Part 1 Business in a Changing World - PowerPoint Presentation

Slide1

Part 1

Business in a Changing World

© 2015 McGraw-Hill Education.

Slide2

CHAPTER 1

The Dynamics of Business and Economics

CHAPTER 2

Business Ethics and Social Responsibility

CHAPTER 2 APPENDIX The Legal and Regulatory EnvironmentCHAPTER 3Business in a Borderless World

1-

2

Slide3

Learning Objectives

LO 1-1

Define basic concepts such as business, product, and profit.

LO 1-2

Identify the main participants and activities of business and explain why studying business is important.LO 1-3 Define economics and compare the four types of economic systems.LO 1-4 Describe the role of supply, demand, and competition in a free enterprise system.LO 1-5 Specify why and how the health of the economy is measured.LO 1-6 Trace the evolution of the American economy and discuss the role of the entrepreneur in the economy.

1-

3

Slide4

The Nature of Business

1-

4

Slide5

A Product Can Be…

1-

5

Slide6

The Goal of Business

The goal of business is to earn a profit

The difference between what it costs to make and sell a product and what a customer pays for it

$10 sale – $8 to make = $2 profit

Earning profits contributes to society by providing employment, which in turn provides money that is reinvested in the economy

Profits must be earned in a responsible manner

1-

6

Slide7

To Earn a Profit

1-

7

Slide8

1-

8

Slide9

Stakeholders

Groups that have a stake in the success and outcome of a business

Customers, employees, investors, government regulators, community, and society

To achieve and maintain profitability, businesses must produce quality products, operate efficiently, and be socially responsible and ethical in dealing with stakeholders

1-

9

Slide10

People and Activities of Business

1-

10

Slide11

People and Activities of Business

Management is concerned with:

Acquiring

Developing

Using

resources (including people) effectively and efficiently

1-

11

Slide12

People and Activities of Business

The focus of all marketing activities is satisfying customers

1-

12

Slide13

People and Activities of Business

The owner is primarily responsible for obtaining financial resources for the operation of the business, including:

Obtaining money

Using money effectively

1-

13

Slide14

Why

Study

Business?

Business career opportunities:

MarketingHuman resources managementInformation technologyFinanceProduction and operationsWholesaling and retailingAnd more

Develop skills for career successBecome a well-informed consumer and member of society

1-

14

Slide15

Economic Foundations of Business

1-

15

Slide16

Economic Foundations of Business

1-

16

Slide17

Economic Systems

All economic systems must address these 3 important issues:

What goods and services, and how much of each, will satisfy consumers’ needs?

How will goods and services be produced, who will produce them, and with what resources will they be produced?

How are the goods and services to be distributed to consumers?

1-

17

Slide18

Economic Systems

C

U

B

A

C

H

I

N

A

K

OREA

NORTH

1-

18

Slide19

Economic Systems

S

W

E

D

E

N

I

S

RAEL

I

NDIA

1-

19

Slide20

Economic Systems

C

A

N

A

D

A

U

S

A

J

APAN

1-

20

Slide21

Economic Systems

No country practices pure capitalism, socialism, or communism

China and Russia have used state capitalism to advance the economy, integrating the powers of the state with the advantages of capitalism

1-

21

Slide22

Free-Enterprise System

Many large economies are free-enterprise – including the U.S., Canada and Japan

Many communist and socialist countries apply free-enterprise principles – including China and Russia

Free enterprise allows a company to succeed or fail on the basis of market demand

1-

22

Slide23

Free-Enterprise System

Basic individual and business rights which must exist in order to motivate companies to succeed

Right to own property

Right to earn profits and use them as one wishes

Right to determine business operations

Right to chooseCareer to pursueWhere to live or where to locate a businessWhat goods/services to purchase and more

1-

23

Slide24

Forces of Supply and Demand

Supply

Demand

1-

24

Slide25

Equilibrium Price

Equilibrium

price is the price at which the number of products supplied equals the amount of products consumers are willing

to buy at

a specific

time

1-

25

Slide26

The Nature of Competition

Competition

is the rivalry among businesses for consumer’s dollars

1-

26

Slide27

Economic Cycles and Productivity

1-

27

May lead to inflation – a continuing rise

in prices

May lead to recession – a decline in production, employment and income

Slide28

Economic Cycles and Productivity

Recessions are often characterized by rising levels of

Unemployment – the condition in which a percentage of the population wants to work but is unable to find jobs

Deflation

occurs when rising unemployment stifles demand, forcing prices down

Severe recession may turn into a

Depression – a condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced

1-

28

Slide29

Economic Cycles and Entrepreneurship

1-

29

Many companies begin in times of economic recession due to high unemployment and the tendency for people to become less risk averse

Hewlett Packard, Revlon, and IHOP are just a few examples of companies that began in suboptimal economic conditions and survived to become large, profitable, and long-lasting

The Great Recession of 2008 is no exception:

Groupon

, founded in 2008, has since become publicly traded and valued at near $10 billion Playdom, a social game developer, was founded in 2008 and sold for $500 million in 2010

SOURCES: Matt

Rosoff

“Born From the Ashes: Big Tech Companies Founded During Busts and Recessions”.

http://www.businessinsider.com/great-tech-companies-that-started-in-terrible-economic-times-2011-8?op=1

;

gbravo

. “Famous Companies Founded During an Economic Recession”.

http://www.resourcenation.com/blog/famous-companies-that-were-founded-in-an-economic-recession/3265/

. (accessed September 18, 2013).

Slide30

Measuring the Economy

1-

30

Slide31

Gross Domestic Product (GDP)

1-

31

In 2008 the System of National Accounts (SNA), which is overseen by the United Nations (UN) and serves as a set of standards by which to measure economic activity in every country, broadened the definition of assets to include intellectual property (IP) such as patents

Over the last decade investments in research and development have spurred new products that have contributed to the GDP making them an important asset

While the calculations are still difficult, Canada and the United States have included IP in their GDP and other countries are expected to follow

(SOURCE: Free Exchange. “Boundary Problems”.

The Economist

. August 3, 2013. Page 64.)

Slide32

Evaluating Our Economy

1-

32

See the U.S. Public Debit to the Penny

Slide33

The American Economy

1-

33

Slide34

The Role of the Entrepreneur

Entrepreneurship requires:

Risk

Innovation

Creativity

Reward

1-

34

Slide35

Government in the American Economy

The U.S. economy is best described as modified capitalism because:

The government regulates industry to encourage competition and protect stakeholders like consumers, employees, or the environment

Laws force businesses to adhere to government standards

Government agencies like the U.S. Federal Reserve Board or the Department of Commerce occasionally intervene to regulate the economy and spur growth

1-

35

Slide36

Ethics and Social Responsibility in Business

1-

36

Slide37

Can You Learn Business in a Classroom?

Absolutely!

To be successful in business, you need:

Knowledge

Skills

Experiences

and Good judgment

1-

37

Slide38

Discussion

Why is it important for the government to measure the economy?

What kinds of actions might it take to control the economy’s growth?

1-

38