Principles to Business

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Principles to Business 1
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Table of Content

• Orientation and course preview
• 2. The Foundation of Business
• 3. Nike Integrated case discussion 1
• 4. VDO clips - Todd McFarlane
• 5. Team-Building Skills 1 Picking the list

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What is Business

• any activity that provides goods or services to
  consumers for the purpose of making a profit.

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Whats the Difference between Goods and Services?

• Identify each of the following as goods or
• services
• Athletic shoes, Banking , College courses, CDs,
  Fast-food restaurants, Hospitals, Hotel, Retail
  Store

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The Nature of Business

• To earn profits by providing products
• Tangible or Goods
• Cars, food, clothing
• Intangible or Services
• A service
• An idea

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Distinctions

• Services
• Banking
• Legal
• Medical
• Travel

• Goods
• Athletic Shoes
• Apparel
• Equipment

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• What do we mean by profit?
• You earn a profit when you sell goods or
  services for more than it costs to make and
  market them.

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The Goals of Business

• For-Profit Sector
• Profit
• The difference between what it costs to make and
  sell a product and what the customer pays for it.

• Nonprofit Sector
• Goals
• May provide goods or services but not for the
  purpose of earning profits.

Is your college a for-profit or nonprofit
enterprise?
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For Profit
vs.
Nonprofit
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Business Participants
Owners
Customers
Employees
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FunctionalAreas Of Business

• Management
• Operations
• Marketing
• Accounting
• Finance

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What does each of these business functions
involve?

• Management - planning, organizing, staffing,
  directing, and controlling a companys resources
  to achieve its goals.
• Operations - transforming resources (labor,
  materials, money) into products or services.
  ensuring that products are of high quality.
• Marketing consists of everything that a company
  does to identify and satisfy customer needs.

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What does each of these business functions
involve?

• Accounting measures, summarizes, and communicates
  financial and managerial information.
• Finance plans for, obtains, and manages company
  funds.

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What external forces influence business
activities?
Govt
Economy
Business
Public Pressure
Consumer Trends
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• Keep in mind that
• Among other responsibilities, most businesses
  need to be good corporate citizens.

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Economics
study of how scarce resources are used to
produce outputsgoods and servicesto be
distributed among people.
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Factors Of Production
Land
Entrepreneurship
Business (Transform)
Capital
Labor
Outputs
Goods
Services
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Economists Questions

• What Goods Services Should Be Produced To Meet
  Consumers Needs?
• How Should Goods Services Be Produced?
• Who Should Receive The Goods Services Produced?

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Types of Resources Used

• Natural
• Land, forests, etc. (not made by people)
• Human
• Physical/mental abilities used by people
  to produce goods and services
• Entrepreneurship
• Financial
• Funds necessary to acquire needed natural and
  human resources

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What Is An Economic System?

• The way a society distributes its resources to
  produce goods and services
• The way a society decides how to allocate
  resources to make and distribute products, goods
  and services.
• Addresses on the issue of how to fulfill
  unlimited demand with limited supply of resources

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Economic systems

• Divide them into 2 types of systems based
• on level of government control
• Planned systems high degree of government
  control
• Free market systems low degree of government
  control

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Types of Economic Systems
Increasing Govt Control
Planned
Free Market
Communism
Socialism
Capitalism
Decreasing Social Services
Mixed Market Economy
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Economic Systems and Where They Occur
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4 Forms of Market Competitions

• Perfect competition
• Monopolistic Competition
• Oligopoly
• Monopoly
• Most countries of the world have
• elements of more than one economic
• System

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Perfect Competition
Many Sellers
Standardized Product
Many Consumers
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How is price determined?

• The price determined by the theories of demand
  and supply

• Demand
• The number of goods and services that consumers
  are willing to buy at different prices at a
  specific time.
• Businesses are willing to supply more of a good
  or service at higher prices because the potential
  for profits is higher.

• Supply
• The number of products that businesses are
  willing to sell at different prices at a specific
  time
• Consumers are usually willing to buy more of an
  item as its price falls because they want to save
  money.

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Supply Demand
70
60
50
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Price
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Equilibrium Point
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10
0
0
10
20
30
40
50
Units
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Oligopoly
Seller A
Seller B
Similar Product
Consumer Group A
Consumer Group C
Consumer Group B
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Monopoly
Seller
Consumer B
Consumer C
Consumer A
Consumer E
Consumer D
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Economic Goals

• GrowthGross Domestic Product
• High Employment Unemployment Rate
• Price StabilityConsumer Price Index

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1. Growth

• 1.1 One commonly used measure is gross domestic
  product.
• GDP is the sum of all goods and services produced
  in a country during a year.
• If GPD goes up, the economy is growing, which is
  good if GDP goes down, the economy is
  contracting, which is bad.

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1.2 Business Cycle
Prosperity
Recovery
Recession
Depression
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2. Employment Rate
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3. Price stability measured

• By the consumer price index (CPI), which compares
  changes in the prices of products which consumers
  spend money, such as cars, food, houses, and so
  on
• The CPI is a measure of the rate of inflationthe
  extent to which prices have gone up.

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Leading economic indicators

• If the following indicators are going up, the
  economy is likely to expand
• New unemployment claims (how many people recently
  lost their jobs)
• Average weekly manufacturing hours (average hours
  worked per week by people in manufacturing)
• Building permits (how many new housing units are
  built)
• Leading Index such as research, stock exchange
  index,consumer index and so on

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the governments role in managing the economy

• Monetary Policy
• Control Federal Reserve
• Contractionary
• Expansionary

• Fiscal Policy
• Control government
• Taxation
• Spending
• National Debt

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National Debt
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Fields of Economics

• MacroeconomicsStudy of the economy as a whole

MicroeconomicsStudy of the economic choices of
individual consumers businesses
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• Nike Integrated case discussion 1
• CASE 1 - Nikes Mission and Business Functions
  Student Supplement
• VDO clips - Todd McFarlane Student
• Supplement

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TEAM-BUILDING SKILLS

• Assignment
• Get together in groups of four selected by your
  instructor and pick any three items from the
  following list
• Pint of milk
• Gallon of gas
• Roundtrip airline ticket between Bangkok and
  Chaing Mai
• Large pizza
• CD by a particular musician
• Two-day DVD rental
• Particular brand of DVD player

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TEAM-BUILDING SKILLS

• Outside of class, each member of the team
• should check the prices of the three items,
• using his or her own sources. At the next class
• meeting, get together and compare the prices
  found by
• team members. Based on yourfindings, answer the
• following questions as agroup
• Are the prices of given products similar, or do
  they vary?
• Why do the prices of some products vary while
  those of others are similar?
• Can any price differences be explained by
  applying the concepts of supply and demand or
  types of competition?