Chapter 1 Discuss 5-8 Innovations 10/6/2000 Bellwork Discuss 5-8 Innovations Objectives Turn in Class Rules Bellwork Review The Nature of Business Competition Activity Notes on the Impact of Global Competition Review Question Answers 1. About 22 million. 2. Production, marketing, and finance. 3. General services and wholesale and retail trade. 4. Service businesses.

Compare & Contrast Review Chapter 1 10/6/2000 Compare & Contrast Review Good vs. Services Manufacturing Firms vs. Service Firms Supply vs. Demand Industrial Businesses vs. Commercial Businesses Highly Industrialized Nations vs. Thirds World Nations Industrial vs. Industry Good vs. Services Goods – physical product such as clothes, shoes, tricycles, & tents Services – intangible products that use mostly labor to satisfy customer needs Manufacturing Firms vs. Service Firms Manufacturing Firms – produce goods Service Firms – provide assistance to satisfy specialized needs through skilled workers Supply vs. Demand Supply – the number of similar products that will be offered for sale at a particular time & a particular price Demand – the number of similar products that will be bought at a given time at a given price Industrial Businesses vs. Commercial Businesses Industrial businesses – produce goods used by other businesses or organizations to make things Commercial businesses – wholesalers, retailers, banks, investment companies and furnishers of services Highly Industrialized Nations vs. Thirds World Nations Highly industrialized nations Have many resources & manufacturing firms (US, Japan, Germany) Third world countries Have few manufacturing firms (Peru, Chile, Nigeria, Somalia, etc.) Industrial vs. Industry Industrial – an organization that makes something Industry – all businesses within a category © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Chapter 1 10/6/2000 GLOBAL COMPETITION Global Competition – the ability of profit-making organizations to compete with businesses in other countries For years, American businesses have led the way in producing new goods & services for sale around the world America was filled with factories and workers from other countries arrived by thousands to find jobs Leaders from foreign countries even came to America to see how our businesses were so successful Over the last 30 years, other countries have become more industrialized and have learned how to invent & produce American business leaders soon realized it was time for change Global competition is the driving force behind the major decisions made by most large companies today © SOUTH-WESTERN EDUCATIONAL PUBLISHING

IMPACT OF GLOBAL COMPETITION Chapter 1 10/6/2000 IMPACT OF GLOBAL COMPETITION Focusing on the right things A balance between effectiveness and efficiency Achieving effectiveness Domestic goods vs. Foreign goods Total Quality Management (TQM) Achieving efficiency Output – the quantity produced within a given time Productivity – producing the largest quantity in the least amount of time How we compete in a global economy: Focus is on right things: effectiveness and efficiency. Effectiveness – making the right decisions about what products or services to offer customers & how to produce and deliver them Efficiency – producing needed goods or services quickly and at low cost Achieving effectiveness – making the right decisions & making what customers want Customers once bought only what was available b/c there was little to choose from Because of global competition, the choices have increased Domestic Goods – products made by firms in the US Foreign Goods – products made by firms in other countries Have students pair up and list items they have with them that were made in the U.S. and items that were made in other countries and what countries in which they were made. Firms focus on gathering info from customers, studying their buying habits, testing new products, adding new features TQM – accomplished by teamwork and continual improvement, from the bottom of the organization to the top An award given for quality in the U.S. is the Malcolm Baldridge National Quality Award which hundreds of firms apply for and one is awarded per year. Achieving efficiency Efficiency is measured by output & Productivity gives it a numeric value Notice the graph on pg. 9

ACHIEVING EFFICIENCY Specialization Technology and innovation Chapter 1 10/6/2000 ACHIEVING EFFICIENCY Specialization Mass Production – assembly lines that produce a large amount of products quickly Technology and innovation Reorganization Downsize – cutting back on goods & services and number of employees Empowerment – letting workers decide how to perform their work & offering ideas on improvement Specialization – with many employees in an organization, work can be more efficient with some specialization Ex. Medical field – would you want heart surgery from a general medical doctor? How can mass production be a form of specialization? Each step along the assembly line requires employees to do one task well and quickly Disadvantage – workers can become bored. Technology & innovation Technology – equipment, processes, and materials, etc. Innovation – improvement or advancement that contributes to satisfying customers How has technology & innovation improved automobiles? Reorganization – most difficult way to achieve efficiency; Downsizing - Typical reaction to cutting back on costs Later many firms realized their employees were there most valuable resource Managers decided to empower them This improved quality and efficiency of workers, fewer managers were needed Activity – Get 4 pairs of student volunteers. Explain to the class that our tree drawing factory is not doing very well. We’ve struggled in sales lately and as a manager, I am going to do my best to figure out some way of our factory being more productive They will all be drawing you as many pictures of a tree as possible (productivity), but trying to be as neat as possible while making all the products look the same (quality) Group 1 you will tell exactly how to draw the tree, who will be drawing leaves, branches, etc. (specialization – mass production) Group 2 you will give a set of colored pencils (technology & innovation) Group 3 you will take away a worker to cut costs (downsizing) Group 4 you will coach, but allow them to make the final decisions. You will try to encourage and ask for their opinions as much as possible (Empowerment)

Chapter 1 10/6/2000 Homework Read p.4-21 Create two (2) questions from the concepts discussed in Chapter 1.