Transcript Chapter One - Cengage Learning

Chapter One
Exploring the World of
Business and Economics
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Learning Objectives
1. Discuss your future in the world of business.
2. Define business and identify potential risks and
rewards.
3. Define economics and describe two types of
economic systems: capitalism and command
economy.
4. Identify the ways to measure economic
performance.
5. Outline the four types of competition.
6. Summarize the factors that affect the business
environment and the challenges that American
businesses will encounter in the future.
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Chapter 1 Outline
– Your Future in the Changing World of
Business
• Why Study Business?
• Special Note to Students
– Business: A Definition
• The Organized Effort of Individuals
• Satisfying Needs
• Business Profit
Chapter 1 Outline (cont’d)
– Types of Economic Systems
• Capitalism
• Capitalism in the United States
• Command Economies
– Measuring Economic Performance
• The Importance of Productivity in the Global
Marketplace
• Important Economic Indicators that Measure a
Nation’s Economy
• The Business Cycle
Chapter 1 Outline (cont’d)
– Types of Competition
•
•
•
•
Perfect (or Pure) Competition
Monopolistic Competition
Oligopoly
Monopoly
– American Business Today
•
•
•
•
Early Business Development
The Twentieth Century
A New Century: 2000 and Beyond
The Current Business Environment
– The Challenges Ahead
Your Future in the Changing
World of Business
• Free enterprise
• What does it take to succeed in
business?
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Why Study Business?
•
•
•
•
For help in choosing a career
To be a successful employee
To start your own business
To become a better informed consumer
and investor
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Tips for Studying Business
1. Prepare before you go to class.
2. Read the chapter.
3. Underline or highlight important
concepts.
4. Take notes.
5. Apply the concepts.
6. Practice critical thinking.
7. Prepare for exams.
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Business: A Definition
• The organized effort of individuals to
produce and sell, for a profit, the goods
and services that satisfy society’s
needs
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Classification of Businesses
• Manufacturing businesses
• Service businesses
• Marketing intermediaries
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Satisfying Needs
• People buy goods and services not just
to own them, but to satisfy particular
needs
• Businesses that understand customer
needs, and work to satisfy those needs,
are usually successful
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The Relationship Between Sales
Revenue and Profit
• Profit is what remains after all business
expenses have been deducted from
sales revenue. A loss (negative profit)
results when a firm’s expenses are
greater than its revenues.
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Business Profit
• The purposes of profit
• Stakeholders
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Economic Systems
• Economics
• Microeconomics
• Macroeconomics
• Economy
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Economic Systems (cont’d)
• Factors of production
• Entrepreneur
• Differences in economic systems
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Types of Economic Systems
• Capitalism
• Capitalism in the United States
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Types of Economies (cont’d)
• Command economies
– Socialism
– Communism
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Measuring Economic Performance
• Productivity
• Economic indicators
– Gross domestic product (GDP)
– Inflation
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Common Measures Used to Evaluate a
Nation’s Economic Health
• Balance of trade
• Bank credit
• Corporate profits
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Common Measures Used to Evaluate a
Nation’s Economic Health (cont’d)
• Inflation rate
• National income
• New housing starts
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Common Measures Used to Evaluate a
Nation’s Economic Health (cont’d)
• Prime interest rate
• Productivity rate
• Unemployment rate
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The Business Cycle
• The recurrence of periods of growth and
recession in a nation’s economic activity
– Recession
– Depression
– Monetary policies
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The Business Cycle (cont’d)
• Fiscal policy
• Federal deficit
• National debt
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Types of Competition
Perfect (or pure) competition
• Supply:
• Demand:
• Market Price (Equilibrium):
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Types of Competition (cont’d)
• Monopolistic competition
• Oligopoly
• Monopoly
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American Business Today
• Standard of living
• Early business development
– Barter system
– Domestic system
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American Business Today (cont’d)
• Early Business Development (cont’d)
– Factory system
– Specialization
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American Business Today (cont’d)
• The Twentieth Century
• The Late Twentieth Century
• A New Century: 2000 and Beyond
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The Challenges Ahead
• How can we encourage Iraq and Afghanistan to
establish a democratic and free society and resolve
possible conflict with North Korea and other countries
throughout the world?
• How can we create a more stable economy and
create new jobs?
• As a nation, how can we develop a disaster crisis
management program that will help people in times of
peril?
• How can we meet the challenges of managing
culturally diverse work forces to address the needs of
a culturally diverse marketplace?
• How can we make American manufacturers more
productive and more competitive with foreign
producers who have lower labor costs?
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The Challenges Ahead (cont’d)
• How can we preserve the benefits of
competition in our American economic
system?
• How can we encourage economic growth and
at the same time continue to conserve natural
resources and protect our environment?
• How can we best market American-made
products in foreign nations?
• How can we meet the needs of two-income
families, single parents, older Americans, and
the less fortunate?
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