1. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Part 1 Business in a Global Environment

2. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 1 Business: 2005 and Beyond

3. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-3 Chapter Objectives 1.Distinguish between business and not-for-profit organizations and identify the factors of production. 2.Describe the private enterprise system and explain how competition and entrepreneurship contribute to the system. 3.Identify the six eras of business and explain how the relationship era influences contemporary business. 4.Describe how technology is changing the way businesses operate and complete. 5.Relate the importance of quality and customer satisfaction to efforts to create value for customers. 6.Explain how productivity affects competitiveness in the global market.

4. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-4 Chapter Objectives 7.Describe the major trends that challenge managers’ skills for managing and developing human resources. 8.Identify the skills that managers need to lead businesses in the new century. 9.Discuss the importance of good business ethics and social responsibility in business decision making.

5. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-5 What is 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.

6. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-6 Not-for-Profit Organizations Businesslike establishments that have primary objectives other than returning profits to their owners. For example: The Corporate Angel Network: A Not- for-Profit Organization providing flights to cancer patients in need

7. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-7 Factors of Production Four basic inputs for effective operation:

8. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-8 The Private Enterprise System Economic system that rewards businesses for their ability to perceive and serve the needs and demands of customers. Competition—battle among businesses for consumer acceptance

9. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-9 Basic Rights in the Private Enterprise System

10. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-10 The Entrepreneurship Alternative Entrepreneur—risk taker in the private enterprise system. Many of the Internet companies we know today got their start as entrepreneur ventures (and many failed). HotJobs.com is now a Yahoo company

11. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-11 Six Eras in the History of Business

12. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-12 The Colonial Period Primarily agricultural Prior to 1776 The Industrial Revolution Mass productions by semi-skilled workers, aided by machines. 1760-1850

13. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-13 The Age of the Industrial Entrepreneur 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 productions innovations like assembly lines. Prior to 1920s

14. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-14 The Marketing Era Consumer orientation, seeking to understand and satisfy needs and preferences of customer groups. Since 1950s Consumer Orientation: marketing used as a process to determine and satisfy consumer needs Branding: creating an identity in consumer’s minds

15. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-15 The Relationship Era Benefits derived from developing extensive relationships with individual customers, employees, and suppliers.

16. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-16 Managing the Technology Revolution Technology—business applications of knowledge based on scientific discoveries, inventions, and innovations. Internet—worldwide network of interconnected computers that, within limits, lets anyone with a PC or other computing device, send and receive images and data anywhere. World Wide Web—interlinked collection of graphically rich information sources within the larger Internet.

17. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-17 From Transaction Management to Relationship Management Transaction management—building and promoting products in hopes of covering costs and earning acceptable profits Relationship management—collection of activities that build and maintain ongoing, mutually beneficial ties between a business and its customers and other parties.

18. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-18 Strategic Alliances and Partnerships Businesses must form partnerships with other organizations to take full advantage of available opportunities. Partnership: an affiliation of two or more companies with the shared goal of assisting each other in the achievement of common goals Strategic alliance: partnership formed to create a competitive advantage for the businesses involved

19. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-19 Creating Value through Quality and Customer Satisfaction Value—customer’s perception of the balance between the positive traits of a good or service and its price. Customer satisfaction—ability of a good service to meet or exceed a buyer’s needs and expectations.

20. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-20 Competing in a Global Market Companies must continually search for both the most efficient manufacturing sites and the most lucrative markets for their products. The world’s 10 most valuable brands

21. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-21 Top-10 trading partners with the U.S.

22. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-22 Productivity: Key to Global Competitiveness Productivity describes the relationship between the number of units produced and the number of human and other production inputs necessary to produce them. Total Output (goods or services produced) Productivity Input (human/natural resources, capital) Total Output (goods or services produced) Productivity Input (human/natural resources, capital) =

23. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-23 Gross Domestic Product (GDP) The sum of all goods and services produced within a country’s boundaries. Nations with the highest GDP

24. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-24 Developing and Sustaining a World-Class Workforce A skilled and knowledgeable workforce is an essential resource for keeping pace with the accelerating rate of change in today’s business world.

25. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-25 Preparing for Changes in the Workforce In the coming decades, companies will face several trends that challenge their skills for managing and developing human resources. Aging of the population. Shrinking labor pool. Increasingly diverse workforce. The changing nature of work. The new employer-employee partnership.

26. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-26 The Changing Nature of Work Outsourcing—Contracting with another business to perform tasks or functions previously handled by internal staff members

27. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-27 Reaping the Benefits of Diversity Blending individuals of different ethnic backgrounds, cultures, religions, ages, genders, and physical and mental abilities can enrich a firm’s success.

28. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-28 Wanted: A New Type of Manager Companies look for managers who are intelligent, highly motivated people with the ability to create and sustain a vision of how an organization can succeed. Vision Critical Thinking Creativity Ability to Steer Change

29. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-29 Vision: the ability to perceive marketplace needs and what an organization must do to satisfy them Critical Thinking: ability to analyze and assess information in order to pinpoint problems or opportunities Creativity: capacity to develop novel solutions to perceived organizational problems – to see better and different ways of doing business Ability to Steer Change: Must guide employees and organizations through the changes brought about by technology, marketplace demands, and global competition

30. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-30 Managing Ethics and Social Responsibility Business Ethics—conduct and moral values involving right and wrong actions arising in the work environment. Social Responsibility—a management philosophy that highlights the social and economic effects of managerial decisions. Companies enhance their image and relationship with society by participating in social responsibility programs

31. Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1-31 What Makes a Company Admired? Solid profits? Stable growth? Safe and challenging work environment? Commitment to social responsibility? You decide!