1. Business Management Chapter 1

2. All businesses engage in 3 major activities:  1. Production – the making of a product or providing a service  2. Marketing – how goods or services are exchanged between producers and consumers  3. Finance – deals with all money matters related to running a business

3. What we pay for something is based upon 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 – the number of similar products that will be bought at a given time at a given price.

4. 2 Types of Businesses:  1. industrial – these produce goods used by other businesses or organizations to make things.  2. commercial – engaged in marketing (wholesalers and retailers), in finance (banks and investment companies), and in furnishing services (medical offices, athletic centers, and motels)

5. Changing Nature of Business  Most businesses react quickly to change:  Innovations: clothing used to be made from natural fibers; now scientists have invented synthetic fibers  Computers: first there was only Apple; now there’s numerous types of computers

6. Global Competition  For years American businesses have led the way. Other countries bought everything from us.  Over the last 30 years other countries have become more industrialized and have learned how to invent and produce better products for consumers.  Now we buy from other countries.

7. Achieving Effectiveness  Business focus on making the right decisions about what products or services to offer customers and how to produce and deliver them.  Firms today focus on gathering information from customers, studying their buying habits, testing new products with customers, and adding new features.  Customers also want high-quality products.  (ex. Buying foreign made cars)

8. Achieving Efficiency  Producing needed goods or services quickly and at a low cost.  Efficiency is achieved in 3 ways:  1. Specialization of effort – hiring people specialized in a particular field/trade.  2. Better technology and innovation  3. Reorganization – letting employees make some decisions

9.  Chapter 1 TEST Friday  For Study:  Notes (from today)  Your outline you created last week  Vocabulary  Study Guide

10. Business Growth and Prosperity  The first measure of a nation’s economic wealth is the gross domestic product (GDP). It’s the total market value of all goods and services produced in a country in a year.  Income that escapes being recorded in the GDP is referred to as the underground economy.  The total GDP for the U.S. is around $10 trillion.  The second measure is individual well-being. (how financially stable we are)

11. Entrepreneurship  Businesses are growing because of people wanting to own their own business.  Small businesses are booming because they are fairly cheap to start.  Small businesses have few employees.  Ex.: restaurants, gift shops, gas stations, bakeries, etc.

12. Growth of Franchises  One popular way to launch a small business is to start a franchise.  The franchisee pays 3 to 8 percent of weekly sales to the franchisor.  Franchises employ over eight million people and account for nearly half the retail store sales in the country.

13.  Risks of Ownership: The success of a business depends on the management. If a business is well managed, it has a better chance of earning money.  All entrepreneurs face risk – competition from other businesses, changes in prices, changes in style, competition from new products, and changes that arise from economic conditions.

14.  Owner’s have Obligations:  1. To Customers  2. To Workers  3. To Management  4. To Competitors  5. To Investors  6. To the Public  The Community also has an obligation to a local business to help it thrive.

15. Intrapreneurship  An intrapreneur is an employee who is given funds and freedom to create a special unit or department within a company in order to develop a new product, process, or service.  Some of the largest corporations in the U.S. provide intrapreneurship opportunities. By so doing, valuable employees provide the company with innovative products and services.  Employee stock ownership plan permits employees to buy stock within the company.

16.  ASSIGNMENT:  Read Case Study 1-1 on page 26 and answer the questions.  Read Case Study 1-2 on page 27 and answer the questions.  One paper for the partnership, be sure to put both names on it.  BOTH DUE AT THE END OF CLASS.