1 Meeting the Challenges of Today’s Dynamic Business Environment Chapter 1

2 (I) What is business? 1. Business is providing goods and services to others seeking profits providing wealth and a high quality of life for almost everyone.. 2. Businesses are a part of an economic system that helps to create a higher standard of living and quality of life. Standard of living: the amount of goods and services people can buy with the money they have. Quality of life: the general well-being of a society.

3 (I) What is business? (Cont.) Nonprofit organizations : Organizations whose goals don’t include making a profit for its owners ( government agencies, public schools and charities). In nonprofit organizations business skills are needed such as leadership, marketing and finance management.

4 (II) The importance of entrepreneurship to wealth An entrepreneur: is a person who risks time and money to start and manage a business. Corporate Downsizing: eliminating some workers or managers in order to make a business more efficient. is one of the major opportunities contributing to the increasing number of entrepreneurs.

5 (II) The importance of entrepreneurship to wealth (Cont.) Matching risk with profit: Businessmen find the right balance between risk and profit. Profits: earnings above and beyond organization spending, expenses, and other costs. Loss: when costs and expenses exceed revenue. Risk is the chance of losing time and money on a business that may not prove profitable.

6 (III) The role of the factors of production in creating wealth The resources businesses use to create wealth: land (other natural resources) Labor (workers) capital (i.e. money, equipments….) entrepreneurship Knowledge entrepreneurship and knowledge are key components in enriching today’s countries.

7 (IV) The business environment The five key environmental factors that are critical to the success of business are: 1. Economic environment 2. Technological environment 3. Competitive environment 4. Social environment 5. Global business environment

8 [1] The Economic Environment: People are willing to take the risk of starting businesses if they feel that the risk isn’t too great. Government can lessen the risk of starting a business Government can lessen the risk of starting a business thereby increasing entrepreneurship and wealth by: allowing private ownership of business passing laws that enable businesspeople to write contracts that are enforceable in court establish a tradable currency eliminate corruption in business and government keep taxes and regulations to a minimum.

9 [2] The Technological Environment a) The Internet a) The Internet: the network of computer and telecommunication equipment that links the world into one unified communications system. a) Information Technology: a) Information Technology: is very important to all business. b) Databank b) Databank: an electronic storage file where vast amount of information is kept, can be used to store of information about customers and thus responding to their needs and wants. c) Electronic Data Interchange c) Electronic Data Interchange: I.e. bar codes used instead of items directly.

10 [3] The Competitive Environment Making quality products is not enough to stay competitive in world markets. In order to remain competitive in the market you have to: Compete by speed Compete by speed Compete by delighting the customers: Compete by delighting the customers: adjust their products, policies, and practices to meet customers’ demands. Compete by meeting the needs of the community: Compete by meeting the needs of the community: ensure stakeholders’ satisfaction. (Stakeholders: customers, employees, stockholders, suppliers...Etc.) Compete by restructuring and meeting the needs of employees: Compete by restructuring and meeting the needs of employees: Empowerment. Is important to respond quickly to customer requests Compete by concern for the natural environment Compete by concern for the natural environment

11 [4] The Social Environment` A. Demography: is the statistical study of the human population to learn its size, density, and characteristics. B. Multiculturalism: is the process of optimizing the contributions of people from different cultures. C. Two-Income Families: many employers provide child care benefits for their employees. Also some companies are increasing the number of part-time workers by allowing workers to stay home and send in their work by telecommunications, a practice known as Telecommuting.

12 [5] The Global Environment The global environment of business affects all other environmental influences. growth of international competition the increase in free trade Key global environmental changes today is the growth of international competition and the increase in free trade among nations which in turn lead to increasing productivity. Productivity is the volume of goods and services that one worker can produce.