Business Principles and Management Characteristics of Business Chapter 1 Mr. Kretschmer © SOUTH-WESTERN EDUCATIONAL PUBLISHING

CHARACTERISTICS OF BUSINESS Chapter 1 10/6/2000 CHARACTERISTICS OF BUSINESS 1 Explain the general types and changing nature of businesses. Describe how global competition has affected the way American businesses operate. Show how businesses have grown and improved the economic well-being of people. Discuss the role and nature of entrepreneurship and the opportunities, problems, and obligations of small businesses. Summarize the value of plans that allow employees to function like entrepreneurs inside businesses. Explain the importance of studying business principles and management. © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Characteristics of Business What are some reasons why businesses lay off workers? Reasons for Hiring Vs. Reasons for Layoffs © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Characteristics of Business What does 1,000,000,000,000 represent? = 8 Trillion Dollars = Total Value of all goods and services produced in the U.S. in a year Businesses are out to make a profit If a profit is not made, the business will fail. © SOUTH-WESTERN EDUCATIONAL PUBLISHING

NATURE OF BUSINESS Business — an organization that produces or distributes a good or service for profit Profit — the difference between earned income and costs © SOUTH-WESTERN EDUCATIONAL PUBLISHING

NATURE OF BUSINESS 3 Major Business activities Types of businesses Production Marketing Finance Types of businesses Industrial businesses Commercial businesses Highly industrialized = U.S. Japan, China, Germany 3rd World Nations = have few manufacturing firms and a population that is poor © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Changing Nature of Business Business has changed! Do you know some of our local history? Delaware River, Canal, Gravity Railroad Horse, steam power, railroad (1869), car, bus, truck, airplanes, ships © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Obligations of Business Owners Business Owners have several obligations: Customers, workers, management, competitors, investors, and the public What are some items that you own today that were not made 25 years ago? Business innovations: Cotton and Wool 30 years ago = Apple Computer © SOUTH-WESTERN EDUCATIONAL PUBLISHING

IMPACT OF GLOBAL COMPETITION ON BUSINESS Focusing on the right things Achieving effectiveness Achieving efficiency Specialization Technology and innovation Reorganization – Downsizing – Empowerment = Work and Quality improved Reengineering – Changing the Workflow © SOUTH-WESTERN EDUCATIONAL PUBLISHING

PRODUCTIVITY PER WORKER © SOUTH-WESTERN EDUCATIONAL PUBLISHING

BUSINESS GROWTH AND PROSPERITY Gross domestic product (GDP) Underground economy and Joint Agreements = Hard to trace Individual well-being = Luxury Items Business Growth = People have a strong desire to own their own business. Small Businesses = Very Large Subway = Over 13,000 Strong McDonalds and Holiday Inn = Located Globally © SOUTH-WESTERN EDUCATIONAL PUBLISHING

ENTREPRENEURSHIP Popularity of small business Growth of small business Growth of franchise business Risks of ownership Obligations of ownership © SOUTH-WESTERN EDUCATIONAL PUBLISHING

INTRAPRENEURSHIP Intrapreneur — an employee who is given funds and freedom to create a special unit or department within a company in order to develop a new product, process, or service © SOUTH-WESTERN EDUCATIONAL PUBLISHING

BUSINESS GROWTH AND PROSPERITY Franchises – Employs 8 million people and accounts for half of all retail sales © SOUTH-WESTERN EDUCATIONAL PUBLISHING

UNITED STATES GROSS DOMESTIC PRODUCT © SOUTH-WESTERN EDUCATIONAL PUBLISHING

INDIVIDUAL WELL-BEING Percentage of U.S. Households Owning Selected Items © SOUTH-WESTERN EDUCATIONAL PUBLISHING

BUSINESS GROWTH AND PROSPERITY Risk of Ownerships depends on managerial success © SOUTH-WESTERN EDUCATIONAL PUBLISHING

Any Questions © SOUTH-WESTERN EDUCATIONAL PUBLISHING