McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 NickelsMcHughMcHugh Nickels Cover

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-2 Chapter 11 Managing Within The Dynamic Business Environment: Taking Risks and Making Profits 1-2

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-3 Business & Entrepreneurship BusinessBusiness ProfitProfit EntrepreneurEntrepreneur Match Risk With ProfitMatch Risk With Profit RevenueRevenue LossLoss Standard of Living/Quality of LifeStandard of Living/Quality of Life StakeholdersStakeholders Nonprofit OrganizationsNonprofit Organizations

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-4 Objectives of Business Survival Growth Social Responsibility Profit

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-5 Creating Wealth: Factors of Production Land Labor Capital Entrepreneurship Knowledge

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-6 Business Environment

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-7 Economic & Legal Environment $Freedom of ownership $ Contract laws $ Tradable currency $ Elimination of corruption

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-8 California$ B California$ B New York B New York B New Jersey 5.70 B New Jersey 5.70 B Connecticut 2.50 B Connecticut 2.50 B Missouri 1.30 B Missouri 1.30 B Ohio 0.72 B Nevada 0.64 B Nevada 0.64 B State Budget Deficits (’03 & ’04)- Billions Source: BusinessWeek March 17, 2003

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-9 ProductivityProductivity E-CommerceE-Commerce Responsiveness to CustomerResponsiveness to Customer Technological Environment

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Competitive Environment Customer ExpectationsCustomer Expectations SpeedSpeed Restructure/EmpowerRestructure/Empower Concern for Natural EnvironmentConcern for Natural Environment

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Bottled Water Sales in Past 10 Years Tripled to $5.7 Billion (Women Majority of Drinkers) Who is Shopping Online? Americans38% French10% Britons25% Spaniards 4% Canadians24% Poles 3% Japanese20% Consumer Trends Source: Business & Economic Review, Jan.-Mar. 2002

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Social Environment Diversity/MulticulturalDiversity/Multicultural Aging/Graying of AmericaAging/Graying of America Two-Income FamiliesTwo-Income Families TelecommutingTelecommuting Single-Parent FamiliesSingle-Parent Families

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved U.S. Household Size Source: Census Bureau

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Buying Power of Diverse Groups Women $3,700 Billion Hispanic Americans 550 Billion African Americans 500 Billion Gay Men & Lesbians 450 Billion Asian Americans 254 Billion Native Americans 35 Billion Sources: National Organization on Disability Employability; U.S. Pan Asian American Chamber of Commerce; DiversityInc.com; U.S. Census Bureau

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. U.S. Ethnic Composition Source: Census Bureau

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved st Century Diversity Issues Race Gender Ethnicity DisabilityAgeLanguage Religion Sexual Orientation Source: U.S. Equal Employment Opportunity Commission

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. The Aging of America Source: Census Bureau

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. % U.S. Population by Age Source: Census Bureau

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Older Americans Working Source: USA Today

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Growth of Dual-Income Households Source: USA Today

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Women In The Workforce Source: CNNMoney, 3/3/03.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Wives Outearn Husbands All Couples* 30.7%All Couples* 30.7% Two-Income Couples 24.1%Two-Income Couples 24.1% *3% Involve Salaries $75,000+ *3% Involve Salaries $75,000+ Source: CNNMoney, 3/3/03.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. Where Americans Live Source: Census Bureau

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Global Environment QualityQuality ProductivityProductivity War & TerrorismWar & Terrorism Global ChangesGlobal Changes

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Disaster Costs September 11, 2001 Attacks $ 70 B Northridge, CA Earthquake 44 B Kobe, Japan Earthquake 100 B The Economic Cost of Disaster Source: Business 2.0, November 2002.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved % Does Global Experience Help Your Career? 20% 56% Source: USA Today 5% Very Helpful Somewhat Unnecessary No Response

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Evolution of American Business Agricultural/ManufacturingAgricultural/Manufacturing Service IndustriesService Industries Future???Future???

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Rise of Information & Communication Technology Globalization Doing Business 24/7 Educated Consumers Aging Workforce Increasing Diversity Pyramid vs. Web Trends in Business Source: Keying In- Newsletter of the National Business Education Association, March 2003 Self-Directed, Empowered Employees Communication Skills Decision-Making Skills TeamworkLeadership Continual Learning

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Skill Level Required Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Source: Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post Average Skill Level: 3.6 2% 58% 40%

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Current Skill Level Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Average Skill Level: % 70.5% 6.6% 16.1%