gas stations,
bakeries, etc.
Growth of Franchises
 One
popular way to launch a small business is to
start a franchise.
 The
franchisee pays 3 to 8 percent of weekly
sales to the franchisor.
 Franchises
employ over eight million people and
account for nearly half the retail store sales in the
country.
 Risks
of Ownership: The success of a business
depends on the management. If a business is
well managed, it has a better chance of
earning money.
 All
entrepreneurs face risk – competition from
other businesses, changes in prices, changes
in style, competition from new products, and
changes that arise from economic conditions.
 Owner’s







have Obligations:
1. To Customers
2. To Workers
3. To Management
4. To Competitors
5. To Investors
6. To the Public
The Community also has an obligation to a local
business to help it thrive.
Intrapreneurship
 An
intrapreneur is an employee who is given
funds and freedom to create a special unit or
department within a company in order to
develop a new product, process, or service.
 Some
of the largest corporations in the U.S.
provide intrapreneurship opportunities. By so
doing, valuable employees provide the
company with innovative products and
services.
 Employee
stock ownership plan permits
employees to buy stock within the company.

ASSIGNMENT:

Read Case Study 1-1 on page 26 and answer
the questions.

Read Case Study 1-2 on page 27 and answer
the questions.

One paper for the partnership, be sure to put
both names on it.

BOTH DUE AT THE END OF CLASS.