1. Chapter 1 Characteristics of Business
Nature of Business
Types of Business
Impact of Global Competition in Business
Business Growth & Prosperity
Entrepreneurship
Intrapreneurship

2. Nature of Business
Business - an organization that produces or distributes a good or a service for profit.
Profit - the difference between earned income & costs

3. Three Major Activities of Business
Production - making a product or providing a service.
Marketing - deals with how goods and services are exchanged
between producers and consumers
Finance - deals with the money matters related to running a business

4. Types of Businesses
Industrial Businesses - produce goods that are often used by other businesses or organizations to make things (Metal, ore, buildings)
Commercial businesses - are engaged in marketing, finance and in furnishing services.
Services - intangible products that result from a high degree of labor (accounting, hair dressers)
Industry - used to refer to all businesses within a category (accounting, publishing etc....)

5. Activity #1: List at least three companies that would be considered to be a part of each industry.
Airline Industry
Banking Industry
Computer Industry
Fast Food Industry
Automotive Industry
Consumer Photography Industry
Insurance Industry
Beverage Industry
Pharmaceutical Industry
Oil & Gas Industry

6. Impact of Global Competition on Business
Global Competition - the ability of organizations to compete with other businesses in other countries.
Domestic Goods - products made by firms in U.S.
Foreign Goods - products made by firms in other countries

7. Effectiveness Vs. Efficiency
Effectiveness - when the right decisions are made in deciding which products or services to offer customers.
The Japanese taught us Total Quality Management (TQM) which is a company-wide commitment to excellence that is accomplished by teamwork & continuous improvement.
Efficiency - producing the needed goods and services quickly and at a low cost.
Managers should strive to be
effective and efficient at the same time

8. Methods to Improve Efficiency
Specialization - when workers specialize, they become experts.
Mass Production - using up-to-date equipment and assembly line methods to produce large quantities of identical goods.
Advanced Technology /Innovation - better quality goods are built at a faster pace and at a lower cost.
Reorganization - (produces greatest results)
Downsizing - cutting back on the size of the firm and products provided.
Empowerment - letting the workers decide on how to perform their work tasks and offer ideas on how to improve the work process

9. Business Growth & Prosperity
Gross Domestic Product -(GDP) is the total market value of all goods produced and services provided in a country in one year. The rate of growth and the GDP indicate the economic strength of the country.
Underground economy - transactions that are not recorded usually because they are unlawful or paid in cash.
Individual well-being of its citizens - Study family income to show standard of living.

10. Entrepreneurship
Entrepreneur - one who starts, manages, and owns a business.
Small business - any business that is operated by one or a few individuals. Usually retail and fewer than 100 employees
Franchise - a legal agreement between a company and a distributor to sell a product
or service under special conditions. Greater chance of success.
Franchisor - parent company
Franchisee - the entrepreneur

11. Activity #2: Franchises
Alphabetical Directory
Find 10 Franchises that you would be interested in and find out information regarding:
A Brief description of the company
Franchise Fees
Cash Required
Total Investments
Total Net Worth

12. Entrepreneurship Risks and Obligations
Risk - the possibility of failure, competition from other businesses, changes in prices, or changes in the economic environment.
If risks are high, so are the chances of failure. 1 out 4 businesses fail within 3 years.
Responsibility lies with the entrepreneur to serve the stakeholders.
Stakeholders - customers, employees, management, competitors, investors, and the public.

13. Intrapreneurship
Intrapreneur is an employee of the organization who is given the funds and the freedom to create a special unit or department within the company in order to develop a new product, process or service
Advantages - upper management does not interfere, low risk, employers benefit by keeping creative employees, customers benefit with new products at a faster pace.