The Dynamic Business Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Learning Goals Describe the relationship of businesses’ profit to risk assumption. Discuss the importance of stakeholders and non- profit organizations to business activities. Explain how entrepreneurship is critical to the wealth of an economy, and list the five factors of production that contribute to wealth. Review the six elements that make up the business environment and explain why the business environment is important to organizations. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Business and Entrepreneurship Business: an activity that seeks to provide goods and services to others while operating at a profit. Profit: is the amount of money a business earns above and beyond what it spends on salaries and other expenses. Entrepreneur: is a person who risks time and money to start and manage a business. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Risk VS Profit Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Stakeholders Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Stakeholders: Those Who Stand to Lose or Gain Customers want value Employees want security Investors want returns Suppliers want to be paid Dealers want support Financial institutions want returns Surrounding communities want “equity” Governments want compliance Environmentalists want change Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Creating Economic Wealth Five Factors of Production Land (natural resources) Labour (workers) Capital (physical assets not money) Entrepreneurship Knowledge Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
The Business Environment The Legal and Regulatory Environment The Economic Environment The Technological Environment The Competitive Environment The Social Environment The Global Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Legal and Regulatory Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Legal and Regulatory Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Economic Environment Economic indicators: consumer spending, employment levels and productivity. Income, expenditures and resources that effect the cost of running a business. Currency fluctuations that affect imports and exports. Government regulations and business ownership. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Economic Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Technological Environment Information, technology and productivity Growth of E-commerce Business-to-consumer (B2C) Business-to-business (B2B) Internet marketing Databases Identity theft Personal Information Protection and Electronic Documents Act (PIPEDA) Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Technological Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Technological Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Technological Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Competitive Environment Components of competition Competing by exceeding customer expectations Competing by restructuring and empowerment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Competitive Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Competitive Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Competitive Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Social Environment Demographic changes: Aging population Managing diversity Two-income families Single parents Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Social Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Global Environment Importance to all other environmental influences Growth of international competition Increase of free trade and trade agreements Importance of innovation Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Global Environment Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson