2 CHAPTER 1 CHAPTER 2 APPENDIX B CHAPTER 3 1-2CHAPTER 1The Dynamics of Business and EconomicsCHAPTER 2Business Ethics and Social ResponsibilityAPPENDIX BThe Legal and Regulatory EnvironmentCHAPTER 3Business in a Borderless World
3 1-3Learning ObjectivesLO 1-1 Define basic concepts such as business, product, and profitLO Identify the main participants and activities of business and explain why studying business is importantLO Define economics and compare the four types of economic systemsLO Describe the role of supply, demand, and competition in a free enterprise systemLO Specify why and how the health of the economy is measuredLO Trace the evolution of the American economy and discuss the role of the entrepreneur in the economy.
4 The Nature of Business Business Products 1-4The Nature of BusinessBusinessIndividuals or organizations trying to earn a profit by providing products that satisfy people’s needsProductsGoods or services with tangible and intangible characteristics that provide satisfaction and benefits
5 Nonprofit Organizations 1-5The Goal of BusinessProfitThe goal of business is to earn a profitThe difference between what it costs to make and sell a product and what a customer pays for itA 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 ethicallyNonprofit OrganizationsProvide goods and services but do not have the fundamental purpose of earning profitsStakeholdersGroups that have a stake in the success and outcome of a business
6 People and Activities of Business 1-6People and Activities of BusinessManagement is concerned with acquiring, developing, and using resources effectively and efficientlyThe focus of all marketing activities is satisfying customersThe 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 1-7Economic Foundations of BusinessEconomicsThe study of how resources are distributed for the production of goods and services within a social systemNatural ResourcesLand, forests, mineral, water, and other things not made by peopleHuman Resources – also called LaborThe physical and mental abilities people use to produce goods and servicesFinancial Resources – also called CapitalThe funds used to acquire the natural and human resources needed to provide productsIntangible ResourcesSuch as a good reputation for quality products or being socially responsible
8 Capitalism (Free Enterprise) 1-8Economic SystemsEconomic SystemA description of how a particular society distributes its resources to produce goods and servicesCommunismFirst described by Karl Marx as a society in which the people, without regard to class, own all the nation’s resourcesSocialismAn economic system in which the government owns and operates basic industries but individuals own most businessesCapitalism (Free Enterprise)An economic system in which individuals own and operate the majority of businesses that provide goods and servicesMixed EconomiesEconomies made up of elements from more than one economic system
9 Free-Enterprise System 1-9Free-Enterprise SystemFree enterprise allows a company to succeed or fail on the basis of market demandBasic individual and business rights which must exist in order to motivate companies to succeedRight to own propertyRight to earn profits and use them as one wishesRight to determine business operationsRight to choose
10 Forces of Supply and Demand 1-10Forces of Supply and DemandThe number of products consumers are willing to buy at different prices at a specific timeThe number of products businesses are willing to sell at different prices at a specific timeEquilibrium price is the price at which the number of products supplied equals the amount of products consumers are willing to buy at a specific timeSupplyDemand
11 The Nature of Competition 1-11The Nature of CompetitionCompetition is the rivalry among businesses for consumer’s dollarsPure CompetitionThe market structure that exists when there are many small businesses selling one standardized productMonopolistic CompetitionFewer businesses than in a pure competition and the differences among the goods they sell are smallOligopolyThe market structure that exists when there are very few businesses selling a productMonopolyThe market structure that exists when there is only one business providing a product in a given market
12 Economic Cycles and Productivity 1-12Economic Cycles and ProductivityEconomic contraction is a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workersEconomic 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 employmentMay lead to inflation – a continuing risein pricesMay lead to recession – a decline in production, employment and incomeRecessions are often characterized by rising levels ofUnemployment – the condition in which a percentage of the population wants to work but is unable to find jobs
13 Economic Cycles and Productivity 1-13Economic Cycles and ProductivitySevere 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 reducedGross Domestic Product (GDP) – the sum of all goods and services produced in a country during a yearBudget Deficit – the condition in which a nation spends more than it takes in from taxes
14 The American Economy Entrepreneur 1-14The American EconomyEarly EconomyAgricultural economyPeople produced everything they needed at homeIndustrial RevolutionNew technologies and factoriesFactories combined material, machines and workersManufacturing and Marketing EconomiesAssembly line production and concern with customer needsService and Digital EconomyThe U.S. is a service economy and technology is leading us into a new digital economyEntrepreneurAn 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 1-15Ethics and Social Responsibility in BusinessBusiness ethics are standards set by societyReputation depends on profit and ethics and social responsibilityStakeholders demand ethical and socially responsible behavior