1. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 1 Fundamentals of Business and Economics

2. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 2 Why Study Business? Learn what it takes to run a business Build a business vocabulary Develop workplace skills Learn about various occupations Appreciate business careers today

3. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 3 What is a Business? For-Profit –Money motive Not-for-profit –Social service

4. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 4 Categories of Business Goods-producing Services

5. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 5 Growth in the Service Sector Manufacturing Construction Agriculture Mining Wholesale and retail Transportation and utilities Finance and insurance Other services Goods-Producing Sector Service-Producing Sector

6. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 6 Why is the Services Sector Growing? More disposable income Changing demographics and lifestyles Complex goods and technologies Need for professional advice Low barriers to entry

7. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 7 What is Economics? Microeconomics Macroeconomics Economic system

8. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 8 Types of Economic Systems Free-market system –Capitalism –Mixed capitalism Planned system –Socialism –Communism

9. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 9 Microeconomics The Forces of Supply and Demand

10. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 10 How Does a Free-Market System Work? Supply and demand Competition Government intervention

11. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 11 Understanding Demand Consumer income Consumer preferences Price of substitute goods Price of complementary goods Advertising and promotion spending Expectations about future prices

12. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 12 Demand Curve for Airline Tickets A demand curve is the relationship between the amount of product that buyers will purchase at various prices. Demand curves typically slope downward. When airlines reduce ticket prices, demand for airline tickets rises.

13. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 13 Expected Shifts in Demand Curve Consumer Income Consumer Preferences Price of Substitutes Price of Complementary Goods Advertising-Promotion Consumer Expectations Number of Buyers Variable Shifts Right When: Increases More Favorable Increases Decreases Increases Optimistic Increases Shifts Left When: Decreases Less Favorable Decreases Increases Decreases Pessimistic Decreases

14. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 14 Understanding Supply Goods and services Supply Price

15. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 15 Supply Curve for Airline Tickets A supply curve is the relationship between prices and quantities sellers are willing to offer for sale, regardless of demand. Supply curves typically slope upward. When ticket prices rise, quantity supplied also increases.

16. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 16 Expected Shifts in Supply Curve Costs of Inputs Number of Competitors New Technology Suppliers Expect That Future Sales Prices Variable Shifts Right When: Decreases Production Costs Will Decline Shifts Left When: Increases Production Costs Will Increase

17. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 17 How Demand and Supply Interact High price reduces demand Low price reduces supply Right price balances supply and demand

18. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 18 Macroeconomics Issues for the Entire Economy

19. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 19 Free-Market Competition Pure competition Monopoly Oligopoly Monopolistic competition

20. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 20 Competitive Advantage Price Speed Quality Service Innovation

21. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 21 The Role of Government Promotes competition Regulates industries Deregulates industries Protects rights of stakeholders Contributes to economic stability

22. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 22 Fostering Competition Antitrust legislation Mergers and acquisitions

23. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 23 Regulating and Deregulating Industries Fair competition Business ethics Working conditions Public safety

24. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 24 Protecting Stakeholders Consumer Product Safety Commission (CPSC) Environmental Protection Agency (EPA) Equal Opportunity Employment Commission (EEOC) Federal Communications Commission (FCC) Federal Aviation Administration (FAA) Federal Energy Regulation Commission (FERC)

25. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 25 Protecting Stakeholders Federal Highway Administration (FHA) Federal Trade Commission (FTC) Food and Drug Administration (FDA) Interstate Commerce Commission (ICC) Occupational Safety and Health Administration (OSHA) Securities and Exchange Commission (SEC)

26. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 26 Contributing to Economic Stability Business cycle –Economic expansion –Economic contraction Fiscal policy –Revenue and spending Monetary policy –Interest rates

27. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 27 Monitoring Major Economic Indicators Interest rates Housing starts Unemployment statistics Durable-goods orders

28. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 28 Measuring Price Changes Purchasing power –Inflation –Deflation Consumer Price Index (CPI) Producer Price Index (PPI)

29. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 29 Measuring National Output Gross National Product (GNP) Gross Domestic Product (GDP) Dollar Value YesYes Final Goods and Services YesYes Domestic Businesses NoYesForeign-OwnedBusinesses YesNo Overseas Operations

30. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 30 Ten Economic Performance Indicators Prime interest rate Housing starts Unemployment rate Durable-goods orders Labor productivity rate Balance of trade Inflation rate Consumer price index Gross domestic product Producer price index

31. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 31 History of U.S. Economic Growth Age of Industrialization (1900-1944) Postwar Golden Era (1945-1969) Turbulent Years (1970-1979) Rise of Global Competition (1980-1989) New Economy and Beyond (1990 to Today)

32. © Prentice Hall, 2005Excellence in Business, Revised Edition Chapter 1 - 32 Challenges of Globalization Products and servicesProducts and services Managing a small businessManaging a small business Globalization and workforce diversityGlobalization and workforce diversity Ethics and social responsibilityEthics and social responsibility Technology and electronic commerceTechnology and electronic commerce