1. CHAPTER 1
Understanding The Contemporary Business Environment

2. The Meaning of Business
Business: Organization that provides goods or services that are then sold to earn profits.
Profits: The difference between a business's revenues and expenses – is what encourages people to open and expand businesses.

3. The Evolution of Business
Industrial Revolution: in the middle of the eighteenth century - change in production characterized by a shift to the factory system, mass production, and the specialization of labor.
- The factory system reduced duplication of equipment and allowed firms to buy raw materials at better prices by buying in large lots.

4. The Evolution of Business
Entrepreneurial Era: Starting/Opening up of businesses due to improvements in transportation and the liberalization of markets.
Production Era: Period during the early 20th century in which business focused primarily on improving productivity and manufacturing efficiency.
Marketing Era: After World War II, idea that a business must focus on identifying and satisfying consumer wants in order to be profitable.

5. The Evolution of Business
The Global Era: Continuation of technological advances in production, computer technology, information systems, and communications capabilities enable businesses to expand into foreign markets.
The Information Era: Characterized mostly by the internet – expanded rapidly after 2005.

6. Factors of Production
Labor: Physical and mental capabilities of people as they contribute to economic production.
Capital: Funds needed to create and operate a business enterprise.
Entrepreneur: is an individual who accepts the risks and opportunities entailed in creating and operating a new business

7. Factors of Production
Physical resources: Tangible items organizations use in the conduct of their businesses; include natural resources, raw materials offices, production facilities, computers etc.
Information Resources: Data and other information used by businesses.

8. The Economics of a Market System
Market: Mechanism for exchange between buyers and sellers of a particular good or service.
Demand: The willingness and ability of buyers to purchase a good or a service.
Supply: The willingness and ability of producers to offer a good or a service for sale.

9. The Economics of a Market System
Law of Demand: Principle that buyers will purchase (demand) more of a product as its price drops and less as its price increases.
Law of Supply: Principle that producers will offer (supply) more of product for sale as its price rises and less as its price drops.
Surplus: Situation in which quantity supplied exceeds quantity demanded.
Shortage: Situation in which quantity demanded exceeds quantity supplied.

10. The Economics of a Market System
Private Enterprise system: one that allows individuals to pursue their own interests with minimal government restriction.
Competition: occurs when two or more businesses vie for the same resources or customers.
Perfect Competition: Market or Industry characterized by numerous small firms producing an identical product.

11. The Economics of a Market System
Monopolistic Competition: Market or Industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors.
Oligopoly: Market or Industry characterized by a generally large sellers with the power to influence the prices of their products.
Monopoly: Market or Industry, in which there is only one producer, which can therefore set the prices of its products.