Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER ONE BUSINESS: BLENDING PEOPLE, TECHNOLOGY AND ETHICAL BEHAVIOR Text by Profs. Gene Boone & David Kurtz Multimedia Presentation by Prof. Milton Pressley The University of New Orleans

Copyright © 2003 by South-Western. All Rights Reserved. Describe the private enterprise system and the roles played by individual businesses, competitors, and entrepreneurs within the system Describe the private enterprise system and the roles played by individual businesses, competitors, and entrepreneurs within the system Explain how the historical development of the U.S. economy continues to influence contemporary business Explain how the historical development of the U.S. economy continues to influence contemporary business Outline the challenges and opportunities that businesses face in the relationship era Outline the challenges and opportunities that businesses face in the relationship era Describe how technology is changing the way businesses operate and compete Describe how technology is changing the way businesses operate and compete Relate the importance of quality and customer satisfaction to efforts to create value for customers Relate the importance of quality and customer satisfaction to efforts to create value for customers LEARNING GOALS

Copyright © 2003 by South-Western. All Rights Reserved. Explain how individual businesses and entire nations compete in the global marketplace Explain how individual businesses and entire nations compete in the global marketplace Describe how changes in the workforce are leading to a new employer-employee partnership Describe how changes in the workforce are leading to a new employer-employee partnership Identify the skills that managers need to lead businesses in the new century Identify the skills that managers need to lead businesses in the new century Explain how ethics and social responsibility affect business decision making Explain how ethics and social responsibility affect business decision making List four reasons for studying business List four reasons for studying business LEARNING GOALS

Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER OVERVIEW U.S. economy enjoying a wave of prosperity U.S. economy enjoying a wave of prosperity Business growth opens doors of opportunity Business growth opens doors of opportunity New challenges posed by the technological revolution New challenges posed by the technological revolution © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.1 Technology: Transforming the Way People Communicate

Copyright © 2003 by South-Western. All Rights Reserved. WHAT IS BUSINESS Business: profit seeking activities of those engaged in purchasing or selling goods and services to satisfy society’s needs and wants Business: profit seeking activities of those engaged in purchasing or selling goods and services to satisfy society’s needs and wants Profits: financial rewards received by a businessperson for taking the risks involved in creating and marketing want-satisfying goods and services Profits: financial rewards received by a businessperson for taking the risks involved in creating and marketing want-satisfying goods and services © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Not-for-Profit Organizations Not-for-profit organizations: businesslike establishments that have primary objectives other than returning profits to their owners Not-for-profit organizations: businesslike establishments that have primary objectives other than returning profits to their owners © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.2: The Corporate Angel Network: A Not-for-Profit Organization Figure 1.2: The Corporate Angel Network: A Not-for-Profit Organization

Copyright © 2003 by South-Western. All Rights Reserved. Factors of Production Factors of production: basic inputs into the private enterprise system, including natural resources, human resources, capital and entrepreneurship Factors of production: basic inputs into the private enterprise system, including natural resources, human resources, capital and entrepreneurship © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved.

Factors of Production Natural Resources: productive inputs that are useful in their natural states Natural Resources: productive inputs that are useful in their natural states Capital: includes technology, tools, information and physical facilities Capital: includes technology, tools, information and physical facilities Human Resources: anyone who works Human Resources: anyone who works © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.3: Human Resources: Critical Factor of Production Figure 1.3: Human Resources: Critical Factor of Production

Copyright © 2003 by South-Western. All Rights Reserved. Factors of Production Entrepreneurship: willingness to take risks to create and operate a business Entrepreneurship: willingness to take risks to create and operate a business © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. THE PRIVATE ENTERPRISE SYSTEM Private enterprise system (capitalism): economic system that rewards firms based on how well they match and counter the offerings of competitors to serve the needs and demands of customers Private enterprise system (capitalism): economic system that rewards firms based on how well they match and counter the offerings of competitors to serve the needs and demands of customers Competition: battle among businesses vying for consumer acceptance Competition: battle among businesses vying for consumer acceptance © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.4: Basic Rights within a Private Enterprise System Basic Rights within the Private Enterprise System

Copyright © 2003 by South-Western. All Rights Reserved. The Entrepreneurship Alternative Entrepreneur: risk taker in the private enterprise system Entrepreneur: risk taker in the private enterprise system © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS Colonial Period Before 1750 Before 1750 Colonial society Colonial society emphasized rural emphasized rural and agricultural and agricultural production production

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS Colonial Period Industrial Revolution After 1750 After 1750 Factory system mass- produced items using semi-skilled workers Factory system mass- produced items using semi-skilled workers

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS Colonial Period Industrial Revolution Industrial Entrepreneurs Entrepreneurship increased during the late 1800s. Entrepreneurship increased during the late 1800s. Did much to raise the overall standard Did much to raise the overall standard of living. of living.

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS Colonial Period Industrial Revolution Industrial Entrepreneurs Production Era Early 1900s Early 1900s Attention focused on activities involved in producing manufactured goods Attention focused on activities involved in producing manufactured goods

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS Colonial Period Marketing Era Marketing Era Industrial Revolution Industrial Entrepreneurs Production Era Post WWII Post WWII Consumer Orientation: marketing used as a process Consumer Orientation: marketing used as a process to determine and satisfy to determine and satisfy consumer needs consumer needs Branding: creating an identity in consumers’ minds Branding: creating an identity in consumers’ minds

Copyright © 2003 by South-Western. All Rights Reserved. SIX ERAS IN THE HISTORY OF BUSINESS Colonial Period Marketing Era Marketing Era Industrial Revolution Industrial Entrepreneurs Production Era Driven by advances in technology Driven by advances in technology Businesses form deep, direct links with customers, employees, suppliers, and others Businesses form deep, direct links with customers, employees, suppliers, and others Relationship Era Relationship Era

Copyright © 2003 by South-Western. All Rights Reserved. MANAGING THE TECHNOLOGY REVOLUTION Internet: worldwide network of interconnected computers that, within limits, lets anyone with access to a personal computer send and receive images and data anywhere Internet: worldwide network of interconnected computers that, within limits, lets anyone with access to a personal computer send and receive images and data anywhere World Wide Web (Web): interlinked collection of graphically rich information sources within the larger Internet. World Wide Web (Web): interlinked collection of graphically rich information sources within the larger Internet. © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.5: Growth of the Internet Population Insert figure when art is received

Copyright © 2003 by South-Western. All Rights Reserved. MANAGING THE TECHNOLOGY REVOLUTION Intranet: closed network system using Internet standards that allow information sharing among employees, divisions, and geographically diverse locations Intranet: closed network system using Internet standards that allow information sharing among employees, divisions, and geographically diverse locations Extranets: secure networks accessible from outside only by designated parties Extranets: secure networks accessible from outside only by designated parties © PhotoDisc

Copyright © 2003 by South-Western. 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: collection of activities that build and maintain ongoing, mutually beneficial ties with customers and other parties. Relationship management: collection of activities that build and maintain ongoing, mutually beneficial ties with customers and other parties. © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Strategic Alliances and Partnerships Partnership: an affiliation of two or more companies with the shared goal of assisting each other in the achievement of common goals Strategic alliance: partnership formed to create a competitive advantage for the businesses involved © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. CREATING VALUE THROUGH QUALITY AND CUSTOMER SATISFACTION Value: customer’s perception of the balance between the positive traits of a good or service and its price Value: customer’s perception of the balance between the positive traits of a good or service and its price Customer satisfaction: the ability of a good or service to meet or exceed buyer needs and expectations Customer satisfaction: the ability of a good or service to meet or exceed buyer needs and expectations © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. COMPETING IN A GLOBAL MARKET Figure 1.6: Top Ten U.S. Trading Partners

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.7: Top Ten Brands Worldwide

Copyright © 2003 by South-Western. All Rights Reserved. Productivity: Key to Global Competitiveness Total Output (goods or services produced) Productivity Input (human/natural resources, capital) Total Output (goods or services produced) Productivity Input (human/natural resources, capital) =

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.8: Nations with the Highest Gross Domestic Product * Estimate; may overstate GDP by up to 25 percent

Copyright © 2003 by South-Western. All Rights Reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE Preparing for Changes in the Workforce Preparing for Changes in the Workforce Aging of the Population Aging of the Population Baby boomers beginning to retire Baby boomers beginning to retire Decline in the number of available workers Decline in the number of available workers © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.9: PaineWebber: Serving the Needs of an Aging Workforce

Copyright © 2003 by South-Western. All Rights Reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE Shrinking Labor Pool Shrinking Labor Pool Lowest unemployment rate in 25 years Lowest unemployment rate in 25 years Limited supply of skilled employees looking for jobs Limited supply of skilled employees looking for jobs © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE Increasingly Diverse Workforce Increasingly Diverse Workforce By 2005, ethnic minorities will be 28% of the U.S. population By 2005, ethnic minorities will be 28% of the U.S. population By 2050, almost 50% of Americans will belong to ethnic groups By 2050, almost 50% of Americans will belong to ethnic groups Diversity will allow us to compete and win locally and globally Diversity will allow us to compete and win locally and globally © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE The Changing Nature of Work The Changing Nature of Work Economy base has moved from manufacturing to services Economy base has moved from manufacturing to services Telecommuters becoming more common Telecommuters becoming more common Job flexibility for employees Job flexibility for employees Growth of outsourcing Growth of outsourcing © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. WHY STUDY BUSINESS? Increased Mobility of Workers Increased Mobility of Workers Few employees stay with one company Few employees stay with one company Many employees choose nontraditional work arrangements such as: Many employees choose nontraditional work arrangements such as: Self-employment Self-employment Working for temporary help agencies Working for temporary help agencies Increased challenge to retain talented employees Increased challenge to retain talented employees © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCE The New Employer-Employee Partnership The New Employer-Employee Partnership Employees can not expect long- term employment Employees can not expect long- term employment Employers thus can not expect corresponding loyalty Employers thus can not expect corresponding loyalty Employers trying to build a new kind of relationship: an employer-employee partnership Employers trying to build a new kind of relationship: an employer-employee partnership © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Reaping the Benefits of Diversity Diverse employees contribute unique perspectives, skills, and experiences Diverse employees contribute unique perspectives, skills, and experiences Such diversity can enrich a firm’s chances of success Such diversity can enrich a firm’s chances of success Tasks performed more effectively Tasks performed more effectively Better solutions to problems Better solutions to problems Can improve understanding of customer needs Can improve understanding of customer needs Can improve relationships with customer groups Can improve relationships with customer groups © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. WANTED: A NEW TYPE OF MANAGER Vision: the ability to perceive marketplace needs and what an organization must do to satisfy them Vision: the ability to perceive marketplace needs and what an organization must do to satisfy them Importance of Vision Importance of Vision

Copyright © 2003 by South-Western. All Rights Reserved. WANTED: A 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 – to see better and different ways of doing business Creativity: capacity to develop novel solutions to perceived organizational problems – to see better and different ways of doing business Importance of Vision Importance of Vision Critical Thinking and Creativity

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.10: Communicating 3M’s Creativity

Copyright © 2003 by South-Western. All Rights Reserved. WANTED: A NEW TYPE OF MANAGER Must guide employees and organizations through the changes brought about by technology, marketplace demands, and global competition Must guide employees and organizations through the 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 © 2003 by South-Western. All Rights Reserved. MANAGING ETHICS AND SOCIAL RESPONSIBILITY Business Ethics: standards of conduct and moral values involving right and wrong actions arising in the work environment Business Ethics: standards of conduct and moral values involving right and wrong actions arising in the work environment Social Responsibility: management philosophy that highlights the social and economic effects of managerial decisions Social Responsibility: management philosophy that highlights the social and economic effects of managerial decisions © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 1.11: Polo Ralph Lauren: Doing Well by Doing Good

Copyright © 2003 by South-Western. All Rights Reserved. WHY STUDY BUSINESS? Businesspeople are catalysts for change, create new opportunities Businesspeople are catalysts for change, create new opportunities Studying business will help prepare you for the future Studying business will help prepare you for the future © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. WHAT’S AHEAD FOR PART I OF THIS BOOK? A look at the ethical and social responsibility issues A look at the ethical and social responsibility issues How economics influences business and people’s everyday lives How economics influences business and people’s everyday lives Challenges and opportunities faced by firms Challenges and opportunities faced by firms © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Photo Credits ZEDCOR, Inc. Micrografx Graphics Suite PhotoDisc