Copyright © 2002 by Harcourt, Inc. All rights reserved. CHAPTER ONE BUSINESS: 2005 and Beyond

Copyright © 2002 by Harcourt, Inc. All rights reserved. CHAPTER OVERVIEW Business components Business components Eras of business Eras of business Workforce changes Workforce changes Manager characteristics Manager characteristics © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. WHAT IS BUSINESS? Business: profit seeking activities of those engaged in purchasing or selling goods/services to satisfy society’s needs and wants Business: profit seeking activities of those engaged in purchasing or selling goods/services to satisfy society’s needs and wants Profits: financial rewards received by businessperson for taking risks involved in creating and marketing goods/services Profits: financial rewards received by businessperson for taking risks involved in creating and marketing goods/services © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Not-for-Profit Organizations Not-for-profit organizations: primary objectives other than returning profits to owners Not-for-profit organizations: primary objectives other than returning profits to owners © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Factors of Production Natural Resources: inputs useful in natural states Natural Resources: inputs useful in natural states Capital: technology, tools, information and physical facilities Capital: technology, tools, information and physical facilities Human Resources: workers and their knowledge Human Resources: workers and their knowledge Entrepreneurship: take risk to create and operate business Entrepreneurship: take risk to create and operate business © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. PRIVATE ENTERPRISE SYSTEM Private enterprise system (capitalism): economic system that rewards firms for ability to serve customer needs and demands Private enterprise system (capitalism): economic system that rewards firms for ability to serve customer needs and demands Competition: battle among businesses vying for consumer acceptance Competition: battle among businesses vying for consumer acceptance © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. SIX ERAS IN HISTORY OF BUSINESS Colonial Period Before 1776Before 1776 Rural/agriculturalRural/agricultural

Copyright © 2002 by Harcourt, Inc. All rights reserved. SIX ERAS IN HISTORY OF BUSINESS Colonial Period Industrial Revolution After 1750After 1750 Factory system mass- produced itemsFactory system mass- produced items Semi-skilled workersSemi-skilled workers

Copyright © 2002 by Harcourt, Inc. All rights reserved. SIX ERAS IN HISTORY OF BUSINESS Colonial Period Industrial Revolution Industrial Entrepreneurs Late 1800sLate 1800s Advanced technologyAdvanced technology Raised standardRaised standard of living of living

Copyright © 2002 by Harcourt, Inc. All rights reserved. SIX ERAS IN HISTORY OF BUSINESS Colonial Period Industrial Revolution Industrial Entrepreneurs Production Era Early 1900sEarly 1900s Production of manufactured goodsProduction of manufactured goods Assembly linesAssembly lines Internal focusInternal focus

Copyright © 2002 by Harcourt, Inc. All rights reserved. SIX ERAS IN HISTORY OF BUSINESS Colonial Period Marketing Era Marketing Era Industrial Revolution Industrial Entrepreneurs Production Era 1950s1950s Satisfy needsSatisfy needs Consumer OrientationConsumer Orientation BrandingBranding

Copyright © 2002 by Harcourt, Inc. All rights reserved. SIX ERAS IN HISTORY OF BUSINESS Colonial Period Marketing Era Marketing Era Industrial Revolution Industrial Entrepreneurs Production Era Advances in technology Advances in technology Develop relationships Develop relationships Relationship Era Relationship Era

Copyright © 2002 by Harcourt, Inc. All rights reserved. FROM TRANSACTION MANAGEMENT TO RELATIONSHIP MANAGEMENT Transaction management: building and promoting products in hopes of covering costs and earning acceptable profits Transaction management: building and promoting products in hopes of covering costs and earning acceptable profits Relationship management: activities that build and maintain ongoing, mutually beneficial ties with customers and other parties Relationship management: activities that build and maintain ongoing, mutually beneficial ties with customers and other parties © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Strategic Alliances and Partnerships Partnership: two or more companies with shared goal of assisting each other in achievement of common goals Strategic alliance: partnership formed to create competitive advantage for businesses involved © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. CREATING VALUE THROUGH QUALITY AND CUSTOMER SATISFACTION Value: perception of balance between positive traits of good/service and price Value: perception of balance between positive traits of good/service and price Customer satisfaction: ability of good/service to meet or exceed needs and expectations Customer satisfaction: ability of good/service to meet or exceed needs and expectations © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE Aging of Population Aging of Population Baby boomers beginning to retire Baby boomers beginning to retire Decline in number of available workers Decline in number of available workers Shrinking Labor Pool Shrinking Labor Pool Limited supply of skilled employees looking Limited supply of skilled employees looking © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE Increasingly Diverse Workforce Increasingly Diverse Workforce 2005, ethnic minorities 28% of U.S. population 2005, ethnic minorities 28% of U.S. population 2050, almost 50% will belong to ethnic groups 2050, almost 50% will belong to ethnic groups Diversity allows local and global competition Diversity allows local and global competition The Changing Nature of Work The Changing Nature of Work Economy - from manufacturing to services Economy - from manufacturing to services Telecommuters more common Telecommuters more common Job flexibility for employees Job flexibility for employees Growth of outsourcing Growth of outsourcing More temporary and part-time employees More temporary and part-time employees © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE Increased Mobility of Workers Increased Mobility of Workers Few employees stay with one company Few employees stay with one company Nontraditional work arrangements Nontraditional work arrangements Self-employment Self-employment Temporary help agencies Temporary help agencies Increased challenge to retain talented employees Increased challenge to retain talented employees © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. Reaping the Benefits of Diversity Contribute unique perspectives, skills, and experiences Contribute unique perspectives, skills, and experiences Enrich a firm’s chances of success Enrich a firm’s chances of success Tasks performed more effectively Tasks performed more effectively Better solutions to problems Better solutions to problems Improved understanding of customer needs Improved understanding of customer needs Improved relationships with customer groups Improved relationships with customer groups © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. WANTED: NEW TYPE OF MANAGER Vision: ability to perceive needs and how to satisfy them Vision: ability to perceive needs and how to satisfy them Importance of Vision Importance of Vision

Copyright © 2002 by Harcourt, Inc. All rights reserved. WANTED: NEW TYPE OF MANAGER Critical Thinking: ability to analyze and assess information in order to pinpoint problems or opportunities Critical Thinking: ability to analyze and assess information in order to pinpoint problems or opportunities Creativity: capacity to develop novel solutions to perceived organizational problems Creativity: capacity to develop novel solutions to perceived organizational problems Importance of Vision Importance of Vision Critical Thinking and Creativity

Copyright © 2002 by Harcourt, Inc. All rights reserved. WANTED: NEW TYPE OF MANAGER Must guide employees and organizations through changes brought about by technology, marketplace demands, and global competition Must guide employees and organizations through changes brought about by technology, marketplace demands, and global competition Importance of Vision Importance of Vision Ability to Steer Change Critical Thinking and Creativity

Copyright © 2002 by Harcourt, Inc. All rights reserved. ETHICS AND SOCIAL RESPONSIBILITY Business Ethics: standards of conduct and moral values involving right and wrong actions in workplace Business Ethics: standards of conduct and moral values involving right and wrong actions in workplace Social Responsibility: (give back) management philosophy that highlights social and economic effects of business decisions Social Responsibility: (give back) management philosophy that highlights social and economic effects of business decisions © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. WHY STUDY BUSINESS? Learn about different business careers Learn about different business careers Assess advantages and disadvantages of starting business Assess advantages and disadvantages of starting business Become better-informed consumer and investor Become better-informed consumer and investor Learn how business can help solve societal problems Learn how business can help solve societal problems © PhotoDisc

Copyright © 2002 by Harcourt, Inc. All rights reserved. WHAT’S AHEAD? Ethical & social responsibility issues Ethical & social responsibility issues How economics influences business and everyday lives How economics influences business and everyday lives Challenges and opportunities faced Challenges and opportunities faced © PhotoDisc