1. The Changing Face of Business http://www.wileybusinessupdates.com1
Chapter
The Changing Face of Business

2. Learning Objectives
Explain how today’s business workforce and the nature of work itself is changing.
Identify the skills and attributes needed for the 21st century manager.
Outline the characteristics that make a company admired .
Define what is business.
Identify and describe the factors of production.
Describe the private enterprise system.
Identify the six eras in the history of business. 1 5 2 6 3 7 4

3. What is Business?
Profit-seeking activities and enterprises provide goods and services necessary to an economic system.
Profit-seeking is the reward for business people who take the risk involved to offer goods and services to customers.
See Fortune 500 for a list of major U.S. companies.
Some businesses produce tangible goods while others provide services. Businesses are large enterprises like General Electric or Microsoft or the small cleaners in your neighborhood. Profits are the central focus of business because without profits, a company could not survive.

4. Not-For-Profit Organizations
Not-for-profit organizations are business-like establishments that have primary objectives other than profits.
Although they place public service over profit making, they still need money to achieve their goals
These organizations are a major part of the U.S. economy
Organizations like the Red Cross and the American Heart Association are not-for-profit organizations. These are businesslike establishments that have a primary objective other than returning profits to their owners. The website compiles a list of major U.S. companies. See if students are familiar with most of these and if their parents (or the students themselves) work for any of these companies.
Lecture Enhancer: Explain a possible objective of a not-for-profit organization.
Lecture Enhancer: Name examples of private-sector not-for-profit organizations.
Lecture Enhancer: Name examples of public-sector not-for-profit organizations.
Lecture Enhancer: What possible risks do not-for-profits face if they choose to sell merchandise or to share advertising with a business in order to raise funds?
Lecture Enhancer: Name a not-for-profit organization that sells merchandise or has a profit-generating arm.

5. Factors of Production Natural Resources Capital Human Resources
Entrepreneurship
Occupational Outlook Handbook
Economic systems require certain inputs: Natural Resources, Capital, Human Resources, and Entrepreneurship. Natural resources include all production inputs that are useful in their natural state. Agriculture, land, building sites, forest, and mineral deposits are examples. Capital includes technology, tools, information, and physical facilities. Human resources includes anyone who works for a firm. Human resources includes physical labor and intellect. Entrepreneurship is the willingness to take risks to create and operate a business. Click on the Occupational Handbook website to access information on the training and education needed, earnings, expected job prospects, what workers do on the job, and working conditions.
Lecture Enhancer: Name one factor of production and its method of payment. Think of a business in which this factor plays a major part.
Class Activity: Ask students to name businesses that used technology in its products or services that transformed our lifestyles.
Lecture Enhancer: Provide an example of a business that recently upgraded or updated some form of its capital.

6. The Private Enterprise System
Capitalism
Adam Smith is the father of capitalism.
“Invisible Hand”
Economic system determines business ownership, profits, and resources
Rewards firms for their ability to serve the needs of consumers
Minimized government intervention
Competition is the battle among businesses for consumer acceptance.
Adam Smith first described capitalism in his famous book, Wealth of Nations, and coined the phrase “Invisible Hand.” The private enterprise system minimizes government interference in economic activity. Firms are rewarded for their ability to compete and meet consumer needs. Competition regulates economic life and is a key premise of capitalism in the US. To compete, each firm must find a competitive differentiation – the unique combination of organizational abilities, products, and approaches.
Lecture Enhancer: Name two of Walmart’s competitors.
Lecture Enhancer: How does Walmart differentiate itself among its competitors?

7. Basic Rights in a Private Enterprise System
For capitalism to work, the citizens of a private enterprise economy must have certain rights. Every participant has the right to own, use, buy, sell, and bequeath property. Freedom of choice means that a private enterprise system relies on the potential for citizens to choose their own employment, purchases, and investments. Profits and competition are explicit rights of the private enterprise.
Lecture Enhancer: Choose one of the four rights under the private enterprise system. Give an example of how this right allows freedom to a business.
Lecture Enhancer: Give a hypothetical example of what government goals might be more easily achieved by limiting a citizen’s freedom to choose their own employment.

8. Entrepreneurship
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 U.S. economy
Provides innovation
Entrepreneurial thinking is important within large firms.
The willingness of individuals to start a new venture drives economic growth and keeps pressure on existing companies to continue to satisfy customers. The spirit of entrepreneurship is beginning to be recognized inside all firms. The topic of entrepreneurship is very popular among today’s college students. Many of them will start their own business ventures (some may have their own businesses now).
Lecture Enhancer: Explain how cable companies have become a recent target of fair-competition laws.
Class Activity: Ask how many class members (or their family members) work in a company with fewer than 20 employees.
Lecture Enhancer: Why are smaller companies more likely to find innovative ways to use the factors of production?

9. Six Eras in the History of U.S. Business
In 400 years, the U.S. business history has gone through six distinct time periods: the colonial period, the Industrial Revolution, the age of industrial entrepreneurs, the production era, the marketing era, and the relationship era. All of these periods are unique because they have influenced U.S business practices in different ways.
Class Activity: Ask students to provide examples of people today who currently earn their income by the making of crafts.
Class Activity: Lead a discussion to identify the oldest companies in the local area or state that continue their operations.
Lecture Enhancer: Compare the options available to buyers of a Ford automobile today compared to during the production era.
Lecture Enhancer: Compare and contrast the brand identities of Walmart and Target.
Lecture Enhancer: Give 3 examples of different brands of athletic shoes. How does each brand differentiate itself within the market?

10. Managing Relationships through Connections
Relationship Management
Activities to build and maintain mutually beneficial ties with customers and other parties
Relationship management depends on technology.
Relationship management involves gathering knowledge of customer needs and preferences and applying that understanding to get as close to the customer as possible.
Lecture Enhancer: How has the shift in focus from production to customer relationships affected how innovation occurs within an industry?
Class Activity: Ask students how many “frequent buyer” or loyalty cards they carry in their wallet or purse?

11. Strategic Alliances and Partnerships
A partnership is an affiliation of two or more companies that help each other achieve common goals.
A strategic alliance is a partnership formed to create a competitive advantage for both parties (see Amazon).
Partnerships and strategic alliances allow organizations to take advantage of available opportunities. A way organizations build relationships is to operate responsibly and incorporate issues that customers care about. E-business has created a new type of strategic alliance (review inventory at Amazon.com). Environmental concerns continue to influence consumer’s choices. Therefore, companies are researching ways to save energy and increase profits by “going green.”
Lecture Enhancer: Give an example of a current e-business strategic alliance.

12. Today’s Business Workforce
Dedicated workers who can foster strong ties with customers
Capable of high-quality production
Able to compete in global markets
Technically savvy
A skilled and knowledgeable workforce is an essential resource for keeping pace with the changing business world. A first-class workforce can be the foundation of a firm’s competitive differentiation, providing important advantages over competing business.

13. Changes in the Workforce: Aging Population
By 2030, the number of U.S. workers 65 or older will reach 72 million.
Many baby boomers are hitting the peak of their careers, while Generations X and Y are launching their careers.
Technology has intensified the hiring challenge by requiring workers to have ever more advanced skills.
U.S. Census Bureau
There is a widening age spectrum of the workforce. This broad age diversity brings management challenges with it, such as accommodating a variety of work-life styles, changing expectations of work, and varying levels of technological expertise. Use the census.gov website to review the population information (age, education, income, etc.) for some zip codes in your geographic area.
Class Activity: Ask students what businesses might benefit or suffer from the aging “baby boomer" population.
Lecture Enhancer: What unique skills might each generation bring to the workplace?

14. Changes in the Workforce: Shrinking Labor Pool/Diversity
Economists predict the U.S. labor pool could soon fall short by as many as 10 million people.
The two fastest-growing ethnic populations in the United States are Hispanics and people of Asian origin.
Employee teams with individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities are more effective.
Diverse employee teams and workforces tend to perform tasks more effectively and develop better solutions to business problems because of their varied perspectives and experiences. Attention to diversity issues can help them avoid damaging legal battles.
Class Activity: Obtain the class' experiences in working in teams with diverse membership. What were the benefits and difficulties the teams encountered?
Lecture Enhancer: Why might diverse workforces offer more innovative solutions to business problems than homogeneous workforces?

15. Changes in the Workforce: Outsourcing
Outsourcing is using outside vendors to produce goods or fulfill services and functions that were previously handled in-house or in-country.
Offshoring is the relocation of business processes to lower-cost locations overseas.
The nature of work is changing. The manufacturing industry is declining while the service industry is growing. Firms must rely heavily on well-trained service workers with knowledge, technical skills, the ability to communicate and deal with people, and a talent for creative thinking. More service jobs like call centers are being outsourced.

16. Changes in the Workforce:
Flexibility and Innovation through Collaboration
Younger workers are looking to something other than work-comes-first
Telecommuting and job-sharing
Part-time and temporary workers are growing
Collaboration is replacing working alone
Value risk-taking and innovation
Workers want a flexible work-life balance that rewards them for their skills. These workers use technology and manage their own careers. The relationship between employees and workers needs to be a valuable partnership that drives innovation through collaboration.
Class Activity: Survey the class to see if how many students work on a flexible or part- time basis.

17. The 21st-Century Manager
Critical-thinking
Creativity
Ability to lead change
Vision
Today’s companies look for managers who are intelligent, highly motivated people with the ability to create and sustain a vision for the organization. Critical thinking is the ability to analyze and assess information to pinpoint problems or opportunities. The challenges in today’s marketplace require managers to perceive the marketplace needs and what an organization must do to satisfy them. There are many challenges facing today’s managers.

18. 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.
Creativity and critical thinking are imperative in today’s workplace, but they must lead to action. These are essential characteristics of the 21st-century workforce. These skills are important throughout the organization.
Class Activity: Lead a class “brainstorming” discussion asking students for a name for a new oil and lubrication business that also will sell coffee and snacks while customers wait in a comfortable lounge area.

19. Ability to Lead Change
Guide employees and organizations through changes
Managers must be comfortable with tough decisions.
Factors that require organizational change can come from external and internal sources.
Changes brought on by technology, the marketplace, and global competition require leadership. Organizational change may come internally from new company goals, emerging employee needs, labor union demands, or production problems. External forces might include feedback from customers, developments in the international marketplace, economic trends, and new technologies.

20. 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
There are a variety of things that make a company admired. As you learn more about business, you will decide for yourself what makes a company admired.
Lecture Enhancer: Are there any factors that you feel have been left out of this list?

21. The Future of Business New Technologies Population Shifts
Emerging nations
Shrinking Global Barriers
Trade, communication, transportation
Throughout the entire course, the student must focus on the factors that are changing the way we do business. Technology is changing the products and services we purchase and how we conduct business. Population shifts are changing the “centers of commerce,” consumer spending patterns, and the focus of marketing. Global barriers such as trade, communications, and transportation are “shrinking,” creating global competition and numerous business opportunities.