Developing a Business Mindset Chapter 1 Chapter 1: Developing a Business Mindset 1-1

Chapter 1 Objectives After studying this chapter, you will be able to: Explain the concept of adding value in a business and identify the major types of businesses. List three steps you can take to help you make the leap from consumer to business professional. Discuss the five major environments in which every business operates. 1-2

Chapter 1 Objectives Cont. Explain the purpose of the six major functional areas in a business enterprise. Summarize seven of the most important business professions. Identify seven components of professionalism. 1-3

What is a business? Any profit-seeking organization that provides goods and services designed to satisfy customers’ needs 1-4

Adding Value to Satisfy Customers Revenue: Money a company brings in through the sale of goods and services. Business model: A concise description of how a business intends to generate revenue. Profit: Money left over after all the costs involved in doing business have been deducted from revenue. Competitive advantage: Some aspect of a product or company that makes it more appealing to its target customers. 1-5

Not-for-profit Organizations Organizations that provide goods and services without having a profit motive; also called nonprofit organizations Examples include museums and charities. 1-6

Goods Producing Business Types of Businesses Goods Producing Business Service Business Labor Intensive Companies that create value by performing activities that deliver some benefit to customers Capital Intensive Companies that create value by making “things,” most of which are tangible 1-7

Risk and Reward

Risk and Reward

Barrier to Entry Any resource or capability a company must have before it can start competing in a given market Some of the Barrier to Entry The capital needed to compete Government testing and approval Tightly controlled markets Strict licensing procedures Limited supplies of raw materials The need for highly skilled employees

The Business Mindset Business mindset: A view of business that considers the myriad decisions that must be made and the many problems that must be overcome before companies can deliver the products that satisfy customer needs Making the Leap from Buyer to Seller Develop a business mindset. Appreciate the role of business in society. Use this course to jumpstart your career. 1-11

The Business Mindset

Positive and Negative Effects of Business

Using This Course to Jump-start Your Career Develop a fundamental business vocabulary Introduce to a variety of jobs in business fields (accounting, economics, human resources, management, finance, and marketing)

The Multiple Environments of Business

Recognizing the Multiple Environments of Business Social environment Trends and forces in society at large Stakeholders Internal and external groups affected by a company’s decisions and activities 1-16

Recognizing the Multiple Environments of Business Technological environment Forces resulting from the practical application of science to innovations, products, and processes Disruptive technologies Those that fundamentally change the nature of an industry Can be powerful enough to create or destroy entire companies.

Recognizing the Multiple Environments of Business Economic environment The conditions and forces that affect the cost and availability of goods, services, and labor and thereby shape the behavior of buyers and sellers Legal and regulatory environment Laws and regulations at local, state, national, and even international levels

Recognizing the Multiple Environments of Business Market environment A company’s target customers, the buying influences that shape the behavior of those customers, and competitors that market similar products to those customers

Major Functional Areas in a Business Enterprise

Major Functional Areas in a Business Enterprise Research and development (R&D) Functional area responsible for conceiving and designing new products Information technology (IT) Systems that promote communication and information usage through the company or that allow companies to offer new services to their customers 1-21

Major Functional Areas in a Business Enterprise Manufacturing, production, or operations An area where the company makes whatever it makes (for goods-producing businesses) or does whatever it does (for service businesses) Purchasing, logistics, facilities management

Major Functional Areas in a Business Enterprise Marketing Charged with identifying opportunities in the marketplace Working with R&D to develop the products to address those opportunities Creating branding and advertising strategies to communicate with potential customers, and setting prices

Major Functional Areas in a Business Enterprise Finance and accounting Responsible for virtually every aspect of a firm’s finances Ensuring that the company has the funds it needs to operate Monitoring and controlling how those funds are spent Drafting reports for company management and outside audiences such as investors and government regulators

Major Functional Areas in a Business Enterprise Human resources (HR) Responsible for recruiting, hiring, developing, and supporting employees Business Services Exist to help companies with specific needs in law, banking, real estate, and other areas

Exploring Careers in Business 1-26

Exploring Careers in Business Operation manager manages the people and processes involved in creating goods and services. Human resource specialist plans and directs human resource activities including recruiting, training and development, compensation and benefits, employee and labor relations, and health and safety.

Exploring Careers in Business Information technology manager designs, implements, and maintains systems that help deliver the right information at the right time to the right people in the organization. Marketing specialist works in branding strategy, electronic commerce, advertising, public relations, creative communication, or interpersonal relations. Sales professional is responsible for building relationships with customers and helping them make purchase decisions.

Exploring Careers in Business Accountant collects, analyzes, and reports on financial matters—such as analyzing budgets, assessing the manufacturing costs of new products, and preparing state and federal tax returns. They also perform audits to verify financial reports or find ways to lower costs. Financial manager plans for the company’s financial needs, invests funds, and raises capital.

Elements of Professionalism

Being a Team Player Professionals know that they are contributors to a larger cause Great team players know how to make those around them more effective Being a team player also means showing loyalty to your organization and protecting your employer’s reputation

Communicating Effectively Listen actively Provide practical information Give facts rather than vague impressions Don’t present opinions as facts Present information in a concise and efficient manner Clarify expectations and responsibilities Offer compelling, persuasive arguments, and recommendations

Maintaining a Confident, Positive Outlook Successful people are optimistic Successful people buckle-down and get the job done despite obstacles Energy, either positive or negative, is contagious One negative personality can make an office miserable

Applying What You’ve Learned Explain the concept of adding value in a business and identify the major types of businesses List three steps you can take to help make the leap from consumer to business professional Discuss the five major environments in which every business operates Explain the purpose of the six major functional areas in a business enterprise Summarize seven of the most important business professions Identify seven components of professionalism

Input-transformation-output Relationships for Typical Systems Inputs Transformation Components Transformation Function Typical Desired Output Hospital Patients, medical supplies MDs, nurses, equipment Health care Healthy individuals Restaurant Hungry customers, food Chef, waitress, environment Well-prepared & well-served food Satisfied customers Automobile Factory Sheet steel, engine parts Tools, equipment, workers Fabrication & assembly of cars High-quality cars College or University High School graduates, books Teachers, classrooms Impart knowledge & skills Educated individuals Department Store Shoppers, stock of goods Displays, sales clerks Attract customers, promote products, fill orders Sales to satisfied customers