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Nickels

McHugh

McHugh

Managing Within The Dynamic Business Environment: Taking Risks and Making Profits

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McGraw-Hill/Irwin Understanding Business, 8e

2008 The McGraw-Hill Companies, Inc., All Rights Reserved.

CHAPTER

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Business & Entrepreneurship

Business Profit Entrepreneur Match Risk With Profit
Revenue Loss

Standard of Living/Quality of Life Stakeholders Nonprofit Organizations

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Business & Entrepreneurship

Business is any activity that seeks to provide goods and services to others while operating at a profit. Profit is the is the amount a business earns above and beyond what it spends for salaries and other expenses. Entrepreneur is a person who risks time and money to start and manage a business.
Businesses provide people with the opportunity to become wealthy. In addition, businesses provide necessities such as food, housing, and medical care.
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Business & Entrepreneurship

Match Risk With Profit
Revenue is the total amount of money a business takes in during a given period by selling goods and services. A Loss occurs when a businesss expenses are more than its revenues

REVENUE EXPENSES = PROFIT

Entrepreneurs PROVIDE EMPLOYMENT for other people. They also PAY TAXES that are used for schools, hospitals, and other facilities. Businesses are a part of an economic system that helps to CREATE A HIGHER STANDARD OF LIVING and quality of life for everyone.

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Business & Entrepreneurship

Standard of Living/Quality of Life refers to the amount of goods and services people can buy with the money they have. QUALITY OF LIFE refers to the general wellbeing of a society in terms of political freedom, a clean natural environment, education, health care, safety, free time, and everything else that leads to satisfaction and joy. Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.
Stakeholders include customers, employees, stockholders, suppliers, bankers, and people in the local community, environmentalists, and elected leaders.

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Business & Entrepreneurship

The challenge for companies in the 21st century will be to BALANCE, as much as possible, THE NEEDS OF ALL STAKEHOLDERS.
To stay competitive, businesses may OUTSOURCE jobs to other countries. OUTSOURCING assigning various functions, such as accounting, production, security, maintenance, and legal work, to outside organizations. Outsourcing may cause more HARM TO THE COUNTRY than GOOD FOR THE COMPANY. Many companies have set up design and production facilities known as INSOURCING. The decision whether to outsource or to insource is based on what is best for all the stakeholders.
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Business & Entrepreneurship

USING BUSINESS PRINCIPLES IN NONPROFIT ORGANIZATIONS
NONPROFIT ORGANIZATIONSsuch as government agencies, public schools, charities, and social causesmake a major contribution to the welfare of society. A NONPROFIT ORGANIZATION is an organization whose goals do not include making a personal profit for its owners or organizers. SOCIAL ENTREPRENEURS are people who use business principles to start and manage organizations that are not for profit and help countries with their social issues. You need the SAME SKILLS to work in nonprofit organizations that you need in business, including information management, leadership, marketing, and financial management.
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Objectives of Business
Survival

Growth

Profit

Social Responsibility

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Business Classifications
Goods producing May be capitalintensive. Service businesses Generally considered labor-intensive.
The malls are a great place to find service businesses.

* * Why Growth in Service * More disposable income.

The targeting of changing demographic patterns and lifestyle trends. Needed to support complex goods and new technology.

Sector

Companies seeking professional advice to remain competitive. Barriers are low to entry for e-commerce.
Growth of internet.

New advertising technology is the big screen customer interactive TV in shopping malls.

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The FACTORS OF PRODUCTION are the resources used to create wealth: LAND (or natural resources) LABOR (workers) CAPITAL (e.g., machines, tools, and buildings; but not moneymoney is used to buy factors of production) ENTREPRENEURSHIP KNOWLEDGE
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Some experts believe that the most important factor of production is KNOWLEDGE. Workers in the high-tech industries in Californias Silicon Valley are often called KNOWLEDGE WORKERS. What makes rich countries rich is not land, labor, or capital; it is a combination of ENTREPRENEURSHIP and the effective use of KNOWLEDGE. Entrepreneurship also helps make some states and cities rich while others remain relatively poor.
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* * The BUSINESS ENVIRONMENT is the * surrounding factors that either help or hinder the development of business; they are: The economic and legal environment The technological environment The competitive environment The social environment The global business environment Businesses grow and prosper in a healthy environment

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Business Environment
Global Business Economic & Legal

Social

Technology

Competitive

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Economic & Legal Environment

$ GOVERNMENTS CAN LESSEN THE RISK of starting a businesses and increasing entrepreneurship and wealth by: $ Minimum taxes and regulations $ Freedom of ownership $ Contract laws $ Tradable currency $ Elimination/minimization of corruption
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Technological Environment
Productivity E-Commerce Responsiveness to Customer

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HOW TECHNOLOGY BENEFITS WORKERS AND YOU.

TECHNOLOGY means everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and various software programs that make business processes more efficient and productive.
EFFECTIVENESS means producing the desired result. EFFICIENCY means producing goods and services using the least amount of resources. PRODUCTIVITY is the amount of output you generate given the amount of input (e.g. hours worked.) Tools and technology greatly improve productivity. Farmers use high technology to increase production and profit.
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Competitive Environment
Customer Expectations Restructure/Empower

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Competitive Environment
Making quality products is not enough to stay competitive in world marketsnow you have to offer QUALITY PRODUCTS and OUTSTANDING SERVICE at competitive prices.

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Competitive Environment
COMPETING BY EXCEEDING CUSTOMER EXPECTATIONS

Customers today want good quality at low prices and great service. Business is becoming CUSTOMERDRIVEN customers wants and needs come first. Successful companies must LISTEN TO CUSTOMERS to determine their wants and needs and then adjust their products, policies, and practices to meet these demands.

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Types of Competition
Pure Competition: Multiple buyers and sellers exist. No one group or groups can become large enough to influence prices. Monopoly: There is only one produce of a product in a given market. Oligopoly: Industry is dominated by only a few producers. Monopolistic Competition: Large number of sellers, none can dominate the market.

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Social Environment
Diversity/Multicultural Aging/Graying of America Two-Income Families Single-Parent Families

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21st Century Diversity Issues

Race
Gender Ethnicity

Age
Language Religion

Disability
Source: U.S. Equal Employment Opportunity Commission

Sexual
Orientation
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Global Environment
International Competition and Free Trade Improvements in Transportation and Communication War & Terrorism Global Changes

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Trends in Business
Rise of Information & Communication Technology Globalization Self-Directed,

Empowered
Employees Communication Skills

Doing Business 24/7

Educated Consumers Aging Workforce

Decision-Making Skills
Teamwork Leadership Continual Learning

Increasing Diversity

Source: Keying In- Newsletter of the National Business Education Association, March 2003

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THE WORLDS RICHEST PEOPLE

Rank Name Age 1 William Gates III 49 2 Warren Buffett 74 3 Lakshmi Mittal 54 4 Carlos Slim Helu 65 5 Prince Alwaleed Bin 6 Ingvar Kamprad 78 7 Paul Allen 52 8 Karl Albrecht 85 9 Lawrence Ellison 60 10 S Robson Walton 61 Worth 46.5 44.0 25.0 23.8 48 23.0 21.0 18.5 18.4 18.3 Country of Residence ($billions) Citizenship United States United States, WA, Medina United States United States, NE, Omaha India United Kingdom, London Mexico Mexico, Mexico City 23.7 Saudi Arabia Sweden Switzerland, Lausanne United States United States, WA, Seattle Germany Mlheim an der Ruhr United States United States, CA, Silicon V. United States United States, AR, Bentonville

Source: Keying In- Newsletter of the National Business Education Association, March 2003

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