Chp. 1 Taking Risks and Making Profits Within The Dynamic Business Environment

Business

Any activity that seeks to provide goods and services to others while operating at a profit

Goods

Tangible products - computers, food, clothing, cars, and appliances

Services

Intangible products (that can't be held in your hand) - education, health care, insurance, recreation, and travel and tourism

Synonyms for "Business"

Company

Enterprise

Firm

Venture

Going concern

Organization (broader term)

Corporation (specific type of business structure)

Revenue

Total amount of money a business takes in during a given period by selling goods and services

Expense

Costs involved with doing business, such as money spent on wages, rent or the production of goods for sale

Profit

Amount of money a business earns above and beyond what it spends for on expenses

Loss

When a business's expenses are more than its revenues

Risk

The chance of losing time and money on a business that may not prove profitable

Revenue - Expenses = ?

Profit or Loss

Standard of Living

The amount of goods and services people can buy with the money they have

Quality of Life

The general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide

Stakeholders

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address

Outsourcing

Contracting with other companies (often in other countries) to do some functions of a firm, like production or accounting

Entrepreneur

A person who risks time and money to start and manage a business

Pros of Entrepreuenership

Freedom to succeed

Make own decisions

Possibility of Wealth

Cons of Entrepreneurship

Freedom to fail

No paid vacations

No employer-sponsored health insurance

Factors of Production

The resources used to create wealth

5 Factors of Production

1. Land

2. Labor

3. Capital

4. Entrepreneurship

5. Knowledge

Business Environment

The surrounding factors that either help or hinder the development of a business

5 Elements of Business Environment

1. Economic & Legal Environment

2. Technological Environment

3. Competitive Environment

4. Social Environment

5. Global Business Environment

Economic & Legal Environment

Government can promote entrepreneurship by:

1. Allowing private ownership of businesses.

2. Minimizing interference with the free exchange of goods and services.

3. Passing laws that enable businesspeople to write enforceable contracts.

4. Establishing a currency that's tradable in world markets.

5. Minimizing corruption.

Technology

Innovations that make business processes more effective, efficient, and productive

Examples of Technology

Phones

Computers, Software Programs, & The Internet

Robots/Machinery

AI

Productivity

The amount of output you generate given the amount of input

(EX. hours worked)

Efficiency

Producing goods & services using the LEAST amount of resources

Effectiveness

Producing the desired results

Competing by Exceeding Customer Expectations

Customers want good quality products at low prices with great customer service

Competing by Empowerment

Because business is more customer-driven, some managers give frontline employees more decision-making power

Empowerment

Giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests

Demography

The statistical study of the human population with regard to size, density, and other characteristics like age, race, gender, and income

Diversity

Creating a workplace that promotes inclusion and belonging

Climate Change

The movement of the temperature of the planet up or down over time

Greening

the trend toward saving energy and producing products that cause less harm to the environment