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TRANSCRIPT
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Ferrell Hirt Ferrell
A CHANGING WORLDEIGHTH EDITION
1
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Copyright © 2011 by The McGraw-H ill Companies, Inc. Al l r ights reserved.McGraw-Hill/Irwin
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CHAPTER 3 Business in a Borderless World
CHAPTER 2 Business Ethics and Social Responsibility
1
CHAPTER 1 The Dynamics of Business and Economics
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Business in a
Changing World
Outline
• The nature of business
• The goal of business
• The people
• The major activities (management, marketingand finance)
• Why study business?
• The economic foundation of business
• Economic cycles and productivity
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What is a business?
Individuals or organizations trying to earn a profit byproviding products that satisfy people's needs.
The Nature of Business
1-3
What are the benefits of abusiness?
- Produce most of the goods and services weconsume
- Employ most working people
- Contributes to the quality of life and standardof living for people in a society
- Enhances the personal income of ownersand stakeholders
- Some businesses support charities andprovide community leadership also
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What is a product?
A good or service with tangible and intangiblecharacteristics that provide satisfaction andbenefits.
The Nature of Business
1-4
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Products: Tangible
Goods & Services
ServicesDry cleaning
Photo processing
Checkup at doctor ’s
Musical concert
Tangible Goods Loaf of bread
Television
Automobile
Computer
1-5
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The Primary Goal
of Business
Earn a profit
The difference between what it costs to make and sell a product
and what a customer pays for it.
1-6
Videos
• Business Explainer - Impossible Task
http://www.youtube.com/watch?v=DK7QfNrLRcg
[ ]
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Profit Is
The difference between what itcosts to make and sell a productand what a customer pays for it
1-7
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Non-Profit Organizations
Not all organizations are for-profit businesses
Nonprofit organizations
Provide goods and services but
Do not have the fundamental purpose of earning profits
Founded by Bill Daniels, a pioneer in cable television
Provides grants and scholarships to students, educationalinstitutions and businesses in the Rockies region
1-8
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Stakeholders
Customers, employees, investors, governmentregulators, community and society. Those thathave a stake in the success and outcomes of a
business are considered stakeholders
1-9
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The People and Activities
of Business
1-10
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The Activities of Business
Management – Focus on employees
Motivating employees toward business goals
Coordinating employee’s actions
Organizing people for efficiency
1-11
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Management: Production and
Manufacturing
Another element of
management
Plan activities
Organize staff
Control tasks of the
organization
1-12
• Steve Jobs talks about managing peoplehttp://www.youtube.com/watch?v=f60dheI4ARg
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Marketing
Focus on sat is fy ing customers
o Determine what products customers want
o Plan and develop products
o Determine:
Distribution
Place
Promotion
Price
1-13
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Axe
o Target market is young men looking for a date
o Uses multimedia promotional approach
YouTube
Viral Marketing
o To promote the fragrance, Axe Music, Unilever staged concerts around thecountry featuring major music acts
1-14
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Finance
Finance is the primaryresponsibility of owners
Obtaining money
Using money effectively
Accountants, stockbrokers, bankers
1-15
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Why Study Business?
o Develop skills for career success
o Understand business activities
o Learn the importance of profitability
Individual businesses
Local and regional impact
Global economic impact
1-16
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Business Impact
Purchase raw materials
Hire employees
Attract capital
Create products
Fuel the global economy
Contribute to society
1-17
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The Economic Foundations
of Business
Economics
• Distribution of resources for the production of goods andservices within a social system
Resources (sometimes called factors of production)
• Natural resources (land, forests, minerals, water)
• Human resources (labor)
• Financial resources (capital)
• Intangible (good reputation, quality products)
1-18
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Economic Systems
How a society distributes its resourcesto produce goods and services
Central issue of economics
How to fulfill an unlimited demand for goods andservices with a limited supply of resources
1-19
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Economic Systems
Three Important Questions:
1. What types and quantities of goods/serviceswill satisfy consumer needs?
2. How will goods/services be produced? Bywhom? With what resources?
3. How are goods/services distributed toconsumers?
1-20
Videos
• Basics of Economics I The Great Courses
http://www.youtube.com/watch?v=QHsIKZCAa6s
• Ten Principles of Economics
http://www.youtube.com/watch?v=zCxPPu6AwgM
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Communism
A society in which the people, withoutregard to class, own all the nation’sresources.
China
North Korea
Cuba
1-22
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Socialism
System in which the government ownsand operates basic industries butindividuals own most businesses.
Sweden
Israel
India
1-23
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Capitalism
Free Enterprise
Individuals own and operatemajority of businesses providinggoods and services
United StatesJapan Australia
1-24
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Pure Capitalism vs
Modified Capitalism
Pure Capitalism
Free Market
All economic decisions made withoutgovernment intervention
Modified Capitalism
Government intervenes and regulates businessto some extent
1-25
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Mixed Economies
No country practices pure capitalism, socialism,or communism. Economic systems can be
mixtures and often contain various elements ofgovernment intervention
1-26
Centrally-planned -
Free market
N. Korea China Brazil Japan USA
Cuba Russia India Germany Canada
Vietnam S. Korea
France UK
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Comparison ofCommunism, Socialism, and Capitalism
1-21
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The Free-Enterprise System
Many large economies are free-enterprise – Even China applies free-enterprise principles
o Basic individual and business rights
Right to own property
Right to earn profits and use them as onewishes (within constraints of law)
Right to make business decisions
Right to choose (careers, what goods/servicesto purchase, etc.)
1-27
Private enterprise system
A system that allows individuals to pursue theirown interests with minimal governmentrestrictions. It requires the presence of fourelements:
1) Private property rights (including intellectualproperty)
2) Freedom of choice
3) Making profits and having entrepreneurship
4) Competition
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Supply and Demand
Distribution of resources and products isdetermined by supply and demand
Demand
Number of goods/services consumers buy at a given priceat a specific time
Supply
Number of products businesses will sell at different pricesat a specific time
1-28
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Forces of Supply & Demand
Equi l ib r ium Pr ice = Pr ice at which n umber o f products suppl ied equal
amount of prod ucts con sumers are wi l l ing to bu y at a speci f ic t ime
1-29
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Nature of Competition
Competition
Rivalry among businesses for consumers’ dollars
Pure Competition
Many small businesses in same product market
Monopolistic Competition
Small number of businesses
Little difference in products (Asprin)
Oligopoly
Very few businesses selling a product (air industry)
Monopoly
1-30
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Economic Cycles &
Productivity
Economic Expansion
Economy is growing and consumers are spendingmoney
Economic Contraction
Spending declines, layoffs, economy slows down
1-31
Economic Indicators
• Gross Domestic Product (GDP)
A total value of all goods and servicesproduced within a given period by a nationaleconomy through domestic factors ofproduction.
Economic Indicators
• Gross National Product (GNP)
The total value of all goods and servicesproduced by a national economy within agiven period regardless of where the factorsof production are located.
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Overall Unemployment Rate
1-32
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Economic Cycles
Inflation
Condition characterized by continuing rise in prices
Recession
Decline in production, employment, and income
Depression
Unemployment very high; consumer spending low; businessoutput sharply reduced
Unemployment
% of population that wants to work but unable to find jobs
1-33
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The 2008-2010 Recession
The wors t recess ion sin ce the Great Depress ion
Collapse of many financial institutions
AIG
Bear Stearns
Washington Mutual
Merrill Lynch
Stock market dropped 50%
Highest mortgage default rate in history
Unemployment exceeded10%
Personal savings rates increased
Government spent $750 billion on financial institutions, and $789 billion on an economicstimulus package
1-34
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Measuring the U.S. Economy:
GDP
1-35
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Evaluating the
U.S. Economy
1-36
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A Brief History of the
U.S. Economy
The early economy
The Industrial Revolution
The manufacturing economy
The marketing economy
The service economy
The new digital economy
1-37
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Entrepreneurship
Entrepreneur: An individual who risks his/her
wealth, time and effort to develop for profit an
innovative product or way of doing something.
Entrepreneurship requires:
Risk
Innovation
Creativity
Reward
1-38
Websites and Videos
• What is an Entrepreneur?
http://www.youtube.com/watch?v=lZKhZmvJuZY
• Steve Jobs' Advice for Entrepreneurs
http://www.youtube.com/watch?v=gxo2rGr7Yfg
• Tribute to Steve Jobs Think Different
http://www.youtube.com/watch?v=LuLw9_JEAsw
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The Role of Government
in the U.S. Economy
Modified Capitalism
o The government regulates industry to encouragecompetition and protect stakeholders likeconsumers, employees, or the environment
o Laws force businesses to adhere to governmentstandards
o Government agencies like the U.S. FederalReserve Board or the Department of Commerceoccasionally intervene to regulate the economyand spur growth
1-39
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Ethics & Social Responsibility
in Business
Business ethics refers to standards andprinciples used by society to defineappropriate behavior at work
Stakeholders increasingly demand thatbusinesspeople behave ethically andsocially responsibly
Business reputation depends on profitand ethical conduct and socialresponsibility
1-40
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Ethical Business Certifications
Only natural ingredients Cradle to Cradle certified Means products are designed with materials
that can be infinitely reused Every product is inspected by the
Environmental Protection and Encouragement Agency Reviews ingredients for safety
Offset CO2 emissions created from productionand travel
1-41
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Can You Learn Business
in a Classroom?
Yes!!!To be success ful in bus iness, you need:
Knowledge
Skills
Experiences and
Good judgment
1-42