1. Business in a Changing World
Part 1
Business in a Changing World
© 2015 McGraw-Hill Education.

2. CHAPTER 1 CHAPTER 2 APPENDIX B CHAPTER 3
1-2
CHAPTER 1
The Dynamics of Business and Economics
CHAPTER 2
Business Ethics and Social Responsibility
APPENDIX B
The Legal and Regulatory Environment
CHAPTER 3
Business in a Borderless World

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

4. The Nature of Business Business Products
1-4
The Nature of Business
Business
Individuals or organizations trying to earn a profit by providing products that satisfy people’s needs
Products
Goods or services with tangible and intangible characteristics that provide satisfaction and benefits

5. Nonprofit Organizations
1-5
The Goal of Business
Profit
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
A person or organization needs management skills, marketing expertise, financial resources, a product and staff, to abide by laws and government regulations, to adapt to change, and to act ethically
Nonprofit Organizations
Provide goods and services but do not have the fundamental purpose of earning profits
Stakeholders
Groups that have a stake in the success and outcome of a business

6. People and Activities of Business
1-6
People and Activities of Business
Management is concerned with acquiring, developing, and using resources effectively and efficiently
The focus of all marketing activities is satisfying customers
The owner is primarily responsible for obtaining financial resources for the operation of the business, including obtaining money and using money effectively

7. Economic Foundations of Business
1-7
Economic Foundations of Business
Economics
The study of how resources are distributed for the production of goods and services within a social system
Natural Resources
Land, forests, mineral, water, and other things not made by people
Human Resources – also called Labor
The physical and mental abilities people use to produce goods and services
Financial Resources – also called Capital
The funds used to acquire the natural and human resources needed to provide products
Intangible Resources
Such as a good reputation for quality products or being socially responsible

8. Capitalism (Free Enterprise)
1-8
Economic Systems
Economic System
A description of how a particular society distributes its resources to produce goods and services
Communism
First described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resources
Socialism
An economic system in which the government owns and operates basic industries but individuals own most businesses
Capitalism (Free Enterprise)
An economic system in which individuals own and operate the majority of businesses that provide goods and services
Mixed Economies
Economies made up of elements from more than one economic system

9. Free-Enterprise System
1-9
Free-Enterprise System
Free enterprise allows a company to succeed or fail on the basis of market demand
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 choose

10. Forces of Supply and Demand
1-10
Forces of Supply and Demand
The number of products consumers are willing to buy at different prices at a specific time
The number of products businesses are willing to sell at different prices at a specific time
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
Supply
Demand

11. The Nature of Competition
1-11
The Nature of Competition
Competition is the rivalry among businesses for consumer’s dollars
Pure Competition
The market structure that exists when there are many small businesses selling one standardized product
Monopolistic Competition
Fewer businesses than in a pure competition and the differences among the goods they sell are small
Oligopoly
The market structure that exists when there are very few businesses selling a product
Monopoly
The market structure that exists when there is only one business providing a product in a given market

12. Economic Cycles and Productivity
1-12
Economic Cycles and Productivity
Economic contraction is a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers
Economic expansion occurs then an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment
May lead to inflation – a continuing rise
in prices
May lead to recession – a decline in production, employment and income
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

13. Economic Cycles and Productivity
1-13
Economic Cycles and Productivity
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
Gross Domestic Product (GDP) – the sum of all goods and services produced in a country during a year
Budget Deficit – the condition in which a nation spends more than it takes in from taxes

14. The American Economy Entrepreneur
1-14
The American Economy
Early Economy
Agricultural economy
People produced everything they needed at home
Industrial Revolution
New technologies and factories
Factories combined material, machines and workers
Manufacturing and Marketing Economies
Assembly line production and concern with customer needs
Service and Digital Economy
The U.S. is a service economy and technology is leading us into a new digital economy
Entrepreneur
An individual who risks his/her wealth, time and effort to develop for profit an innovative product or way of doing something.

15. Ethics and Social Responsibility in Business
1-15
Ethics and Social Responsibility in Business
Business ethics are standards set by society
Reputation depends on profit and ethics and social responsibility
Stakeholders demand ethical and socially responsible behavior