Chapter One

1
Chapter One

• The Dynamics ofBusiness and Economics

2
Business Vs. NonprofitOrganization

• Business
• An individual or organization that tries to earn
  a profit by providing products that satisfy
  peoples needs, ex. IBM.
• Nonprofit Organization
• Provides products, especially services, for some
  purpose other than profits, ex. The Salvation
  Army.

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The People andActivities of Business

• People Owners Employees Customers
• Activities Management Marketing Finance

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Why Study Business?

• It provides employment for most people.
• It provides the majority of products needed to
  survive and enjoy life.
• It will help prepare you for your future career.
• It will help you become a better informed
  consumer and member of society.

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Types of ResourcesUsed by Business

• Natural - land, forests, etc. (not made by
  people)
• Human - physical/mental abilities used by
  people to produce goods and services
• Financial - funds needed to acquire needed
  natural and human resources

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Basic Questions to Be Asked of Economic Systems

• 1. What goods and services and what quantity
  will satisfy the needs of the consumer?
• 2. How will the goods and services be
  produced? Who will produce them and with
  what resources?
• 3. How are the goods and services to be
  distributed to the consumer?

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Comparison of Communism, Socialism, and Capitalism
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Comparison of Communism, Socialism, and Capitalism
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Economic Systems and Where They Occur

• Communism China North Korea Cuba
• Socialism Sweden India France Israel
• Capitalism Canada
• United States Australia Japan

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Equilibrium Priceof Soft Drinks
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11
Four Competitive Environments

• Pure Competition Many small businesses sell one
  standardized product.
• Monopolistic There are fewer businesses than in
  a competition pure-competition system, and the
  differences between the goods they sell are
  small.
• Oligopoly Very few businesses sell a product
  the product they sell can be similar or
  different.
• Monopoly There is only one producer of a product
  in a given market.

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The Economy
The Early Economy
The Manufacturing andMarketing Economies
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The Service andInternet-based Economy
The Industrial Revolution
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Consumer Buying Plans
Adults who plan to make these purchases in one
year
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Source USA Today, February 3, 1999, p. B-1
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Ten Steps for ImprovingCustomer Service

• 1. Shift perspectives (think innovatively about
  customers needs).
• 2. Reorder priorities (decide what is truly
  important and do it first).
• 3. Develop faster reflexes (make a decision and
  act).
• 4. Get focused. Stay focused. (find out what
  works and concentrate on that).
• 5. Simplify (search for easier solutions).

1-12a
Source Sam Geist, Ten Action Steps for Changing
Times, The Small Business Journal, October 12,
1998.
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Ten Steps for ImprovingCustomer Service

• 6. Be flexible (choose the most appropriate tool
  to meet a challenge).
• 7. Overcome the fear of failure (fear inhibits
  the ability to change).
• 8. Become a problem solver (customers want
  solutions).
• 9. Energize (be action-oriented and
  future-focused).
• 10. Listen (for opportunities).

1-12b
Source Sam Geist, Ten Action Steps for Changing
Times, The Small Business Journal, October 12,
1998.
16
Why Use the Internet?

• Fast, inexpensive way to deliver information
• Lower administration and service costs
• Quick feedback on new products
• Improved customer service
• Instant global audience
• Level playing field for competition
• Enhanced business-to-business links
• Competitors are probably using

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Source Sara Record, Keys to the
Kingdom,Profit Magazine, November 1998, p. 57.
17
The Changing Faceof the Internet
Internet users remain younger, more educated and
richer than North Americans as a whole, but newer
users are less so. Users who began in past year
vs. users more than a year.
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New user
Veteran

• Male 48 55
• Female 52 45
• Age 50 or older 20 19
• Household incomeunder 30,000 23 16
• Never attended college 39 22

Source USA Today, March 2, 1999, p. A-1
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Women Entrepreneurs Are More Likelyto Utilize
Technology Than Their MaleCounterparts.
of Men
of Women
Technology
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• Frequently use e-mail 51 40
• Subscribe to an onlineservice 47 41
• Have a home page 23 16
• Conduct research usingthe Internet 22 14
• Use technology for growth 17 10

Source National Foundation for Women Business
Owners,Going Techno, Entrepreneur, January
1998, p. 31.
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E-commerce Facts

• 10.4B orders received over the Internet in 2001
  an increase of 43.4 from 2000.
• E-commerce represented only 0.5 of total
  revenues in 2001
• Four firms stopped Internet selling for every
  five that started in 2000.

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Who Sells Over The Internet

• Wholesalers sold 1.9B up 83.9 from 2000
• Manufacturers sold 1.7B up 83.9 5 from 2000
• Retailers sold 1.5B up 66.9 from 2000
• Businesses with more than 500 employees accounted
  for 40 of internet sales down from 43 in 2000.

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Do You Speak Business?(current workplace
language)

• People Churner A boss who drives away
  talented people
• Bottom Fisher Person willing to dive into
  seemingly hopeless situations
• Boomerang Worker Retiree returning to former
  employer
• Toxic Employee Worker with anti-employer
  reputation or attitude

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Source The List Do You Speak Business?,
Business Week,November 16, 1998, p. 6.
22
Solve the Dilemma

• Explain and demonstrate the relationship between
  supply and demand for Mrs. Acres Homemade Pies.

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Explore Your Career Options

• What are some of the changes in the work
  environment that contribute to the transformation
  of the traditional career track?

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Wrong Place, Wrong Time (Not So Hot Jobs)
Projected Decreasein Search Demand
Job Title

• 1. Vice-President for Retail Operations -94
• 2. Vice-President for Government Sales -81
• 3. Oil Executives -62
• 4. President/CEO of Managed Care -56
• 5. Vice-President for Computer Hardware
  Sales -53
• 6. Wall Street Real Estate Financing Execs -49
• 7. Traditional Vice-President for
  Environment,Health, and Safety -41
• 8. Russian Specialist Investment Banker -38
• 9. Owner, Storefront Travel Agency -33
• 10. Traditional Publishing Executive -30

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Source Robert McNatt, Up Front, Business
Week, March 8, 1999, p. 6.
25
Additional Discussion Questions and Exercises

• 1. Which economic system provides for central
  government planning to determine what goods
  and services will satisfy needs of citizens?
• 2. How did the Industrial Revolution affect the
  agricultural economy in Canada?
• 3. What characteristics of modern entrepreneurs
  are similar to those of early entrepreneurs?

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Chapter 1 Quiz

• 1. The activities designed to provide goods and
  services that satisfy customers are know
  as a. management b. marketing c. finance d. gr
  oss national product
• 2. Which of the following best describes
  inflation? a. a continuing decrease in product
  prices b. a moderate decrease in demand c. a
  continuing increase in unemployment d. a
  continuing increase in prices

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Chapter 1 Quiz

• 3. The airline business in the Canada is an
  example of what form of competition? a. pure
  competition b. monopolistic competition c. oligo
  poly d. monopoly
• 4. The quantity of products and services that
  consumers are willing to buy at different
  prices at a specific time is a. supply b. demand
  c. competition d. gross national product

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Video Case Question 1

• How did Starbucks take a declining product and
  turn it into a highly successful business concept
  with few competitors?

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Video Case Question 2

• How has Starbucks been able to sell its
• brand name through joint ventures with
• other companies.

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Video Case Question 3

• What is the potential contribution of
• Starbucks involvement in activities to
• support those that produce coffee beans,
• its own employees, and the communities
• where it has stores?

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