1. Business Administration
Unit 1
Business and Its Environment
Chapter 1 – Characteristics of Business

2. Small business management
Organized to follow the life cycle of an entrepreneurial venture from concept through implementation into harvesting or replication.

3. Most innovative companies
Dropbox – store,sync and share files securely
Uber - online tech cab service
Ecko Unlimited- Urban clothing line
Nike – digital sports division
Amazon – fast online delivery of anything
Square – sparked mobile payments

4. What is an entrepreneur?
They are engaged in the buying and selling of products or services in order to make money.
Product – something that exists in nature or is made (tangible)
Service – labor or expertise exchanged for money (intangible)

5. Types of business Making a product or providing a service
Manufacturing firms produce goods
Johnson & Johnson/Microsoft
Providing a service
Assistance to satisfy specialized needs through skilled workers
Doctor / Accountant / Web Design
Service firms far outnumber mfg. firms

6. 2 Types of Businesses
Industrial/Manufacturing
Commercial/Services

7. Industrial/Manufacturing Business
Produce goods used by other businesses to make things
Basic Material Companies – Apple, Exxon Mobil, Coach, Crocs, Campbell Soup
Emerging market nations have few mfg. firms –

8. Commercial/Service Business
Marketing
Retailers: Home Depot, Walmart, Walgreens
Finance
Banks & Investment Companies – JPMorgan, Bank of America
Services
Comcast, AT & T, Hilton Hotels

9. Industry/Sector (10 – 12) major sectors
An area of the economy in which businesses share the same or related products or services.
(10 – 12) major sectors
Finance, Technology, Energy
Retail Sales, Communications, Transportation, Health Care, Utilities, Agriculture, Mining, Manufacturing.

10. 12 Industries That Are Growing in 2015
Health Care
High Tech Equipment Manufacturing
The Auto Industry
Transportation
Computer Systems Design
Social Networking

11. Changing Nature of Business
Five ways that entrepreneurs find opportunities to create new business:
1. Use a new technology to produce a new product.
2. Use an existing technology to produce a new products.
3. Use and existing technology to produce an old product in a new way.
4. Find a new source of resources
5. Develop a new market for an existing product.

12. Global Competition
Ability to compete with businesses in other countries
Other countries have industrialized
Efficient, greater variety, lower prices
American businesses had to change
Global competition is the force behind major decisions of large companies today

13. Establishing Strategies
PEST Analysis
Political: government regulations and legal issues
Economic: outside economic issues
Social: demographic and cultural aspects
Technology: how organizations deliver its product or service to the marketplace
SWOT Analysis
Evaluating strengths, weaknesses, opportunities and threats
Integrating internal and external opportunities

14. Five Roots of Opportunity in the Marketplace
Problems that your business can solve.
Changes in laws, situations or trends.
Inventions of totally new products or services.
Competition find a way to beat the competition on price, location, quality, reputation, reliability or speed.
Technological Advances scientists may invest new technology, but entrepreneurs figure out how to use and sell it.

15. 3 Ways To Efficiency Specialization of effort
Better technology & innovation
Reorganization

16. Specialization Specialize in an area Mass Production
Expert in industry (Niche)
Mass Production
Up-to-date equip. in factory production
Computers & Robots
Large quantities of identical goods
Costs decrease to consumers

17. Technology & Innovation
Technology includes
Equipment, manufacturing processes & materials
Better quality goods/services
Built faster at lower cost
Technology = staying ahead of competitors

18. Reorganization Late 80’s to early 90’s & recent recession
Companies had slow growth
Competition from other nations
Downsize
Cutting back goods/services & employees
Needed better ways to compete

19. Reorganization Empowerment
Workers decide how to perform their jobs, ideas on improving processes
Drastically changed role of workers
Past – narrow tasks, little decision making
Improved quality of work & efficiency
Fewer managers due to skilled workers

20. Entrepreneurship Entrepreneur
Person who starts, manages & owns a business
Few gvt. controls prevent starting a business
New businesses may have:
Physical facility (store), individual working in home office, internet business

21. What is Small Business?
The public often thinks of business only in terms of “big” business – ExxonMobil, Apple, Microsoft, Nike
Small business – companies having fewer than 500 employees and less than $5 million market capitalization.
26.8 million businesses in the US and 99.9% are small firms with fewer than 500 employees.
52% of US businesses are home-based

22. Paths to Small Business Ownership
Franchising – legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol.
Acquisition - buying an existing business.
Licensing Technology – enter into a contract to use technology without purchasing the rights to own it.
Microenterprises – firms with five or fewer employees

23. Franchise Business
Legal agreement where distributor buys rights to sell franchising company’s product/service under company’s name & trademark
McDonald’s, Applebee’s Restaurants, Subway
Franchisor – parent company
Franchisee – distributor of franchised product/service

24. Franchise Business
Franchise agreement usually includes initial fee to franchisor and % of weekly sales (3-8%)
Franchisee gets in return
Help selecting location, exclusive rights to sell in specific geographic area, training & advice

25. Risks of Ownership Businesses fail for many reasons
1 out or 4-5 fail within 3 years
½ close within 6-7 years
Some voluntarily close
Sell to another larger company

26. Failure Reasons 64.1% - Economic causes 23.9% - Financial Causes
Low profit/sales, industry weakness
23.9% - Financial Causes
Expenses & debt

27. End of Chapter 1