1. Lesson 1 Exploring the World of Business and Economics

2. Learning Objectives
LO 1-1 Summarize the four benefits of studying business LO 1-2 Given an example of a business, explain how that business benefits society LO 1-3 Given an example of a business, explain potential societal concerns about that business

3. Learning Objectives
LO 1-4 Given a factor in the business environment, discuss how that factor might affect businesses and consumers LO 1-5 Given an example of an economy, classify as one of the four types of economic systems

4. Learning Objectives
LO 1-6 Given the type of competition for an industry, identify the key strategic considerations for companies in that industry LO 1-7 Given an example of a pricing change, identify the resulting effects on supply and demand

5. Learning Objectives
LO 1-8 Given an example of an economic indicator, explain whether it is a positive or negative indication of economic conditions

6. Why Study Business? Helps in choosing a career
Assists in improving career
Makes a better-informed consumer and investor
Aids in becoming a more influential community member
Leads to more fulfilling jobs, higher incomes, and stronger communities
LO 1-1

7. Understanding Business Basics
Seeking profit by offering products to satisfy society’s needs
Products - Goods or services
Profit - Sales revenue is greater than expenses
LO 1-2

8. Benefits of Business to Society
Offering valuable products
Providing employment
Improving quality of life
LO 1-2

9. Concerns About the Impact of Business on Society
Health and safety risks
Environmental damage
Social disruption
LO 1-3

10. Factors Affecting the Business Environment
Economic
Consider size and health of the economy when making business decisions
Competitive
High level of competition forces a company to focus on following strategies
Cost cutting
Development of new products
Increased marketing and branding efforts
LO 1-4

11. Factors Affecting the Business Environment
Global
Increases competition and changes the skills needed for a successful career
Technology
Leads to new products and can lower the prices of existing ones
Social
Influences kind of products companies offer and way of operating businesses
LO 1-4

12. Economic Systems
Helps examine how each system will affect opportunities to make income and create wealth
Affects choices as a consumer and the prices paid
LO 1-5

13. Types of Economic Systems
Capitalism
Individuals own and operate the majority of businesses, with limited government intervention
Mixed economy
Land and business is privately owned, with various levels of government intervention
LO 1-5

14. Types of Economic Systems
Socialism
Key industries and resources are owned by the state, with some private ownership of land and businesses
Communism
Property and profits are owned by the state
LO 1-5

15. Degrees of Competition and Supply and Demand
Perfect competition: Market situation in which no buyer or seller is powerful enough to affect the price of a product
Prices are decided by the fundamental economic concept of supply and demand
Equilibrium: Price at which supply equals demand
Companies must pay attention to minimize production costs to gain profits
LO 1-6, 1-7

16. Degrees of Competition and Supply and Demand
Monopolistic competition: Market situation with sellers requiring to differentiate their products
Oligopoly: Market situation with few sellers
Sellers match competitors price and win customers through product differentiation
LO 1-6, 1-7

17. Degrees of Competition and Supply and Demand
Monopoly: Market situation with one seller and significant barriers to entry for competitors
Pricing in some monopoly industries are regulated by government
Gas, water, and electricity utilities
Requires massive investment to enter businesses
Success depends on achieving a meaningful share of the market
LO 1-6, 1-7

18. Measuring Economic Performance
Health of nation’s economy affects:
Individuals
Finance needed for education, acquiring jobs, interests paid on credit card purchases
Businesses
Plans for hiring, investing, launching
Government
Level of taxes collected, fiscal policy, monetary policy
LO 1-8

19. Business Cycle
Fluctuations while graphing the economic growth rate for a country
Expansion - Growing economy
Contraction - Shrinking economy
Recession - Economy shrinking two quarters consecutively
LO 1-8

20. Gross Domestic Product (GDP)
Total dollar value of goods and services produced by people within the boundaries of a country during a 1-year period
Used to measure whether an economy has grown or shrunk
Growing GDP represents good things
Increasing employment and increasing incomes
LO 1-8

21. Economic Indicators
Unemployment rate: Percentage of a nation’s labor force unemployed at any time
Calculated as the number of unemployed divided by the number of people currently in the labor force
Inflation: Tracks the rise in prices of goods and services over a period of time
Steady rate around 2% is regarded as a stable economy
LO 1-8

22. Exploring Careers in Business
Choose a career
Improve your career
Become a more informed consumer and investor
Become a more influential member of your community
LO 1-8