Business ch1 powerpoint

Chapter Overview

  • Title: Taking Risks and Making Profits within the Dynamic Business Environment

  • Copyright: 2022 © McGraw Hill LLC. All rights reserved.

Chapter Contents

  • Business and Wealth Building

  • The Importance of Entrepreneurs to the Creation of Wealth

  • The Business Environment

  • The Evolution of U.S. Business

Learning Objectives

LO 1-1: Profit and Risk

  • Describe the relationship between profit and risk.

  • Explain how businesses and nonprofit organizations can raise the standard of living.

LO 1-2: Entrepreneurship and Wealth Creation

  • Explain how entrepreneurship and the factors of production contribute to wealth.

LO 1-3: Economic Environment

  • Analyze the effects of the economic environment and taxes on businesses.

LO 1-4: Technological Impact

  • Assess the effects of technology on businesses.

LO 1-5: Competition

  • Demonstrate how businesses can meet and beat competition.

LO 1-6: Social Change

  • Analyze the social changes affecting businesses.

LO 1-7: Global Challenges

  • Identify what businesses must do to meet global challenges, including war and terrorism.

LO 1-8: Trend Analysis

  • Review how past trends are being repeated and implications for future graduates.

Business and Wealth Building

Definition of Business

  • Business: Any activity seeking to provide goods and services to others while aiming for profit.

Goods vs. Services

  • Goods: Tangible products (e.g., computers, food).

  • Services: Intangible products (e.g., education, health care).

  • Successfully filling a market need enables profit.

Role of Entrepreneurs

  • Entrepreneur: An individual who risks time and resources to initiate and manage a business.

Revenues, Profits, and Losses

Definitions

  • Revenue: Total money generated from selling goods/services.

  • Profit: Money earned after expenses (salaries, operational costs).

  • Loss: Occurs when expenses exceed revenues.

Matching Risk with Profit

  • Risk: The potential loss of time and resources on potentially unprofitable ventures.

  • Not all enterprises yield the same profit; high risks may result in high rewards.

Standard of Living and Quality of Life

Definitions

  • Standard of Living: Quantity of goods/services available based on monetary resources.

  • Quality of Life: Overall satisfaction in society, considering factors like freedom and health.

  • High quality of life requires collaboration between businesses, nonprofits, and government.

Responding to Business Stakeholders

Stakeholders

  • Stakeholders: Individuals or groups affected by business policies. Their varying needs can conflict (e.g., wages vs. profits).

Outsourcing vs. Insourcing

  • Outsourcing: Contracting functions to external companies.

  • Insourcing: Foreign companies establishing operations in the U.S.

Nonprofit Organizations

  • Nonprofit Organization: Seeks social or educational goals rather than personal profit; uses financial gains for social purposes.

Importance of Entrepreneurs to Wealth Creation

Advantages and Disadvantages

  • Positives:

    • Freedom to make decisions.

    • Potential for wealth creation.

  • Negatives:

    • Risk of failure.

    • Lack of health insurance or paid time off.

Factors of Production

  • Five Factors:

    1. Land (natural resources)

    2. Labor (workforce)

    3. Capital (financial resources)

    4. Entrepreneurship (innovation and risk-taking)

    5. Knowledge (expertise and information)

    • Entrepreneurship and knowledge are critical to economic prosperity.

The Business Environment

Definition

  • Business Environment: Factors aiding or hindering business development.

Elements of Business Environment

  1. Economic and legal factors.

  2. Technological advancements.

  3. Competitive landscape.

  4. Social dynamics.

  5. Global considerations.

Economic and Legal Environment

Government Roles

  • Support entrepreneurship through:

    1. Promoting private ownership.

    2. Allowing free trade.

    3. Enforcing contracts.

    4. Establishing tradable currency.

    5. Minimizing corruption.

Technological Environment

Impact

  • Technology: Tools enhancing efficiency (e.g., computers, software).

  • Productivity: Output relative to input used.

E-commerce

  • Buying/selling goods online (B2C and B2B models).

Competitive Environment

Customer Expectations

  • Focus on quality, price, and customer service.

Employee Empowerment

  • Empowerment: Providing frontline workers with decision-making authority to better respond to customer needs.

Social Environment

Demographic Analysis

  • Demography: Study of human population characteristics.

Workforce Diversity

  • Modern workplaces focus on inclusion and diversity.

Global Environment

Globalization

  • Enhanced by communication and distribution systems like the Internet.

War and Terrorism

  • Economic impacts include diverted resources and increased security costs.

Ecological Considerations

Climate Change and Greening

  • Climate change signifies shifts in global temperatures.

  • Greening: Efforts toward sustainable practices and lesser ecological damage.

The Evolution of U.S. Business

Historical Progress in Industries

  • Agricultural advances during the 1800s contributed to economic growth.

  • Shift from farming to industrialization, followed by expansion into the service sector and information age.

Conclusions and Connections

  • The book aims to equip readers with insights for effective leadership in business.