Chapter 1: BUSINESS NOW
Change is the Only Constant
© 2009 South-Western, a division of Cengage Learning
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LOOKING AHEAD
• What is the role of business in the economy?
• How has business evolved?
• What is the role of non-profits in the economy?
• What are the core factors of production?
• What are the elements of the environment
affecting business?
• How are business trends impacting careers?
© 2009 South-Western, a division of Cengage Learning
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MOVING AT BREAKNECK SPEED
1965
1.General Motors
2.Exxon Mobil
3.Ford Motor
4.General Electric
5.Mobil
6.Chrysler
7.US Steel
8.Texaco
9.IBM
10.Gulf Oil
1985
1.Exxon Mobil
2.General Motors
3.Mobil
4.Ford Motor
5.Texaco
6.IBM
7.DuPont
8.AT&T
9.General Electric
10.Amoco
1995
1.General Motors
2.Ford Motor
3.Exxon Mobile
4.Wal-Mart
5.AT&T
6.General Electric
7.IBM
8.Mobil
9.Sears Roebuck
10.Altria Group
2007
1.Wal-Mart
2.Exxon Mobil
3.General Motors
4.Chevron
5.ConocoPhillips
6.General Electric
7.Ford Motor
8.Citigroup
9.Bank of America
10.AIG
In the last decade:
– The players have changed
– What consumers want has changed
– How we buy has changed
© 2009 South-Western, a division of Cengage Learning
Source:http://money.cnn.com
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BUSINESS BASICS
A business is any activity
that provides goods and
services in an effort to earn
profit.
Non-profit
organizations focus
on causes not
profit
© 2009 South-Western, a division of Cengage Learning
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BUSINESS BASICS
Profit is the financial reward
that comes from starting
and running a business.
the money that a
business earns in
sales (or revenue),
minus expenses
© 2009 South-Western, a division of Cengage Learning
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NONPROFIT PARTNERSHIPS
The Business of Doing Good
Many nonprofits work with
businesses to improve the quality
of life in society.
Companies support their
missions and improve society.
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ENTREPRENEURIAL SPIRIT
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CREATIVITY MATTERS
• Creativity is important to the economy
– with global competition, the stakes are
high
• Many of the latest inventions have
come from companies
– this trend is likely build momentum as
global competition intensifies
© 2009 South-Western, a division of Cengage Learning
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INVENTIONS WITH IMPACT
Disposable Diapers
Cat Litter
Laptop
Bikinis
Viagra
Muzak
Camcorder
Kool-Aid
Astroturf
© 2009 South-Western, a division of Cengage Learning
Source: Encyclopedia Britannica
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THE EVOLUTION OF BUSINESS
Assembly Line
Consumer Power
Industrial Titans
Refining Production
Wealth Creation
Productivity Gains
Growth in
Consumerism
Satisfied Customers
Decrease Costs
Product Differentiation
Increase in Living Standard
Use of Technology
Manipulation/Competition
Hard Sell
Exploitation
No Customer Focus
Mass Production
Factories
Long-term
Relationships
Customer Focus
Work Specialization
Efficiency
Industrial
Revolution
1700-mid
1800s
Entrepreneurship Production
Era
Era
Mid 1800s
Early 1900s
Marketing
Era
1950s
Relationship
Era
© 2009 South-Western, a division of Cengage Learning
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FACTORS OF PRODUCTION
Natural Resources
Human Resources
Capital
Entrepreneurship
• Businesses rely on
some combination of
these factors
• Entrepreneurship is a
key factor
– Most growing economies
support and promote
entrepreneurship
© 2009 South-Western, a division of Cengage Learning
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THE ELEMENTS OF THE
BUSINESS ENVIRONMENT
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DYNAMIC, CONSTANT AND
ENGAGING, CHANGE
– New Products
– Integrating Technology
– Creating Technologies
– New Businesses
– Innovative Processes
– New Target Markets…..
“
When the
change on the
outside exceeds
the change on
the inside, the
end is near.”
“
• Companies must respond
quickly and creatively
- Jack Welch
© 2009 South-Western, a division of Cengage Learning
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ECONOMIC ENVIRONMENT
Free Enterprise and Fair Competition Flourish in the United States
• Government takes an active
role to support businesses
– Low Federal Tax Structure
– Small Business Administration
– Federal Trade Commission
Economic Vulnerabilities
CEO/Worker Pay Gap
Consumer Debt
Federal Debt
– Legislation & Enforceable
Contracts
© 2009 South-Western, a division of Cengage Learning
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COMPETITIVE ENVIRONMENT
• Today’s competition is intense
• Companies must focus on customer
satisfaction
– Build Long-Term Relationships
– Provide Value
– Customer Satisfaction = Profitability
– Cheap Doesn’t Equal Value
© 2009 South-Western, a division of Cengage Learning
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COMPETITIVE PRINCLIPLES
1. Avoid your competitors’ strengths and exploit
their weaknesses. Don’t try and beat them at
their game.
2. Always be a little paranoid. Never
underestimate your competition.
3. Competitors will usually get better when
pushed.
4. Competitors are sometimes irrational
when pushed.
© 2009 South-Western, a division of Cengage Learning
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COMPETITION IS CHANGING
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SOCIETY CHANGES
• What are our changing values and beliefs?
• How does the integration of other cultures
change/add to values and beliefs?
• What demographic influences are changing
the environment globally?
Companies must respond to these changes in the
products they sell and how they sell them.
© 2009 South-Western, a division of Cengage Learning
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AND CHANGES……
Teens today are much less
likely than their parents to
categorize people by race,
religion, and sexual orientation.
They’re more likely to notice
similarities and differences in
core values.
© 2009 South-Western, a division of Cengage Learning
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Source: Diversity in Word and Deed: Most Teens Claim Multicultural Friends, press release from Teenage Research Unlimited, November 10, 2004, TRU Website,
http://www.teenresearch.com/PRview.cfm?edit_id=278.
SOCIAL ENVIRONMENT
• Diversity
• Aging Population
• Rising Worker
Expectations
• Ethics & Social
Responsibility
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GENERATION C
• Creating Content
• Customizing Products
– Websites
– Blogs
– Photos
– Ringtones
– Music
– Movies
© 2009 South-Western, a division of Cengage Learning
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TECHNOLOGICAL
ENVIRONMENT
• Technology has transformed businesses and
consumers
• How Companies Do Business
–
–
–
–
Telecommunications
Robotics
Flexible Manufacturing
Alternative Selling/eCommerce
• How Consumers Shop
– Online Information/Content
– Alternative Buying/eCommerce
© 2009 South-Western, a division of Cengage Learning
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TECHNOLOGICAL
ENVIRONMENT
More than 724,000
Americans report that eBay
is their primary or
secondary source of income,
And an additional 1.5 million
people say that they
supplement their incomes by
selling on eBay.
© 2009 South-Western, a division of Cengage Learning
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Source: US Postal Service News Release, July 21, 2005. http://www.usps.com/communications/news/press/2005/pr05_062.pdf.
GLOBAL ENVIRONMENT
Technology is linking
customers/suppliers
worldwide
China and India’s
economies are
growing
Technology
Free Trade
Job Migration
Terrorism is more
of a threat today
Blurred lines between
countries/world
© 2009 South-Western, a division of Cengage Learning
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GLOBAL ENVIRONMENT
According to investment
bank CLSA, China
manufactures 80% of the
world’s clocks and watches,
50% of its cameras, 30% of
its microwave ovens, a
quarter of its washing
machines, and a fifth of its
refrigerators.
© 2009 South-Western, a division of Cengage Learning
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COOLEST BRANDS
According to Chinese college students
Nike
30.8%
Sony
15.9%
Adidas
15.1%
BMW
10.1%
Microsoft
9.0%
Coca-Cola
8.9%
IBM
8.2%
© 2009 South-Western, a division of Cengage Learning
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BUSINESS AND YOU
MAKING IT PERSONAL
What are your passions?
What are business careers
that encompass your
passions?
© 2009 South-Western, a division of Cengage Learning
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LOOKING BACK
• Define business and the role of business in the
economy.
• Explain the evolution of modern business.
• Discuss the role of non-profit organizations in the
economy.
• Outline the core factors of production and how
they impact the economy.
• Describe today’s business environment and
discuss each dimension.
• Explain how current business trends impact your
career choices.
© 2009 South-Western, a division of Cengage Learning
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