Transcript Ch 1 PPT - Complete - Characteristics of Business

Chapter 1 Characteristics of Business
1.1 The Nature of Business
Goals


2
Explain the nature of business activities.
Describe the general types of businesses.
Business and Profit
Business —
An organization that produces or distributes a
good or service for profit
Profit —
difference between income and costs
3
THE NATURE OF BUSINESS


4
Business activities
– Production
– Marketing
– Finance
Types of businesses
– Industrial businesses
– Commercial businesses
 Service businesses
 Retail
businesses
1.2 Changes Affecting Business
Goals
 Describe how innovations affect businesses.
 Identify the impact global competition has
had on U.S. businesses.
 Discuss ways in which businesses can
improve their business practices.
5
Changes Affecting Businesses

Innovation – Something entirely new
– Affect the types of products & services offered for
sale:


–
Affect business operations

–
6
Clothing: Cotton & Wool – Nylon & Polyester
Transportation: Horse & Buggy – Car, Ships, Planes
Apple Computer: Built one of the first personal computers 35
years ago. Computers operated by individual employees
influenced the way businesses do business
THE innovation that has literally changed the
relationships between businesses and their
customers: Internet
Changes Affecting Businesses

7
Impact of global competition
–
For hundreds of years, the US businesses led the
way in producing new goods/services for sale
around the world.
–
However, during the past half century, more
countries have become industrialized , and have
been able to produce goods cheaper than in the
US.
Focusing on the Right Things

Focusing on the right things
– Achieving effectiveness — making the right
decisions about what products or services to offer
and the best ways to produce and deliver them
–
–
8
Achieving efficiency — producing products and
services quickly, at low cost , without wasting time
and materials
Three ways to help achieve efficiency:
• Specialization
• Technology & innovation
• Reorganization of work
EFFICIENCY




9
Specialization – In any business with more than a few
employees, work can be performed more efficiently by
having workers become specialists
When workers specialize, they become expert
Result of specialization – improved quality and increase
in amount produced
Mass Production – Greatly improved efficiency:
–
Less
–
Less
–
Less
Cost of goods
Time
Employees
EFFICIENCY
10

Reorganization of Work – the most challenging way to increase
efficiency is to reorganize the way work gets done.

1970’s – 1990’s: Slow economy – companies reaction to slow
economy was to layoff workers and reduce amount of goods
produced - Downsizing

However, downsizing did not solve problem of producing right
products inexpensively.

Firms discovered that

Managers learned that firm could be more productive by letting
employees participate in some decision-making, called:
empowerment which reduced costs and lead to efficiency.
employees
were best resource.
1.3 The Contributions of Business
Goals


11
Identify two ways a nation measures its
economic growth and prosperity.
Describe the benefits of business ownership
to the nation and individuals.
The Contributions of Business

Business growth and prosperity
– Gross Domestic Product (GDP) —
–
12
total market value of all goods and services
produced in a country in a year
Individual well-being — 2nd measure of a nation’s
wealth , including:
•
•
•
•
Owning homes
Televisions
High speed Internet
Cell phones
COUNTRIES WITH LARGEST GDPs
14
12
GDP in trillions
10
8
6
4
2
13
.
U
.S
EU
na
C
hi
Ja
pa
n
a
In
di
an
y
G
er
m
U
K
Fr
an
ce
Ita
ly
0
The Contributions of Business

14
Business ownership
–
Popularity of small businesses
–
Growth of franchise businesses
–
Risks of ownership
–
Obligations of ownership
–
Intrapreneurship
–
Studying business principles and management
Growth of Franchise Business

15
Popular way for entrepreneurs to launch a small
business – franchise :
–
Legal agreement in which a person or group of
investors purchases the right to sell a company’s
products under the company’s name/trademark.
–
Parent company is the franchisor
–
Person/Group running franchise: franchisee
–
Franchisee usually pays initial fee and a percentage
of sales, usually 3% – 8%
Risks of Ownership


Success of a business depends greatly on managerial
effectiveness
– If well-managed, it will likely earn a profit
– If not, business will not survive
Risk – the possibility of loss
Includes:
Competition from other businesses
 Changes in prices
 Changes in economic conditions
Businesses close for many reasons. 1 out of every 5 businesses
fails within 5 years and one half cease after 6 - 7


16
Obligations to Ownership

Anyone who starts a business has a responsibility to entire
community:
– Customers
- that they may have the best at the lowest cost
17
- that their welfare won’t be sacrificed for company
–
Employees
Management
–
Competition - That there will be no unfair competition
–
Public
- that the business will strive in all its operations
and relations to promote general welfare &
observe faithfully the laws of the land.
–
Investors
- that their rights will be safeguarded and they will
be kept informed about their investment
–
- that it may be recognized in proportion to ability
INTRAPRENEURSHIP
Intrapreneur —
an employee who is given funds and freedom to
create a special unit or department within a
company in order to develop a new product ,
process , or service
18