1. Developing a Business Mindset & Business Ethics
Chapter 01 & 04
Chapter 1: Developing a Business Mindset
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2. Chapter 1 & 4 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.
Explain the purpose of the six major functional areas in a business enterprise.
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3. Chapter 1 & 4 Objectives Cont.
Discuss what it means to practice good business ethics and highlight three factors that influence ethical decision making.
Define corporate social responsibility (CSR) and explain the difference between philanthropy and strategic CSR.
Distinguish among the four perspectives on corporate social responsibility.
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4. What is a business?
Any profit-seeking organization that provides goods and services designed to satisfy customers’ needs
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5. 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.
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6. Not-for-profit Organizations
Organizations that provide goods and services without having a profit motive; also called nonprofit organizations
Examples include museums and charities.
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7. 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
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8. Factors of Production

9. 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

10. 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.
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11. The Business Mindset

12. The Business Mindset

13. Positive and Negative Effects of Business

14. 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)

15. The Multiple Environments of Business

16. 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
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17. 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.

18. 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

19. 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

20. Major Functional Areas in a Business Enterprise

21. 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
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22. 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

23. 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

24. 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

25. 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

26. Ethics in Contemporary Business
Recent unethical actions in the financial industry contributed to the global recession.
As a result, public confidence in banking ranks at its lowest in 20 years.
Yet the vast majority of businesses are run by ethical managers and staffed by ethical employees.

27. Ethics in Contemporary Business
Social Responsibility
The idea that a business has certain obligation to society beyond the pursuit of profits
Ethics
The rules or standards governing the conduct of a person or group
Transparency
The degree to which affected parties can observe relevant aspects of transactions or decisions 27

28. What is Ethical Behavior?
Ethics is the rules or standards governing the conduct of a person or group
Ethical behavior involves:
Competing fairly and honestly
Communicating truthfully
Being transparent
Not Causing Harm to Others

29. Compete Fairly and Honestly
Businesses are expected to compete fairly and honestly and not knowingly deceive, intimidate, or misrepresent customers, competitors, clients, or employees.
While most companies compete within the boundaries of the law, some do knowingly break laws or take questionable steps in their zeal to maximize profits and gain a competitive advantage.

30. Communicating Truthfully
Tell the Truth, Whole Truth and Nothing but the Truth
Transparency
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31. Not Causing Harm to Others
All businesses have the capacity to cause harm to employees, customers, other companies, their communities, and investors.
Insider trading, in which company insiders use confidential information to gain an advantage in stock market trading, harms other investors.

32. Ethical Business Behavior
Cultural differences
Knowledge
Organizational behavior
Influential Factors

33. Cultural Differences
Globalization exposes businesspeople to a variety of different cultures and business practices.
What may be considered unethical in the U.S. may be an accepted practice in another culture.
Managers need to consider a wide range of issues, including: acceptable working conditions, minimum wage levels, product safety issues, environment protection.

34. Knowledge
In most cases, a well-informed person is in a position to make better decisions and avoid ethical problems.
Making decisions without all the facts or a clear understanding of the consequences could harm employees, customers, the company, and other stakeholders.

35. Organizational Behavior
The foundation of an ethical business climate is ethical awareness. Organizations that strongly enforce company codes of conduct and provide ethics training help employees recognize and reason through ethical problems.
Code of Ethics: A written statement that sets forth the principles that guide an organization’s decisions.
Whistle-Blowing: The disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization.

36. Ethical Decision Making
Ethical Dilemma
Ethical Lapse

37. Ethical Decision Making
An ethical dilemma is a situation in which one must choose between two conflicting but arguably valid sides.
An ethical lapse is a stuation in which an individual makes a decision that is clearly wrong, such as divulging trade secrets to a competitor.

38. Finding the Right Answer When Faced with an Ethical Dilemma
Make sure you frame the situation accurately, taking into account all relevant issues and questions.
Identify all parties who might be affected by your decision
Be as objective as possible
Don’t assume that other people think the way you do
Watch out for conflicts of interest

39. Conflict of Interest
Conflicts of interest, situations in which competing loyalties can lead to ethical lapses; in business, situations in which a business decision may be influenced by the potential for personal gain.

40. Corporate Social Responsibility (CSR)
Business has obligations to society beyond the pursuit of profits.
Business and society need each other.

41. The Relationship between Business and Society
Consumers in contemporary societies enjoy and expect a wide range of benefits, from education and health care to credit and products that are safe to use
Profit-seeking companies are the economic engine that powers modern society; they generate the vast majority of the money in a nation’s economy
Much of what we consider when assessing a society’s standard of living involves goods and services created by profit-seeking companies
Companies cannot hope to operate profitably without the many benefits provided by a stable, functioning society
CSR is both a moral imperative for business and a good thing for society. Each depends on the other being healthy and successful. 41

42. CSR Courses of Action Philanthropy Strategic CSR
Social contributions that are directly aligned with a company’s overall business strategy
The donation of money, time, goods, or services to charitable, humanitarian, or educational institutions

43. Perspectives on Corporate Social Responsibility

44. Corporate Social Responsibility Perspectives
Minimalist View: The only social responsibility of a business is to pay taxes and obey the law.
Milton Friedman: “There is only one social responsibility of business: to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” 44

45. Corporate Social Responsibility Perspectives
Defensive View: Many companies today face pressure from a variety of activists and nongovernmental organizations (NGOs), nonprofit groups that provide charitable services or promote causes, and from workers’ rights to environmental protection.
One possible response to this pressure is to engage in CSR activities as a way to avoid further criticism. 45

46. Corporate Social Responsibility Perspectives
Cynical View: A company accused of irresponsible behavior promotes itself as being socially responsible without making substantial improvements in its business practices. 46

47. Corporate Social Responsibility Perspectives
Proactive View: Company leaders believe they have responsibilities beyond making a profit, and they back up their beliefs and proclamations with action—without being prompted to by outside forces.
This approach doesn’t have to compromise profits or returns for investors. 47

48. CSR: The Natural Environment
Pollution, the contamination of the natural environment by the discharge of harmful substances.
Ecology, the study of the relationship between organisms and the natural environment.

49. AT & T Code of Ethics (excerpts)

50. Approaches to Resolving Ethical Dilemmas

51. Green and Clean? Where Our Electricity Comes From
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

52. 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