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

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

1-3 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 . 

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

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

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

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

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

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

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

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

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

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

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.

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