Chapter 1 Characteristics of Business Nature of Business Types of Business Impact of Global Competition in Business Business Growth & Prosperity Entrepreneurship Intrapreneurship

Nature of Business Business - an organization that produces or distributes a good or a service for profit. Profit - the difference between earned income & costs

Three Major Activities of Business Production - making a product or providing a service. Marketing - deals with how goods and services are exchanged between producers and consumers Finance - deals with the money matters related to running a business

Types of Businesses Industrial Businesses - produce goods that are often used by other businesses or organizations to make things (Metal, ore, buildings) Commercial businesses - are engaged in marketing, finance and in furnishing services. Services - intangible products that result from a high degree of labor (accounting, hair dressers) Industry - used to refer to all businesses within a category (accounting, publishing etc....)

Activity #1: List at least three companies that would be considered to be a part of each industry. Airline Industry Banking Industry Computer Industry Fast Food Industry Automotive Industry Consumer Photography Industry Insurance Industry Beverage Industry Pharmaceutical Industry Oil & Gas Industry

Impact of Global Competition on Business Global Competition - the ability of organizations to compete with other businesses in other countries. Domestic Goods - products made by firms in U.S. Foreign Goods - products made by firms in other countries

Effectiveness Vs. Efficiency Effectiveness - when the right decisions are made in deciding which products or services to offer customers. The Japanese taught us Total Quality Management (TQM) which is a company-wide commitment to excellence that is accomplished by teamwork & continuous improvement. Efficiency - producing the needed goods and services quickly and at a low cost. Managers should strive to be effective and efficient at the same time

Methods to Improve Efficiency Specialization - when workers specialize, they become experts. Mass Production - using up-to-date equipment and assembly line methods to produce large quantities of identical goods. Advanced Technology /Innovation - better quality goods are built at a faster pace and at a lower cost. Reorganization - (produces greatest results) Downsizing - cutting back on the size of the firm and products provided. Empowerment - letting the workers decide on how to perform their work tasks and offer ideas on how to improve the work process

Business Growth & Prosperity Gross Domestic Product -(GDP) is the total market value of all goods produced and services provided in a country in one year. The rate of growth and the GDP indicate the economic strength of the country. Underground economy - transactions that are not recorded usually because they are unlawful or paid in cash. Individual well-being of its citizens - Study family income to show standard of living.

Entrepreneurship Entrepreneur - one who starts, manages, and owns a business. Small business - any business that is operated by one or a few individuals. Usually retail and fewer than 100 employees Franchise - a legal agreement between a company and a distributor to sell a product or service under special conditions. Greater chance of success. Franchisor - parent company Franchisee - the entrepreneur

Activity #2: Franchises www.franchise.com Alphabetical Directory Find 10 Franchises that you would be interested in and find out information regarding: A Brief description of the company Franchise Fees Cash Required Total Investments Total Net Worth

Entrepreneurship Risks and Obligations Risk - the possibility of failure, competition from other businesses, changes in prices, or changes in the economic environment. If risks are high, so are the chances of failure. 1 out 4 businesses fail within 3 years. Responsibility lies with the entrepreneur to serve the stakeholders. Stakeholders - customers, employees, management, competitors, investors, and the public.

Intrapreneurship Intrapreneur is an employee of the organization who is given the funds and the freedom to create a special unit or department within the company in order to develop a new product, process or service Advantages - upper management does not interfere, low risk, employers benefit by keeping creative employees, customers benefit with new products at a faster pace.