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2. Business in a Changing World McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved. Chapter 1 The Dynamics of Business and Economics

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4. CrocsCrocs focuses on core competencies Market opportunities, timing, and circumstances 1-4

5. The Nature of Business What is a business? Individuals or organizations trying to earn a profit by providing products that satisfy people's needs. 1-5

6. The Nature of Business What is a product? A good or service with tangible and intangible characteristics that provide satisfaction and benefits 1-6

7. Products Tangible Goods & Services Tangible Goods Automobile Computer Loaf of bread Television Services Dry cleaning Photo processing Checkup at doctor’s Movie star performance 1-7

8. The Primary Goal of Business Earn a Profit The difference between what it costs to make and sell a product and what a customer pays for it. 1-8

9. The Primary Goal of Business PROFIT -- The reward for the risks that businesses take in providing products. 1-9

10. Non-Profit Organizations Not all organizations are businesses. Nonprofit organizations provide goods and services but do not have the fundamental purpose of earning profits. 1-10

11. Maintaining Profitability Quality productsEfficient operations Social responsibilityBusiness ethics Profitability Management skills Planning Organizing Controlling Leading Marketing Expertise Products Price Promotion Distribution 1-11

12. Stakeholders Customers, employees, investors, government regulators, community and society. Those that have a stake in the success and outcomes of a business are considered stakeholders. 1-12

13. Stakeholders & the Environment Environmentally Friendly Practices Hewlett-Packard Cummins, Inc. Cummins, Inc Diversity Pipeline Alliance Home Depot U-Haul 1-13

14. The People & Activities of Business 1-14

15. The People & Activities of Business Management – Focus on employees Coordinating employee’s actions Organizing people for efficiency Motivating employees toward business goals. 1-15

16. The People & Activities of Business Management – Production and Manufacturing Plan activities Organize staff Control tasks. 1-16

17. The People & Activities of Business Marketing – Focus on satisfying customers Determine what products customers want Plan and develop products Determine distribution Determine place Determine promotion 1-17

18. The People & Activities of Business Marketing & Promotion Advertising Personal selling Sales promotion Publicity 1-18

19. The People & Activities of Business Finance – Primary responsibility of owners Obtaining money Using money effectively Accountants, stockbrokers, bankers 1-19

20. Why Study Business Develop Skills for career success Understand business activities Importance of profitability Individual businesses Local and regional economic impact Global economic impact 1-20

21. Why Study Business Business impact Purchase raw materials Hire employees Attract capital Create products Fuel the global economy Contribute to society 1-21

22. The Economic Foundations of Business Resources -- Natural resources (land, forests, minerals, water) Human resources (labor) Financial resources (capital) Distribution of resources for the production of goods and services within a social system. 1-22

23. Factors of Production -- Natural, human, and financial resources used to produce goods and services -- 1-23

24. Economic Systems Central issue of economics – How to fulfill an unlimited demand for goods and services with a limited supply of resources How a society distributes its resources to produce goods and services 1-24

25. Economic Systems Three Important questions – 1.What types and quantities of goods/services will satisfy consumer needs? 2.How will goods/services be produced? By whom? With what resources? 3.How are goods/services distributed to consumers? How a society distributes its resources to produce goods and services 1-25

26. Comparison of Communism, Socialism, and Capitalism 1-26

27. Economic Systems A society in which the people without regard to class, own all the nation’s resources. China North Korea Cuba Communism 1-27

28. Economic Systems System in which the government owns and operates basic industries but individuals own most businesses. Sweden India Israel Socialism 1-28

29. Economic Systems Free Enterprise – individuals own and operate majority of businesses providing goods and services United States Japan Australia Canada Capitalism 1-29

30. Economic Systems Free Market -- All economic decisions made without government intervention (pure capitalism) Government intervenes and regulates business to some extent (modified capitalism) Pure Capitalism Modified Capitalism 1-30

31. Economic Systems No country practices pure capitalism or pure socialism/communism. Economic systems contain various elements of government intervention Mixed Economies 1-31

32. Supply & Demand Demand -- number of goods/services consumers buy at given price at a specific time Supply -- number of products businesses will sell at different prices at a specific time Distribution of resources and products determined by supply and demand 1-32

33. Forces of Supply & Demand Price at which number of products supplied equal amount of products consumers are willing to buy at a specific time = equilibrium price 1-33

34. Nature of Competition Pure competition – many small businesses in same product market Monopolistic competition – small number of businesses little difference in products Oligopoly– very few businesses selling a product Rivalry among businesses for consumers’ dollars. 1-34

35. Economic Cycles and Productivity Economic Expansion – economy is growing and consumers are spending money Economic Contraction – spending declines, layoffs, economy slows down Expansion and Contraction 1-35

36. Economic Cycles Inflation– condition characterized by continuing rise in prices Recession– decline in production, employment, and income Unemployment– % population wants to work but unable to find jobs Depression– unemployment very high; consumer spending low; business output sharply reduced 1-36

37. Overall Unemployment Rate U.S. Civilian Labor Force 1920 - 2007 1-37

38. Measuring the Economy Gross Domestic Product (GDP) 1-38

39. Evaluating Our Nation’s Economy 1-39

40. Entrepreneurship Bill Gates Michael Dell Frederick Smith Ben & Jerry’s Sam Walton Risk, innovation, creativity, reward 1-40

41. Ethics & Social Responsibility Enron MCI WorldCom Emission Standards Global Warming Going “Green” Business reputation depends on profit AND ethical conduct and responsibility 1-41