1. © 2009 South-Western, a division of Cengage Learning 1 Chapter 1: BUSINESS NOW Change is the Only Constant

2. © 2009 South-Western, a division of Cengage Learning 2 What is the role of business in the economy? How has business evolved? What is the role of non-profits in the economy? What are the core factors of production? What are the elements of the environment affecting business? How are business trends impacting careers? LOOKING AHEAD

3. © 2009 South-Western, a division of Cengage Learning 3 MOVING AT BREAKNECK SPEED In the last decade: –The players have changed –What consumers want has changed –How we buy has changed 1965198519952007 1.General Motors 2.Exxon Mobil 3.Ford Motor 4.General Electric 5.Mobil 6.Chrysler 7.US Steel 8.Texaco 9.IBM 10.Gulf Oil 1.Exxon Mobil 2.General Motors 3.Mobil 4.Ford Motor 5.Texaco 6.IBM 7.DuPont 8.AT&T 9.General Electric 10.Amoco 1.General Motors 2.Ford Motor 3.Exxon Mobile 4.Wal-Mart 5.AT&T 6.General Electric 7.IBM 8.Mobil 9.Sears Roebuck 10.Altria Group 1.Wal-Mart 2.Exxon Mobil 3.General Motors 4.Chevron 5.ConocoPhillips 6.General Electric 7.Ford Motor 8.Citigroup 9.Bank of America 10.AIG Source:http://money.cnn.com

4. © 2009 South-Western, a division of Cengage Learning 4 A business is any activity that provides goods and services in an effort to earn profit. Non-profit organizations focus on causes not profit BUSINESS BASICS

5. © 2009 South-Western, a division of Cengage Learning 5 Profit is the financial reward that comes from starting and running a business. the money that a business earns in sales (or revenue), minus expenses BUSINESS BASICS

6. © 2009 South-Western, a division of Cengage Learning 6 NONPROFIT PARTNERSHIPS Many nonprofits work with businesses to improve the quality of life in society. Companies support their missions and improve society. The Business of Doing Good

7. © 2009 South-Western, a division of Cengage Learning 7 ENTREPRENEURIAL SPIRIT

8. © 2009 South-Western, a division of Cengage Learning 8 CREATIVITY MATTERS Creativity is important to the economy –with global competition, the stakes are high Many of the latest inventions have come from companies –this trend is likely build momentum as global competition intensifies

9. © 2009 South-Western, a division of Cengage Learning 9 INVENTIONS WITH IMPACT Source: Encyclopedia Britannica Laptop Viagra Camcorder Cat Litter Bikinis Muzak Disposable Diapers Kool-Aid Astroturf

10. © 2009 South-Western, a division of Cengage Learning 10 THE EVOLUTION OF BUSINESS Industrial Revolution 1700-mid 1800s Entrepreneurship Era Mid 1800s Production Era Early 1900s Marketing Era 1950s Relationship Era Mass Production Factories Work Specialization Efficiency Industrial Titans Wealth Creation Increase in Living Standard Manipulation/Competition Exploitation Assembly Line Refining Production Productivity Gains Decrease Costs Hard Sell No Customer Focus Consumer Power Growth in Consumerism Product Differentiation Customer Focus Long-term Relationships Satisfied Customers Use of Technology

11. © 2009 South-Western, a division of Cengage Learning 11 FACTORS OF PRODUCTION Businesses rely on some combination of these factors Entrepreneurship is a key factor –Most growing economies support and promote entrepreneurship Natural Resources Human Resources Capital Entrepreneurship

12. © 2009 South-Western, a division of Cengage Learning 12 THE ELEMENTS OF THE BUSINESS ENVIRONMENT

13. © 2009 South-Western, a division of Cengage Learning 13 DYNAMIC, CONSTANT AND ENGAGING, CHANGE Companies must respond quickly and creatively –New Products –Integrating Technology –Creating Technologies –New Businesses –Innovative Processes –New Target Markets….. “ “ When the change on the outside exceeds the change on the inside, the end is near.” - Jack Welch

14. © 2009 South-Western, a division of Cengage Learning 14 ECONOMIC ENVIRONMENT Government takes an active role to support businesses –Low Federal Tax Structure –Small Business Administration –Federal Trade Commission –Legislation & Enforceable Contracts Economic Vulnerabilities CEO/Worker Pay Gap Consumer Debt Federal Debt Free Enterprise and Fair Competition Flourish in the United States

15. © 2009 South-Western, a division of Cengage Learning 15 COMPETITIVE ENVIRONMENT Today’s competition is intense Companies must focus on customer satisfaction –Build Long-Term Relationships –Provide Value –Customer Satisfaction = Profitability –Cheap Doesn’t Equal Value

16. © 2009 South-Western, a division of Cengage Learning 16 COMPETITIVE PRINCLIPLES 1.Avoid your competitors’ strengths and exploit their weaknesses. Don’t try and beat them at their game. 2.Always be a little paranoid. Never underestimate your competition. 3.Competitors will usually get better when pushed. 4.Competitors are sometimes irrational when pushed.

17. © 2009 South-Western, a division of Cengage Learning 17 COMPETITION IS CHANGING

18. © 2009 South-Western, a division of Cengage Learning 18 SOCIETY CHANGES What are our changing values and beliefs? How does the integration of other cultures change/add to values and beliefs? What demographic influences are changing the environment globally? Companies must respond to these changes in the products they sell and how they sell them.

19. © 2009 South-Western, a division of Cengage Learning 19 AND CHANGES…… Teens today are much less likely than their parents to categorize people by race, religion, and sexual orientation. They’re more likely to notice similarities and differences in core values. Source: Diversity in Word and Deed: Most Teens Claim Multicultural Friends, press release from Teenage Research Unlimited, November 10, 2004, TRU Website, http://www.teenresearch.com/PRview.cfm?edit_id=278.

20. © 2009 South-Western, a division of Cengage Learning 20 SOCIAL ENVIRONMENT Diversity Aging Population Rising Worker Expectations Ethics & Social Responsibility

21. © 2009 South-Western, a division of Cengage Learning 21 GENERATION C Creating Content Customizing Products –Websites –Blogs –Photos –Ringtones –Music –Movies

22. © 2009 South-Western, a division of Cengage Learning 22 TECHNOLOGICAL ENVIRONMENT Technology has transformed businesses and consumers How Companies Do Business –Telecommunications –Robotics –Flexible Manufacturing –Alternative Selling/eCommerce How Consumers Shop –Online Information/Content –Alternative Buying/eCommerce

23. © 2009 South-Western, a division of Cengage Learning 23 TECHNOLOGICAL ENVIRONMENT More than 724,000 Americans report that eBay is their primary or secondary source of income, And an additional 1.5 million people say that they supplement their incomes by selling on eBay. Source: US Postal Service News Release, July 21, 2005. http://www.usps.com/communications/news/press/2005/pr05_062.pdf.

24. © 2009 South-Western, a division of Cengage Learning 24 GLOBAL ENVIRONMENT Terrorism is more of a threat today Job Migration China and India’s economies are growing Technology Free Trade Blurred lines between countries/world Technology is linking customers/suppliers worldwide

25. © 2009 South-Western, a division of Cengage Learning 25 GLOBAL ENVIRONMENT According to investment bank CLSA, China manufactures 80% of the world’s clocks and watches, 50% of its cameras, 30% of its microwave ovens, a quarter of its washing machines, and a fifth of its refrigerators.

26. © 2009 South-Western, a division of Cengage Learning 26 COOLEST BRANDS Nike 30.8% Sony 15.9% Adidas 15.1% BMW10.1% Microsoft 9.0% Coca-Cola 8.9% IBM 8.2% According to Chinese college students

27. © 2009 South-Western, a division of Cengage Learning 27 BUSINESS AND YOU MAKING IT PERSONAL What are your passions? What are business careers that encompass your passions?

28. © 2009 South-Western, a division of Cengage Learning 28 LOOKING BACK Define business and the role of business in the economy. Explain the evolution of modern business. Discuss the role of non-profit organizations in the economy. Outline the core factors of production and how they impact the economy. Describe today’s business environment and discuss each dimension. Explain how current business trends impact your career choices.