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THE CONTRIBUTIONS OF BUSINESS
BUSINESS MANAGEMENT
PAVONE
BUSINESS GROWTH AND PROSPERITY
GROSS DOMESTIC PRODUCT
• Gross Domestic Product (GDP) – The chief measure of a nations
economic wealth; it is the total market value of all goods and
services produced in a country in a year.
• Underground Economy – Income that escapes being recorded in
the GDP (drugs, counterfeit merchandise, etc).
• The European Union maintains the highest GDP in the world,
slightly ahead of the United States.
GROSS DOMESTIC PRODUCT
Countries with the Largest GDPs
World
$78,280,000,000,000
1
European Union $18,240,000,000,000
2
United States
$17,420,000,000,000
3
China
$10,380,000,000,000
4
Japan
$4,616,000,000,000
5
Germany
$3,860,000,000,000
6
United Kingdom $2,945,000,000,000
7
France
$2,847,000,000,000
8
Brazil
$2,353,000,000,000
9
Italy
$2,148,000,000,000
10
India
$2,050,000,000,000
INDIVIDUAL WELL-BEING
• Next measure of a nations wealth is individual well-being of its
citizens; GDP gives overall picture of economy but not economic
worth of individuals.
• With increased income, an average family improves its level of
living, with luxuries that were not available years ago.
• Americans also spend money on self-improvement and lifeenrichment.
• Overall, Americans have done well financially compared to other
countries, but economic and social problems still exist.
BUSINESS OWNERSHIP
POPULARITY OF SMALL BUSINESS
• Entrepreneur – Someone who starts, manages, and owns a
business.
• Almost anyone can start a new business, with little money needed
to start, also with little or no space needed to start.
• Small business is a company owned by one or more individuals;
they account for more than half of employment in this country and
can offer high-paying jobs.
• Many small businesses are one-person or family operations, such
as restaurants, gift shops, bakeries or online companies.
• Most large businesses begin as small businesses (for instanceSubway, Kinko’s, etc).
GROWTH OF FRANCHISE BUSINESS
• Franchise – A Legal agreement in which an individual or small
group of investors purchases the right to sell a company’s product
or service under the company’s trademark.
• Franchisor – Parent company of a franchise agreement that
provides the product or service.
• Franchisee – Distributor of a franchised product or service.
• In a franchise agreement, a franchisee pays an initial fee to the
franchisor and a percentage of sales; typically failure rate is much
less for franchised businesses.
• Prospective franchisees need to be careful when looking into
purchasing a franchise.
• Franchises have grown steadily and now account for about 5
percent of businesses.
RISKS OF OWNERSHIP
• Success of a business is greatly dependent on managerial
effectiveness in order to turn a profit.
• Risk, the possibility of failure, is faced by all businesses and
derives from competition, price changes, price style and economic
conditions.
• One out of every four to five businesses fail within the first three
years, half cease operations within six to seven years.
• Economic Causes
• Finance Causes
• Disaster and Fraud
• Neglect Causes
• Strategy Causes
• Experience Causes
OBLIGATIONS OF OWNERSHIP
• Businesses have responsibility to their business community in
which they operate; their failure can create a loss for other
businesses.
• Successful businesses also have economic and social
responsibilities, such as to their customers, employees,
management, competitors, investors and the public.
• The community also has obligations to businesses, such as
awareness of turning a profit, realization of prices of goods and
services are affected by expenses and awareness that businesses
cannot provide jobs unless a worker is trained and motivated to
work.
INTRAPRENEURSHIP
• Intrapreneur – 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.
• Employers give their employees the power to be creative and work
independently in order to provide the company with innovative
products and services, without creating a financial risk for the
employees.
• Businesses have found ways in which they can profit share or give
partial ownership to their employees through profit sharing and
company stock purchasing in order to obtain funding by their own
employees.
STUDYING BUSINESS PRINCIPLES AND
MANAGEMENT
• People obtain great benefit from understanding the production,
marketing and financial activities of a business; as an owner, it is
important to have a full understanding of a business operation,
employee relations and government regulations.