1. Chapter 5: Business in the U.S. Economy
Goals:
Describe the changing status of employment in the U.S.
Discuss the role of businesses in the U.S. economy
Describe three types of businesses

2. The Changing U.S. Job Market
Decline of traditional manufacturing and agricultural jobs
.com boom
Baby Boomers- Born between 1946 and 1964
Retiring in 2010’s
Asian, Hispanics, and African Americans will gain more jobs in the next ten years

3. Job Market Statistics
Total employment grew by nearly 17 percent from ’92 to ’02
Projected to increase 15 percent by 2012
What will the economy do to this projected increase?
By 2012 nearly half (48%) of the workforce is projected to be women

4. Economic Affects on Businesses
Downsizing
Has it affected your family?
Streamlining
Contingent Worker = One who has no explicit or implicit contract for long term employment (5% of the present workforce)

5. Business and the Economy
Nearly 18 million businesses have no employees other than the owner
What do employ wages do for the economy?
What do profits earned by businesses do for the economy?
Most important role of businesses is to make and distribute products and services needed by consumers, government, and other businesses

6. Business Activities
1. Generating Ideas: Ideas must always be developing
2. Raising Capital: What does Nike use their capital for
3. Employing and Training Personnel: What are human resources?
4 Buying Goods and Services: What goods and services does Nike have to buy?

7. Business Activities cont..
5. Marketing Goods and Services: How does Nike market their products?
6. Maintain Business Records: What kind of jobs would be available in this area?
Nike Case Study: 1950-Present

8. Nike
Summarize who, what, and why. How did they Generate Ideas?
1960’s- Summarize who and what happened. How did they raise capital? Who did they hire and train?
1970’s- More ideas and marketing. Where did the waffle design come from? Who was Steve Prefontaine? Why would they choose him? What goods and services did they have to buy?

9. Nike Case Study cont…
1980’s- Summarize decade, what did they miscalculate? how did they re-market their product? What campaigns did they use? Why would maintaining business records be important at this time for Nike?
1990’s- What did they build in Oregon? Who was the new face of their company? What other areas did they venture into?
2000’s- What new products did they develop? What is their new integrated approach? What is the future for Nike?

10. Types of Businesses
Producers: Create the products and services used by individuals and other businesses.
Use Resources
Extractor- A business that takes resources from nature to develop products
Coal miners, farmers, etc…

11. Types of Businesses Cont…
Intermediaries: Businesses involved in selling goods and services of producers to consumers and other businesses.
-retailers and wholesalers
-Examples?
Service Businesses: Offer something intangible to consumers.
-What is tangible and intangible?
-fastest growing part of the economy
- >60% in current economy

12. Forms of Business Ownership
Proprietorship: Owned and run by one person
Total control
Easy to get started with few legal and capital requirements
Owner receives all profits
However, incurs all debts as well

13. Business Ownership cont…
Partnership: Business owned and operated by two or more people who have entered in a written agreement.
Similar to proprietorship
BOTH owners are responsible for key business decisions
Each partner is liable. Amount of liability depends on contract

14. Business Ownership cont…
Corporation: Separate legal entity formed by documents filed with your state.
Owned by shareholder(s) and managed by a Board of Directors (BOD)
Difficult to form
More capital and legal requirements
Corporations protect the liability of stockholders to only the amount that the person has invested

15. Choosing a Form of Business Ownership
Proprietorship:
Components:
Need to obtain government licenses and permits
Easy to start
Must register business name
Advantages = Total control of business, Tax advantages (income taxed as personal income), huge rewards
Disadvantages= Owner and business are seen as one by government (taxes), debts are responsibility of owner, giant risk

16. Partnership Components
Can be formed verbally, but written agreement is better (partnership agreement)
Partnership Agreement= business name, investments, ownership and profit percentage entitlements, authority and responsibility of each
Advantages: More start-up capital, More expertise, good for persons who share a common idea
Disadvantages: No protection for personal assets of each partner, if one person leaves or dies the partnership is usually ended

17. Corporation
Components: more difficult to form than other two, most common form of business, subject to many laws and regulations, articles of incorporation, corporate bylaws, stockholders
Advantages: Treated as an “individual” by the government, limited liability, debt does not matter, hands-off approach to ownership (stockholders)
Disadvantages: Focused decision making, many more records and laws, must pay corporate taxes on profits earned, investors also pay taxes

18. Other Forms of Ownership
Limited Liability Partnership: Identifies some investors who cannot lose more than the amount of their investment, but they are not allowed to participate in day-to-day management of the business.
Joint Venture: Two or more businesses operate for a limited time and for a specific project (a type of partnership)

19. Other Forms of Ownership cont…
Limited Liability Company: Provides liability protection for owners.
Non-Profit Corporation: Group of people who join together to perform a function that benefits the public.
Free from income tax
Receive grants and donations
Must be government approved

20. Cooperatives
Owned by members, serves their needs, and managed by their interest
Members form a consumer cooperative
Purchase goods and services cheaper as a group
Large numbers form greater bargaining power than individual businesses
MFA

21. Franchises
Written contract granting permission to operate a business to sell products and services in a set way.
Franchiser vs. Franchisee
Expands a business using the investments of others
Franchiser still maintains control over the name, product quality, and operating procedures
Monthly or Annual fee paid to franchiser in return for operating assistance
Jiffy Lube, Century 21, McDonalds

22. Mission Statements Provides a written direction for a business
Short and specific statement for the reason(s) a business exists and what it wants to achieve
Samples are:
Bristol-Myers Squibb Company
Slogan/Motto: extending and enhancing human life
Mission Statement:
Our company's mission is to extend and enhance human life by providing the highest-quality pharmaceutical and related health care products.

23. More sample mission statements
Burlington Northern Sante Fe Company
Mission Statement: Our vision is to realize the tremendous potential of The Burlington ' expectations Northern and Santa Fe Railway by providing transportation services that consistently meet our customers
Ford Motor Company
Mission Statement:? We are a global family with a proud heritage passionately committed to providing personal mobility for people around the world.
Harley-Davidson, Inc
Mission Statement: We fulfill dreams through the experience of motorcycling, by providing to motorcyclists and to the general public an expanding line of motorcycles and branded products and services in selected market segments.

24. Business’ Organizational Structure
Organizational Chart: A diagram that show the structure of an organization, classifications of work and jobs, and the relationship among the classifications
Hierarchy of order and control
P. 117 of book

25. Summary Questions What are baby boomers? When were they born?
What is the most important role of businesses in our economy?
What are the 6 steps of Business Activities?
What are the 3 types of businesses?
What are the 3 main forms of business ownership?
What is the easiest business to form?
What is the role of stockholders in a corporation?
What are the advantages of a partnership?

26. Summary Questions
How do cooperatives get cheaper prices for goods and services?
What is the difference between a franshiser and a franchisee?
What are the advantages and disadvantages of franchising?
How are business organizations structured?
What are the key components of a mission statement?

27. Written Assignment Number Four
Due on Monday, February 9th