business in a changing world -...
TRANSCRIPT
Business in aChanging WorldChanging World
McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter 1 The Dynamics of Business and Economics
Asst. Prof. Dr. Serdar AYAN
1-2
The Nature of Business
What is a business?Individuals or organizations trying to Individuals or organizations trying to earn a profit by providing products that satisfy people's needs.
1-3
The Nature of Business
What is a product?A good or service with tangible and A good or service with tangible and intangible characteristics that provide satisfaction and benefits
1-4
ProductsTangible Goods & Services
Tangible GoodsAutomobile
ServicesDry cleaningAutomobile
ComputerLoaf of breadTelevision
Dry cleaningPhoto processingCheckup at doctor’sMovie star performance
1-5
The Primary Goal of Business
Earn a ProfitThe difference between what it costs The difference between what it costs to make and sell a product and what a customer pays for it.
1-6
The Primary Goal of Business
PROFIT --The reward for the risks that The reward for the risks that businesses take in providing products.
1-7
Non-Profit Organizations
Not all organizations are businesses.
Nonprofit organizations provide goods Nonprofit organizations provide goods and services but do not have the fundamental purpose of earning profits.
1-8
Maintaining Profitability Quality products Efficient operations
Profitability
Management skills•Planning•Organizing•Controlling•Leading
Social responsibility Business ethics
•Leading
Marketing Expertise•Products •Price•Promotion•Distribution
1-9
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.
1-10
Stakeholders & the Environment
Environmentally Friendly Practices•Hewlett-Packard•Cummins, Inc.•Cummins, Inc.•Diversity Pipeline Alliance•Home Depot•U-Haul
1-11
The People & Activities of Business
1-12
The People & Activities of Business
Management – Focus on employees•Coordinating employee’s actions•Organizing people for efficiency•Motivating employees toward business goals
.1-13
The People & Activities of Business
Management – Production and Manufacturing•Plan activities•Organize staff•Control tasks
.1-14
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
1-15
The People & Activities of Business
Marketing & Promotion•Advertising•Personal selling•Sales promotion•Publicity
1-16
The People & Activities of Business
Finance – Primary responsibility of owners•Obtaining money•Using money effectively•Accountants, stockbrokers, bankers
1-17
Why Study Business
•Develop Skills for career success•Understand business activities•Importance of profitability•Importance of profitability•Individual businesses•Local and regional economic impact •Global economic impact
1-18
Why Study Business
Business impact•Purchase raw materials•Hire employees•Attract capital•Create products•Fuel the global economy•Contribute to society
1-19
The Economic Foundations of Business
Distribution of resources for the production of goods and services within a social system.
Resources --•Natural resources (land, forests, minerals, water)•Human resources (labor)•Financial resources (capital)
1-20
Factors of Production --
Natural, human, and financial resources used to produce goods and services --
1-21
Economic Systems
How a society distributes its resources to produce goods and services
Central issue of economics –
•How to fulfill an unlimited demand for goods and services with a limited supply of resources
1-22
Economic Systems
Three Important questions –
How a society distributes its resources to produce goods and services
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?
1-23
Comparison of Communism, Socialism, and Capitalism
1-24
Economic Systems
Communism
A society in which the people without regard to class, own all the nation’s resources.•China•North Korea•Cuba
1-25
Economic Systems
Socialism
System in which the government owns and operates basic industries but individuals own most businesses.
•Sweden•India•Israel
1-26
Economic Systems
Capitalism
Free Enterprise – individuals own and operate majority of businesses providing goods and services
•United States•Japan•Australia•Canada
1-27
Economic Systems
Pure CapitalismModified Capitalism
Free Market -- All economic decisions made without government intervention (pure capitalism)
Government intervenes and regulates business to some extent (modified capitalism)
1-28
Economic Systems
Mixed Economies
No country practices pure capitalism or pure socialism/communism. Economic systems contain various elements of government intervention
1-29
Supply & Demand
Demand -- number of goods/services consumers
Distribution of resources and products determined by supply and 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
1-30
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
1-31
Nature of Competition
Pure competition – many small businesses in
Rivalry among businesses for consumers’ dollars.
Pure competition – many small businesses in same product marketMonopolistic competition – small number of businesses little difference in productsOligopoly– very few businesses selling a product
1-32
Economic Cycles and Productivity
Economic Expansion – economy is growing and
Expansion and Contraction
Economic Expansion – economy is growing and consumers are spending money
Economic Contraction – spending declines, layoffs, economy slows down
1-33
Economic Cycles•Inflation– condition characterized by continuing rise in prices•Recession– decline in production, employment, and incomeand income•Unemployment– % population wants to work but unable to find jobs•Depression– unemployment very high; consumer spending low; business output sharply reduced
1-34
Overall Unemployment Rate
U.S. Civilian Labor Force 1920 - 2007
1-35
Measuring the Economy•Gross Domestic Product (GDP)
1-36
Evaluating Our Nation’s Economy
1-37
Entrepreneurship
Bill Gates
Risk, innovation, creativity, reward
Bill GatesMichael DellFrederick SmithBen & Jerry’sSam Walton
1-38
Ethics & Social Responsibility
Enron
Business reputation depends on profit AND ethical conduct and responsibility
EnronMCI WorldComEmission StandardsGlobal WarmingGoing “Green”
1-39