2. The Changing Face of Business1
Chapter
The Changing Face of Business

3. Learning Objectives
LO 1.1 Distinguish between business and not-for-profit organizations.
LO 1.2 Identify and describe the factors of production.
LO 1.3 Describe the private enterprise system.
LO 1.4 Identify the seven eras in the history of business.
LO 1.5 Explain how today’s business workforce and the nature of work itself are changing.
LO 1.6 Identify the skills and attributes needed to lead businesses in the twenty-first century.
LO 1.7 Outline the characteristics that make a company admired.

4. What is Business?
Business: All profit-seeking activities and enterprises that provide goods and services necessary to an economic system
Profits: Rewards for businesspeople who take the risks involved to offer goods and services to customers
2012 rankings of Canada's top 1000 public companies by profit

5. Factors of Production Natural resources Capital Human resources
Entrepreneurship

6. Test Your Knowledge Why are the four factors of production important?
a) The factors of production are regulated by the government.
b) Human resources will always be the most important factor of production.
c) Managing all four of the factors of production is critical for the successful operation of a business.
d) Firms need to understand how to reduce the cost of production if they are going to be successful.
Answer: d

7. The Private Enterprise System
Capitalism
Adam Smith known as father of capitalism
“invisible hand”
Economic system determines business ownership, profits, and resources
Firms rewarded for their ability to serve the needs of consumers
Minimizes government intervention
Competition: The battle among businesses for consumer acceptance

8. Basic Rights within a Private Enterprise System
FIGURE 1.1
Basic Rights within a Private Enterprise System

9. The Entrepreneurship Alternative
An Entrepreneur:
Is a risk taker
Takes financial, personal, social, and career risks
Sees a potentially profitable opportunity
Devises a plan to achieve success in the marketplace and earn those profits
Fuels the economy
Provides innovation

10. Number of Private Sector Employees by Industry and Size of Business Enterprise, 2009
FIGURE 1.2
Number of Private Sector Employees by Industry and Size of Business Enterprise, 2009

11. Seven Eras in the History of Business
The Colonial Period
Primarily agricultural; prior to 1776
The Industrial Revolution
Mass production by semiskilled workers, aided by machines;
The Age of Industrial Entrepreneurs
Advances in technology and increased demand for manufactured goods, leading to enormous entrepreneurial opportunities; late 1800s
The Production Era
Emphasis on producing more goods faster, leading to production innovations such as assembly lines; through the 1920s
The Marketing Era
Consumer orientation, seeking to understand and satisfy needs and preferences of customer groups; since 1950s
The Relationship Era
Benefits derived from deep, ongoing links with individual customers, employees, suppliers, and other businesses; began in 1990s
The Social Era
Businesses interact, connect, communicate, share, and exchange information in virtual communities and networks around the world; since 2004

12. Test Your Knowledge
Identify the business era during which managers began to pay more attention to what consumers wanted and needed rather than simply to what the firm could produce.
a) The Industrial Revolution
b) The production era
c) The marketing era
d) The relationship era
Answer: c

13. Managing Relationships through Technology
Relationship Management
The collection of activities that build and maintain ongoing, mutually beneficial ties with customers and others
Relationship management depends on technology

14. Strategic Alliances
A partnership is an affiliation of two or more companies that help each other achieve common goals
Strategic alliance: A partnership formed to create a competitive advantage for the businesses involved (see Amazon)

15. Today’s Business Workforce
Reliable workers dedicated to promoting strong ties with customers and partners
Capable of efficient, high-quality production
Able to compete in global markets
Technically savvy and innovative

16. Changes in the Workforce
The Aging Population/Shrinking Labour Pool
Many baby boomers are hitting the peak of their careers, while Generations X and Y are launching their careers
More generations mixing in the workplace than ever before
Technology has intensified the hiring challenge by requiring workers to have ever- more advanced skills
Canada’s Aging Population

17. Changes in the Workforce (cont’d)
Increasingly Diverse Workforce
Two-thirds of Canada’s population growth is due to international immigration, particularly from Asia
Employee teams with individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities are more effective
DiversityInc’s top 50 companies for diversity

18. Test Your Knowledge
The Internet has made possible another business tool for staffing flexibility: __________, or using outside vendors to produce goods or fulfill services and functions that were previously handled in-house or in-country.
a) outsourcing
b) nearshoring
c) offshoring
d) partnering
Answer: a

19. The Twenty-First-Century Manager
Vision
Critical thinking and creativity
Ability to lead change

20. Vision
Vision is the ability to perceive marketplace needs and what an organization must do to satisfy them
Today’s companies look for managers who are intelligent, highly motivated people with the ability to create and sustain a vision for the organization

21. Critical Thinking and Creativity
Critical thinking is the ability to analyze and assess information to pinpoint problems or opportunities
Creativity is the capacity to develop novel solutions to perceived organizational problems

22. Ability to Lead Change
Guide employees and organizations through changes
Managers must be comfortable with tough decisions in fluctuating conditions
Factors that require organizational change can come from external and internal sources

23. What Makes a Company Admired?
Solid profits
Stable growth
Safe and challenging work environment
High-quality goods and services
Business ethics and social responsibility
Fortune’s list of most admired companies

24. What’s Ahead New technologies Population shifts
Emerging nations
Shrinking global barriers
Trade, communication, transportation

25. Copyright
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