The Framework of Contemporary Business

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Chapter 1

• The Framework of Contemporary Business

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Learning Goals
Distinguish between business and not-for-profit
organizations. Identify and describe the factors
of production. Describe the private enterprise
system, including basic rights and
entrepreneurship. Identify the six eras of
business, and explain how the relationship era-
including alliances, technology, and
environmental concerns-influences contemporary
business.
Explain how todays business workforce is
changing. Describe how the nature of work itself
is changing. Identify the skills and attributes
managers need to lead businesses in the 21st
century. Outline the characteristics that make a
company admired by the business community.
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What is Business?

• Profit-seeking activities and enterprises provide
  goods and services necessary to an economic
  system.
• Profit is the reward for businesspeople who
  take the risk involved to offer goods and
  services to customers.

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Factors of Production

• Natural Resources
• Capital
• Human Resources
• Entrepreneurship

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The Private Enterprise

• Capitalism
• Adam Smith is the father of capitalism.
• Economic system determines business ownership,
  profits and resources
• Rewards firms for their ability to serve the
  needs of consumers
• Minimized government intervention
• Competition is the battle among businesses for
  consumer acceptance.

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Basic Rights in the Private Enterprise
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The Entrepreneurship Alternative

• The risk-taker
• Fuels the U.S. economy
• Provides innovation
• Entrepreneurial thinking is important inside of
  large firms.

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Six Eras in the History of US Business
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Managing Relationships through Connections

• Relationship Management
• Activities to build and maintain mutually
  beneficial ties with customers and other parties
• Relationship management depends upon technology.

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Strategic Alliances and Partnerships
A strategic alliance is a partnership formed to
create a competitive advantage for both parties.
A partnership is an affiliation of two or more
companies that help each other achieve common
goals.
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Todays Business Workforce

• Dedicated workers who can foster strong ties with
  customers
• Capable of high-quality production
• Ability to compete in global markets
• Technically savvy

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Changes in the Workforce-Aging Population

• By 2030, the number of U.S. workers 65 or older
  will reach 72 million.
• Many baby boomers are hitting the peak of their
  careers while Generation X and Y are launching
  their careers.
• Technology has intensified the hiring challenge
  by requiring workers to have ever more advanced
  skills.

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Changes in the Workforce-Shrinking Labor
Pool/Diversity

• Economists predict the U.S. labor pool could soon
  fall short by as many as 10 million people.
• The two fastest-growing ethnic populations in the
  United States are Hispanics and people of Asian
  origin.
• Blending individuals of different genders, ethnic
  backgrounds, cultures, religions, ages, and
  physical and mental abilities.

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Changes in the Workforce-Outsourcing
Offshoring is the relocation of business
processes to lower cost locations overseas.
Outsourcing is using outside vendors to produce
goods or fulfill services and functions that
were previously handled in-house or in-country.
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Changes in the Workforces-Flexibility and Mobility
and Innovation Through Collaboration

• Younger workers are looking to something other
  than work-comes-first
• Part-time and temporary workers are growing
• Collaboration is replacing working alone
• Value risk taking and innovation

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The 21st Century Manager

• Critical-thinking
• Creativity
• Ability to lead change
• Vision

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Importance of Critical Thinking and Creativity

• Critical thinking is the ability to analyze and
  assess information to pinpoint problems or
  opportunities.
• Creativity is the capacity to develop novel
  solutions to perceived organizational problems.

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Ability to Lead Change

• Guide employees and organizations through changes
• Managers must be comfortable with tough
  decisions.
• Factors that require organizational change can
  come from external and internal sources.

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What Makes a Company Admired

• Solid profits
• Stable growth
• Safe and challenging work environment
• High-quality goods and services
• Business ethics and social responsibility