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Change is the Only Constant
Chapter 1: Business Now Change is the Only Constant Copyright © 2014 by Nelson Education Limited 1 1
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Looking Ahead LO1 Define business and discuss the role of business in the economy LO2 Explain the evolution of modern business LO3 Discuss the role of not-for-profit organizations in the economy Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 2 2
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Looking Ahead LO4 Outline the core factors of production and how they influence the economy LO5 Describe today’s business environment and discuss each key dimension LO6 Explain how current business trends might influence your career choices Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 3
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LO1 Business Now: Moving at Breakneck Speed
In the last decade, the players, what consumers want, and how we buy has changed Companies are being launched and growing faster than ever Mature firms are being merged, acquired, and dissolved Page 3 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 4
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Not-for-profit organizations – focus on causes not profit
Business Basics Business – any activity that provides goods and services in an effort to earn profit Not-for-profit organizations – focus on causes not profit Page 3 Examples of non-profits: United Way, Planned Parenthood, Red Cross, and YM−YWCA. Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 5 5
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Business Basics Profit – the financial reward that comes from starting and running a business; the money that a business earns in sales (or revenue), minus expenses Page 4 Link to Canada’s largest companies by market capitalization: Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 6 6
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Business Basics Entrepreneurs – people who risk time, money, and other resources to start and manage a business Business drives up the Standard of Living, which, in turn, contributes to the Quality of Life Page 3 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 7 7
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Business Encourages Entrepreneurial Spirit
Page 4 Exhibit 1.1 The Richest Canadians in 2011 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 8 8
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LO2 The History of Business: Putting It All In Context
Long-term Relationships Satisfied Customers Use of Technology Consumer Power Growth in Consumerism Product Differentiation Customer Focus Assembly Line Refining Production Productivity Gains Decrease Costs Hard Sell No Customer Focus Industrial Titans Wealth Creation Increase in Living Standard Manipulation/Competition Exploitation Mass Production Factories Work Specialization Efficiency Pages 4-5 Industrial Revolution 1700-mid 1800s Entrepreneurship Era Second half of 1800s Production Era Early 1900s Marketing Era 1950s Relationship Era Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 9 9
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LO3 Not-For-Profit Organizations and the Economy: The Business of Doing Good
Not-for-profit organizations focus on health, human services, education, art, religion, and culture Canada’s non-profits contribute more than $80 billion to the economy While focused on “doing good” rather than financial gain, non-profits are businesses in every other sense: they employ people, take in revenue, and produce goods and services Link to Charity Village for a list of Canada’s not-for-profit organizations: Discuss your college or university as a non-for-profit organization. What are its similarities to a for-profit business? Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 10 10
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LO4 Factors of Production: The Building Blocks
Natural Resources Businesses rely on some combination of these factors Entrepreneurial activity can kick-start an economy by harnessing the other factors of production Capital Human Resources Pages 5-7 Discuss each factor of production. Highlight the key role entrepreneurs, as risk takers and innovators, play in strong economic systems. Entrepreneurship Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 11 11
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LO5 The Business Environment: The Context for Business
Page 7 Exhibit 1.2 The Business Environment Explain and discuss each of the elements of the business environment. How would a company such as BOMBARDIER (transportation company) or COSTCO (retailer) currently respond to each element of the business environment? Talk about Tim Hortons and its new panini sandwiches to combine with the discussion point. Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 12 12
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Free enterprise and fair competition flourish in Canada
Economic Environment Free enterprise and fair competition flourish in Canada Government takes an active role to support businesses: Economic development is supported by Industry Canada Provinces promote economic development by providing investment and tax incentives Legislation supports enforceable contracts Pages 7-8 The Canadian economy has favourable systems and supports for business as free enterprise is a key driver of the economy. However, the Canadian economy, although strong with a solid foundation, does face some economic vulnerabilities. Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited Copyright © 2011 by Nelson Education Limited 13 13
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Economic Vulnerabilities
CEO/Worker pay gap Corruption and ethical lapses Consumer debt Federal/provincial debt Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited
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Competitive Environment
Today’s competition is intense Companies must focus on loyal customers because they are the vocal promoters of their products/services Page 8 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited Copyright © 2011 by Nelson Education Limited 15 15
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Competitive Environment
Companies must provide unsurpassed value Value is the size gap between benefit and price The cheapest product does not mean value The key to value is quality Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited
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Competitive Environment
How fast firms get products to market can be a competitive advantage Bleeding edge firms launch products that fail because they are ahead of the market Leading edge firms offer products just as the market is ready Pages 8-9 Apple computers was not first to the MP3 market but they now own 75% market share Employees are another key competitive advantage Copyright © 2011 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 17 Copyright © 2014 by Nelson Education Limited 17 17
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Competitive Principles
Avoid your competitors’ strengths and exploit their weaknesses; don’t try and beat them at their game Always be a little paranoid; never underestimate your competition Competitors will usually get better when pushed Competitors are sometimes irrational when pushed Pages 8-9 These principles are from Jack Trout, a 40-year marketing veteran. Highlight Jack Trout’s advice (p. 8) on today’s competition. Note the companies that do this well: Exhibit 1.3 (next slide). Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 18 18
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Competition is Changing
Top 10 global brands all U.S.-based Japan, Germany, Finland, S. Korea, and France-based brands all included among the next 10 best Insert exhibit 1.3, p. 8, C2e Page 8 Exhibit 1.3 Discuss the biggest gainers in regards to brands. Review which brands are growing fastest. Discuss the number of new products that are introduced every week. Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 19 19
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Inventions with Impact (Can you identify four Canadian inventions?)
Disposable diapers Zippers Cat litter Poutine Insulin Bikinis Laptop Blackberry Viagra Camcorder Great Inventions that have impacted human life….for better or for worse Page 8 Four Canadian inventions: insulin, poutine, zippers, and Blackberry. Link to eHow.com to see Canada’s top 10 inventions: Note: There are other lists and rankings also available on the website. Kool-Aid Astroturf Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 20 20
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Technological Environment
Business technology includes any tools that businesses can use to become efficient and effective Source of competitive advantage Industries have experienced dramatic change New industries have emerged Page 10 Some industries have been responding slower than others while some remain at the cutting edge. Think about successful companies and how they use technology. Think about companies that are suffering financially. What opportunities have they ignored? Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 21 21
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Technological Environment
Technology continues to evolve at breakneck speed; the change in everyday life and business operations is almost unimaginable Companies that welcome change and manage it well will clearly be the winners Page 13 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 22 22
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Social Environment Diversity Aging population
Rising worker expectations Ethics and social responsibility Pages 10-12 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 23 23
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Shades of Green: The Six Sins of Greenwashing
Sin of hidden trade-off Sin of no proof Sin of vagueness Sin of irrelevance Sin of lesser of two evils Sin of fibbing Page 12 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 24 24
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Global Environment Technology Free Trade Natural Disasters
Technology is linking customers/suppliers worldwide China and India’s economies are growing Technology Free Trade Natural Disasters Job Migration Terrorism is more of a threat today Pages 12-14 While the world is becoming more global amongst rapid change, there are advantages and disadvantages and, at the same time, the multipronged threat of terrorism and job loss. Blurred lines between countries/world Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 25 25
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Global Environment Both China and India have been growing relatively fast due to foreign investment and internal development China has been a magnet for manufacturing jobs and India for high tech jobs Pages 12-14 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 26
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LO6 Business and You: Making it Personal
What are your passions? What are business careers that encompass your passions? Page 14 Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 27 27
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Looking Back What is the role of business in the economy?
How has business evolved? What is the role of non-profits in the economy? Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited 28
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Looking Back What are the core factors of production?
What are the elements of the environment affecting business? How are business trends impacting careers? Copyright © 2014 by Nelson Education Limited Copyright © 2014 by Nelson Education Limited
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