Copyright © Cengage Learning. All rights reserved.1 | 1 Chapter One Exploring the World of Business and Economics

Copyright © Cengage Learning. All rights reserved.1 | 2 Learning Objectives 1.Discuss your future in the world of business. 2.Define business and identify potential risks and rewards. 3.Define economics and describe two types of economic systems: capitalism and command economy. 4.Identify the ways to measure economic performance. 5.Outline the four types of competition. 6.Summarize the factors that affect the business environment and the challenges that American businesses will encounter in the future.

Chapter 1 Outline –Your Future in the Changing World of Business Why Study Business? Special Note to Students –Business: A Definition The Organized Effort of Individuals Satisfying Needs Business Profit

Chapter 1 Outline (cont’d) –Types of Economic Systems Capitalism Capitalism in the United States Command Economies –Measuring Economic Performance The Importance of Productivity in the Global Marketplace Important Economic Indicators that Measure a Nation’s Economy The Business Cycle

Chapter 1 Outline (cont’d) –Types of Competition Perfect (or Pure) Competition Monopolistic Competition Oligopoly Monopoly –American Business Today Early Business Development The Twentieth Century A New Century: 2000 and Beyond The Current Business Environment –The Challenges Ahead

Copyright © Cengage Learning. All rights reserved.1 | 6 Your Future in the Changing World of Business Free enterprise What does it take to succeed in business?

Copyright © Cengage Learning. All rights reserved.1 | 7 Why Study Business? For help in choosing a career To be a successful employee To start your own business To become a better informed consumer and investor

Copyright © Cengage Learning. All rights reserved.1 | 8 Tips for Studying Business 1.Prepare before you go to class. 2.Read the chapter. 3.Underline or highlight important concepts. 4.Take notes. 5.Apply the concepts. 6.Practice critical thinking. 7.Prepare for exams.

Copyright © Cengage Learning. All rights reserved.1 | 9 Business: A Definition The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs

Copyright © Cengage Learning. All rights reserved.1 | 10 Classification of Businesses Manufacturing businesses Service businesses Marketing intermediaries

Copyright © Cengage Learning. All rights reserved.1 | 11 Satisfying Needs People buy goods and services not just to own them, but to satisfy particular needs Businesses that understand customer needs, and work to satisfy those needs, are usually successful

Copyright © Cengage Learning. All rights reserved.1 | 12 The Relationship Between Sales Revenue and Profit Profit is what remains after all business expenses have been deducted from sales revenue. A loss (negative profit) results when a firm’s expenses are greater than its revenues.

Copyright © Cengage Learning. All rights reserved.1 | 13 Business Profit The purposes of profit Stakeholders

Copyright © Cengage Learning. All rights reserved.1 | 14 Economic Systems Economics Microeconomics Macroeconomics Economy

Copyright © Cengage Learning. All rights reserved.1 | 15 Economic Systems (cont’d) Factors of production Entrepreneur Differences in economic systems

Copyright © Cengage Learning. All rights reserved.1 | 16 Types of Economic Systems Capitalism Capitalism in the United States

Copyright © Cengage Learning. All rights reserved.1 | 17 Types of Economies (cont’d) Command economies –Socialism –Communism

Copyright © Cengage Learning. All rights reserved.1 | 18 Measuring Economic Performance Productivity Economic indicators –Gross domestic product (GDP) –Inflation

Copyright © Cengage Learning. All rights reserved.1 | 19 Common Measures Used to Evaluate a Nation’s Economic Health Balance of trade Bank credit Corporate profits

Copyright © Cengage Learning. All rights reserved.1 | 20 Common Measures Used to Evaluate a Nation’s Economic Health (cont’d) Inflation rate National income New housing starts

Copyright © Cengage Learning. All rights reserved.1 | 21 Common Measures Used to Evaluate a Nation’s Economic Health (cont’d) Prime interest rate Productivity rate Unemployment rate

Copyright © Cengage Learning. All rights reserved.1 | 22 The Business Cycle The recurrence of periods of growth and recession in a nation’s economic activity –Recession –Depression –Monetary policies

Copyright © Cengage Learning. All rights reserved.1 | 23 The Business Cycle (cont’d) Fiscal policy Federal deficit National debt

Copyright © Cengage Learning. All rights reserved.1 | 24 Types of Competition Perfect (or pure) competition Supply: Demand: Market Price (Equilibrium):

Copyright © Cengage Learning. All rights reserved.1 | 25 Types of Competition (cont’d) Monopolistic competition Oligopoly Monopoly

Copyright © Cengage Learning. All rights reserved.1 | 26 American Business Today Standard of living Early business development –Barter system –Domestic system

Copyright © Cengage Learning. All rights reserved.1 | 27 American Business Today (cont’d) Early Business Development (cont’d) –Factory system –Specialization

Copyright © Cengage Learning. All rights reserved.1 | 28 American Business Today (cont’d) The Twentieth Century The Late Twentieth Century A New Century: 2000 and Beyond

Copyright © Cengage Learning. All rights reserved.1 | 29 The Challenges Ahead How can we encourage Iraq and Afghanistan to establish a democratic and free society and resolve possible conflict with North Korea and other countries throughout the world? How can we create a more stable economy and create new jobs? As a nation, how can we develop a disaster crisis management program that will help people in times of peril? How can we meet the challenges of managing culturally diverse work forces to address the needs of a culturally diverse marketplace? How can we make American manufacturers more productive and more competitive with foreign producers who have lower labor costs?

Copyright © Cengage Learning. All rights reserved.1 | 30 The Challenges Ahead (cont’d) How can we preserve the benefits of competition in our American economic system? How can we encourage economic growth and at the same time continue to conserve natural resources and protect our environment? How can we best market American-made products in foreign nations? How can we meet the needs of two-income families, single parents, older Americans, and the less fortunate?