2. Chapter 1 - Business and Its Environment Business Management Class- Mr. Sherpinsky Council Rock School District

3.  Business  Production  Marketing  Finance  Industrial businesses  Commercial businesses  Service businesses  Industry

4. The Nature of Business

5.  An organization that produces or distributes a good or service for profit is a business.  All businesses engage in 3 Major Activities: 1. Production (Manufacturing) 2. Marketing (Sales) 3. Finance (Money)

6.  Production: involves a company making a product or providing a service for the customer. What do they provide?What types of companies?  Manufacturing companies  Service companies  Goods: Tangible, made and stored prior to use  Services: Intangible, labor intensive, can’t be made prior to need

7.  Marketing: deals with how goods or services that are exchanged between producers and consumers.  That’s everything from purchasing the right raw materials to the actual shipping to wholesaler or retailer markets.

8.  Finance – deals with all money matters related to running a business. That could include things like… –Investments –Purchase of raw materials –Purchase of equipment to produce –Cost analysis and comparisons What are some other things that involve money in a business?

9.  Two Major Kinds of Businesses  INDUSTRIAL ▪ Industrial firms- produce goods that are used by other businesses or organizations to make things.  COMMERCIAL ▪ Commercial firms-firms engaged in marketing, (wholesalers and retailers), in finance, (banks and investments companies), and in providing services (medical offices, fitness centers, and hotels).

10. Businesses that produce goods.  (Tangible)  (Examples): automobile, television m, clothing and shoes  Mills

12. Provide assistance to supply a need to a customer  Intangible  Can NOT be produced prior to need  (Examples): doctors, lawyers, travel agents, plumbers, government agencies, etc…  Today service firms far exceed the number of manufacturing firms.

13. Can you name some local manufacturing and service companies?

14.  Supply and Demand  Supply-the number of similar products that will be offered for sale at a particular time and at a particular price.  Demand-refers to the number of similar products that will be bought at a given time at a given price

15.  How does supply and demand effect pricing?  Why is it so important to businesses?

16.  CHECKPOINT 1.1  CRITICAL THINKING 1.1

17.  Service firm-provides intangible products/ assistance to satisfy specialized needs through skilled workers  Industrial firm- produce goods that are used by other businesses or organizations to make things.  Commercial firm-firms engaged in marketing, finance, and furnishing services.

18.  Industry-refers to all businesses within a specific category (auto, medical, music, publishing, advertising)

19.  Industry is the term often used to refer to all businesses within a category, i.e.,  music industry (instruments, songs, singers)  publishing industry (books, magazines, newspapers)  Government industry (fire, police, state, federal, etc.)  Page 6 shows growth in employment in industries/ businesses. Which has had the most growth?

20.  Go to the BLS.gov website  Research employment growth in major industries  Which service industries are projected to have the greatest growth from 2008-2018?  Name top 4!

22. 1.2 Goals: 1)Describe how innovations affect businesses 2)Identify the impact global competition has had on U.S. businesses 3)Discuss ways in which businesses can improve their business practices.

23.  Innovation  Global competition  Effectiveness  Efficiency  Domestic goods  Foreign goods  Output  Productivity  Downsize  Empowerment

24. What is Innovation? Steve Jobs: Innovation

25.  Innovation is something entirely new.  For example:  Natural fibers like cotton and wool  Chemical develops led to synthetic fibers like rayon, nylon, and polyester  Can also affect business operations  Computers used in design and manufacturing  Internet changed relationships, information ▪ Small versus Large has now been equalized

26.  Using the Internet  Find an example of eight (8) products or services that used innovation to revolutionize what they offer… Be ready to share with the class!!!

27.  Third World Nation-countries that have few manufacturing firms and a population that is generally poor and uneducated to a large degree.  Domestic goods-products made by firms in the United States.  Foreign goods-products made by firms in other countries.

28.  What is meant by Global competition?  What is an example of a company falling behind? The ability of profit-making organizations to Compete with other businesses in other countries. The United States automobile manufacturers is an example of an industry that fell behind. How and Why?

29. the driving force behind the major decisions made by most large companies today. Ability of businesses from one country to compete with businesses from another country

30. NICs are countries whose economies have not yet reached first world status but have outpaced their developing counterparts. NICs are nations undergoing rapid economic growth (usually export-oriented). In many NICs, social upheaval can occur as primarily rural, agricultural populations migrate to the cities, where the growth of manufacturing concerns can draw many thousands of laborers.

31. First World Countries Second World Countries Third World Countries

32. Where Do Your Customers Come From?

33. Web Quest-  Research one of the major retailers you know.  (Wal-Mart, Target, or Sears)  Answer these questions: 1. What percentage of goods do they sell come from outside the United States? 2. Name 8 countries they buy from? 3. Give examples of what types of products they buy from each country

34. 1. Effective 2. Efficient To Compete and Survive! What does that mean and how does it occur?

35. 3  Occurs when an organization makes the right decisions in deciding 3 things: 1) What products or services to offer to customers. 2) How to produce the products 3) How to deliver them to the consumers

36.  Occurs when an organization produces needed goods or services  Expected Quality AND  Quickly AND  At a low cost, without wasting time or materials

38.  Which of the following actions represents effectiveness and which represents efficiency? ? Survey people to see what they like in a product ? New equipment was installed to produce more items in less time ? A new product is produced by a robot based on customers’ answers to 5 questions

39.  Which of the following actions represents effectiveness and which represents efficiency.  Survey people to see what they like in a product (Effectiveness)  New equipment was installed to produce more items in less time (Efficiency)  A new product is produced by a robot based on customers’ answers to 5 questions (Efficiency and Effectiveness).

40. Companies MUST BE efficient  Extent of efficiency is measured by output or amount produced within a given time.  Productivity refers to producing largest quantity in least amount of time by using efficient methods an modern equipment.  Workers are more productive when they are ▪ Well equipped ▪ Well trained ▪ Well managed

41. 10 8 8 12 10 12 10 12 16 14 16 14 10 8 12 15 12 15 16 18 20 15 10 20

42.  Why is Quality is important to customers  Why is Quality important to retailers  TQM is a commitment to excellence  Baldridge National Quality Award (National honor given annually by federal agency)  Japan’s Quality Award Program is the Deming Award  Recipient of these prestigious awards always show increase in sales.

43. 1. Specialization 2. Technology and Innovation 3. Reorganization

44.  Employees are training for specific types of jobs rather than general training  Example: General mechanic or workers that specialize in transmission repair, body repair, engine repair, etc.  Specialization builds experts in their field  Improves quality and increases amount produced.  Specialization improves efficiency.  Effectiveness improved by mass production, assembly line production, up-to-date equipment…robots

45.  Effectiveness can be improved though advanced technology…equipment, process, & materials.  United States improves efficiency by encouraging invention and innovative ideas from their workers.

46.  Most difficult way to increase efficiency  Old way to increase efficiency in the US:  downsize (layoff workers) and  cut back on goods and service offered.  Rethink organization a) Redesign the workflow b) Recognize employees c) EMPOWER the entire team showed improvement in production, quality, morale, and profits.  Reorganizing made US competitive in global market.

47.  CHECKPOINT 1.2  CRITICAL THINKING 1.2

48. Lisa Gansky - TED January 2011

49.  Consumer Reports magazine rates consumer products, including cars.  For many years, the annual car ratings listed foreign cars as superior to domestic ones.  BUT DOES QUALITY REALLY MATTER?

50.  Focus attention on customers’ needs.  Provide excellent customer service.  Offer high-quality goods and services.

51. Web Quest: CNET.com  Choose “REVIEWS” and select a product (electronic) and research the reviews…  Name the parts of the outline for each review  Then answer these questions: 1.Did you find the review helpful? 2.Was it easy to read and use? 3.Is there anything else you would add to a review? 4.What feature did you like the most and why?

52. Growth and Prosperity

53. The total market value of all goods and services produced in a country in a year. Gross Domestic Product

54.  Gross Domestic Product (GDP)  Underground economy  Entrepreneur  Franchise  Franchisor  Franchisee  Intrapreneur

55.  Overall, the United States is a prosperous nation  Around the world, people admire and envy this country’s economic strength. P. 15 What about worldwide?

57.  Gross Domestic Product (GDP) – total market value of all goods produced and services provided in a country in a year.  Individual well- being -2 nd measure of a nation’s wealth.

58.  Small businesses are part of the “Entrepreneurship movement”  Someone who starts, manages, owns, and assumes the risk of a business…  Part-time, full-time, with little or no money  Located at home or at a business location

59. Is the Majority of business in the United States Employers of more than half of all workers Firms with 1 to 4 employees 3,617,764 Firms with 5 to 9 employees 1,044,065 Firms with 10 to 19 employees 633,141 Firms with 20 to 99 employees 526,307 Firms with 100 to 499 employees 90,386 Firms with 500 employees or more 18,469 Firms with 500 to 749 employees 6,060 Firms with 750 to 999 employees 3,038 Firms with 1,000 to 1,499 employees 3,044 Firms with 1,500 to 1,999 employees 1,533 Firms with 2,000 to 2,499 employees 904 Firms with 2,500 to 4,999 employees 1,934 Firms with 5,000 employees or more 1,956 Firms with 5,000 to 9,999 employees 975 Firms with 10,000 employees or more 981

60.  Operated by one or few individuals  Few produce goods  Employ fewer than 100 people  Over 98% of all business  Over half of US workers are employed by businesses with fewer than 500 employees.  Owners usually highly skilled in one or more areas  Many earn less than $250,000 a year in revenue

61.  What is a franchise?  Legal agreement in which an individual purchases the right to sell a company’s product or service under the company’s name or trademark  Examples?  Franchisor: the parent company (provider)  Franchisee: the distributor of product or services

65. Positive  Parent company provides the product or service  Provides special training  Greater chance of survival  Benefit from corporate name and advertising Negative  Start up fee  Must adhere to their rules and contract  Chance of fraud

66.  Find Ten (10) examples of franchises in Newtown PA 18940  Report their HQ Address

67.  Greatly depends on manager effectiveness  Entrepreneur assumes the risk of success or failure  3 out of 5 fails within 3 years  Economic & financial reason for failure  To customers  To workers  To management  To competitors  To investors  To the public (Touching Lives) RISK OBLIGATIONS

68. Economic: Economic: Industry Weakness, Low Profits, Low Sales Finance; Finance; Heavy expenses, Burdensome debts Disaster: Disaster: Hurricanes, floods, theft Neglect?: Neglect?: conflicts, family problems, and poor work habits Strategy Strategy: Overexpansion, difficulty collecting from customers Experience: Experience: inadequate planning and inexperience

69. Intrapreneurship versus Entrepreneurship  Company gives employee the freedom and funds to develop new products, processes, or services. What do You Think?  Employees benefits how?  Employer benefits how?  Consumers benefits how?  Examples where used?

70.  Companies have begun offering employees the opportunity to buy into the company. This is called a _____________________________(ESPO) Employee Stock Ownership Plan Employees buy shares of stock in the company which benefits the company $$$ and increased productivity. Employees benefits by becoming more motivated which increases productivity. Work hard and better.

71. Why do so many people start businesses, yet so many of the businesses ultimately fail? Businesses are easy to start but hard to operate and manage successfully

72. What is the main difference between an entrepreneur and an intrapreneur?

73.  CHECKPOINT 1.3  CRITICAL THINKING 1.3

74.  Underground Economy  Underground Economy: Economic items or dollars not reported in GDP numbers.  Illegal Activities  Counterfeit Products  Under the table employees  Estimated at 5% of the GDP number during a bad economy and as much as 20% during a boom!

76.  Go to my faculty Webpage:  Answer the Net BookMark question on page 20 in textbook:  Complete the Crossword Puzzle  Take the Practice Test  Print out all three (3) assignments: Analysis, Puzzle and Test and turn them in for credit.