1. part Chapter © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 1 McGraw-Hill The Dynamic Business Environment 1 Chapter 1

2. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 2 McGraw-Hill 1.Understand the importance of studying business. 2.Explain the evolution of American business. 3.Describe the five elements of the business environment. 4.Understand your options in the world of business in the future. Learning Objectives

3. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 3 McGraw-Hill Business – Definition Defining Business Wealth opportunity Entrepreneurs Profit, Revenue, Loss, and Risk and Reward Definitions Standard of Living The Importance of Studying Business

4. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 4 McGraw-Hill Stakeholders and Shareholders Definitions Customers, employees, stockholders, suppliers, bankers, people in community, elected leaders, among others. Challenge – to balance the needs Defining Business

5. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 5 McGraw-Hill Progress in the Agricultural and Manufacturing Industries Strong economic development Agriculture Manufacturing industry Progress in Service Industries Employment – shift from manufacturing to service More high-paying jobs Evolution of American Business

6. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 6 McGraw-Hill The Five Parts of the Business Environment

7. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 7 McGraw-Hill The Economic and Legal Environment Businesses operate within framework of laws and economic forces. Entrepreneurs are looking for acceptable Return on Investment (ROI). Businesspeople benefit from awareness of current laws.

8. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 8 McGraw-Hill The Economic and Legal Environment What Can Government Do? Allow private ownership Pass laws that enable people to write enforceable contracts –Uniform Commercial Code (UCC) Tradable currency Laws to minimize corruption and illegal activities –Ethical lapses Capitalist system

9. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 9 McGraw-Hill Businesses have always been affected Information technology (IT) Increased Productivity Technology Effectiveness Efficiency Resources Productivity Greater profit The Technological Environment

10. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 10 McGraw-Hill Making Buying and Selling Easier E-commerce –Business-to-consumer (B2C) –Business-to-business (B2B) Success through quality and service Responsiveness to Customers Use of technology –Uniform Product Code (UPC) Databases The Technological Environment

11. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 11 McGraw-Hill Focus on quality and value Customer-driven Organizations Dependence on customers Listen to customers Employee Empowerment Quick response to customer requests Cross-functional teams Self-managed teams The Competitive Environment

12. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 12 McGraw-Hill Diversity Increase in minority owners and employees Businesses concerned about diverse workforce and customer base Boomers, Generations X and Y Aging Consumers Baby Boomers growing older Catering to Baby Boomers The Social Environment

13. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 13 McGraw-Hill The Social Environment Dual Incomes Result of dual income trend Cafeteria-style benefits Part-time work Single Parents Work-life balance Marriage Changing views –Children vs. no children

14. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 14 McGraw-Hill The Global Environment Two important changes –Growth of international competition –Increased free trade All businesses compete in the global marketplace How terrorism affects the way business is done

15. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 15 McGraw-Hill Your Future in Business Entrepreneurship vs. Working for Others Two ways to succeed: –Working for Other Businesses –Entrepreneurial Challenge Creation of Wealth –Five factors –What makes countries rich

16. © 2009 The McGraw-Hill Companies, Inc. All rights reserved. 16 McGraw-Hill Your Future in Business Working for a Nonprofit Organization or a Government Agency Businesses can’t do everything for communities Social entrepreneur Government agency Business concepts applicable