Chapter 1-BUS100

Business
Any activity that seeks to provide goods and services to others while operating at a profit or all profit-seeking activities and enterprises that provide goods and services necessary to an economic system.
Profit
Rewards for businesspeople who take risks involved to offer goods and services to customers or the amount of money a business earns above and beyond what it spends for salaries, materials and other expenses.
Not-for-Profit Organizations
Businesslike establishments that have primary objectives other than returning profits to owners.
Examples of Not-for-Profit Organizations
Ohio State’s athletics departments, U.S. Postal Service, American Heart Association
Entrepreneur
A risk taker in the private enterprise system.
Objectives of Business
1. Growth
2. Survival
3. Social Responsibility
ALL TIE TOGETHER TO GET profit
Standard of Living
The amount of goods and services people can buy with the money they have.
Quality of Life
The general well-being of a society in terms of political freedom, a clean natural environment, education, health care, safety, free time and everything else that leads to satisfaction and joy.
Factors of Production (5)
Natural Resources, Capital Technology, Human Resources, Entrepreneurship, and Knowledge
Natural Resources
All production inputs that are useful in their natural state.
Examples of Natural Resources
Land, minerals, forests, and building sites.
Capital Technology
Tools, information, and physical facilities
Human Resources
Anyone who works, including the CEO and a self-employed mechanic.
Entrepreneurship
Willingness to take risks to create and operate a business.
Knowledge
Ability to determine customers wants and needs and to respond with desired good and services (Information Technology)
Stakeholders
Are all the people who stand to gain or lose by the policies and activities of a business.
Private Enterprise System
An economic system that rewards firms for their ability to see and meet the needs and demands of consumers. Also called capitalism.
Competition
Battle among businesses for customer acceptance; Adam Smith’s “invisible hand” that requires firms to engage in competitive differentiation to set themselves apart from competitors.
5 Things in a Business Environment
1. Global Business
2. Economic and Legal
3. Social
4.Technology
5. Competitive
Legal Environment
1. Minimum taxes and regulations
2. Freedom of ownership
3. Contract laws
4. Tradable currency
5. Elimination/minimization of corruption
Six Eras of Business
1. The Colonial Period (pre-1776)
2. The Industrial Revolution (1760-1850)
3. The Age of Industrial Entrepreneurs (late 1800s)
4. The Production Era (through the 1920s)
5. The Marketing Era (since 1950s)
6. The Relationship Era (began in 1990s)
The Colonial Period (pre-1776)
• Emphasized rural and agricultural production.
• Colonists depended on England for finished products and financial backing.
The Industrial Revolution (1760-1850)
• Move from one-by-one production of goods by skilled laborers to factory systems and mass production.
• Factories profited from savings realized through large-scale production.
The Age of Industrial Entrepreneurs (late 1800s)
• Inventors created an endless array of commercially useful products and new production methods.
-Eli Whitney introduced concept of interchangeable parts.
-Robert McCormick introduced horse-drawn reaper than reduced the labor involved in harvesting wheat.
-Vanderbilt (railroads), Morgan (banking), and Carnegie (steel) started new businesses and reaped great benefits.
The Production Era (through the 1920s)
• Emphasis on efficient production of goods through huge, labor-saving factories.
• Focus on internal processes rather than external influences, e.g., Henry Ford’s assembly lines.
The Marketing Era (since 1950s)
1. Drop in income during Great Depression focused businesses on marketing goods and services through sales and advertising.
2. Development of consumer orientation, a marketing approach that focuses on determining what consumers want and need and developing products to satisfy those needs
3. Businesses increasingly distinguished their products from competitors’ through branding, e.g. the McDonald’s “golden arches.”
The Relationship Era (began in 1990s)
• Businesses take a long-term approach to interactions with customers to build loyalty and improve customer retention. (Customer Relationship Management)
Least Corrupt Countries
Iceland, Finland, and New Zealand
Most Corrupt Countries
Haiti, Bangladesh, and Chad
Technology Environment
-Productivity
-E-Commerce
-Responsiveness to Customer
Social Environment
-Diversity/Multicultural
-Aging/Graying of America
-Two-Income Families
-Single-Parent Families
Changes in the Workforce
1. Increasingly Diverse Workforce
2. Aging of Population
3. New Employer- Employee Relationship
Diversity in Workforce
Blending individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities—can enhance a firm’s chances of success.
New Employer-Employee Partnership
*Lifetime employment with one company is largely a thing of the past. Today’s model is partnership*

• Companies recognize value of a partnership with employees and many routinely share financial data with them.
• Companies offer stock, profit-sharing, and employee training geared toward career advancement.

Global Environment
-International Competition and Free Trade
-Improvements in Transportation and Communication
-War & Terrorism
-Global Changes
THE 21ST-CENTURY MANAGER
• Intelligent
• Highly motivated
• Able to create and sustain a vision of how an organization can succeed
• Able to apply critical-thinking skills and creativity
• Able to steer change
Importance of Vision
Vision is the ability to perceive marketplace needs and what an organization must do to satisfy them.
Importance of Critical Thinking
Critical thinking is the ability to analyze and assess information to pinpoint problems or opportunities.
• Determining the authenticity, accuracy, and worth of information, knowledge, and arguments
• Identifying critical issues and solutions.
Importance of Creativity
Creativity is the capacity to develop novel solutions to perceived organizational problems.
• Not just artists and musicians—involves ability to see better and different ways of doing business.
• Not just ideas, must lead to action.
Ability to Steer Change
• Changes are driven by technology, marketplace demands, and global competition.
• Factors can be external (e.g., customer feedback, trends) or internal (company goals, production problems).