BUSN 115 Class 1

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BUSN 115 - Class 1

• Chapter 1,2 3

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What is Business

• Chapter 1

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Business Future

• Changes in the workforce, technology, and markets
  will all have a significant impact on how firms
  are organized and on the policies and procedures
  they implement. Because the future cannot be
  predicted with certainty, management must be
  prepared to adapt its strategies and plans when
  the future unfolds differently than anticipated.
  Successful firms are not necessarily those that
  guessed right but those that are agile enough to
  thrive in many different futures.

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Business

• Is a type of organization
• A number of persons or groups of people having
  specific responsibilities and united for some
  purpose or work.
• Functions in a Business Environmental System
• Complex of social and cultural uncontrollable
  conditions affecting the nature of an
  organization.
• Combines Factors of Productions
• 5 types of resources that are common to all
  productive activity to create goods and services
• Strives for a profit, or purpose
• Profits Income less expenses
• Purpose goals other than the usual business
  goals of profit
• By providing goods and services desired by its
  customers
• Goods tangible items manufactured by business
• Service intangible offerings of businesses that
  cannot be held, touched, or stored
• These goods and service are the basis of the
  countries standard of living

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The Environment of Business
Global
Social
Demographic
Technology
Economicsystems
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Environment of Business

• Demographic
• Study of people vital statistics, such as their
  age, race and ethnicity and location
• Evolving Global Economic Systems
• Is the combination of policies, laws, and choices
  made by its government to establish the systems
  that determine what goods and services are
  produced and how they are allocated
• Emerging Technology
• Miniaturization
• Internet
• Developing technology in
• artificial intelligence, robotics, virtual
  reality, teleportation, flying cars,
  nanotechnology
• Global Completion
• Labor
• Resources
• Customers
• Social Changes
• 2 income families

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Demographics Relevant to Business
Other
Generation X 16
Baby boomers29
Oldercustomers 23
Generation Y26
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Womens Presence in the Workforce
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Gender Relationship

• Gender influences the way that we communicate
  with each other.
• Women
• often view what is said in terms of intimacy,
  because they see a world of connection where
  individuals negotiate complex networks of
  friendship, minimize differences, try to reach
  consensus and avoid the appearance of
  superiority, which would highlight differences.
• Men
• sometimes interpret conversations in terms of
  independence, because in a world concerned with
  status, a primary means of establishing status is
  to tell others what to do, and taking orders is
  a marker of low status

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Evolving Global Economic Systems

• Capitalism (private enterprise)
• competition (buy sell freely)
• all factors of production owned privately
• own property make profit free choice
• pure capitalism is extreme
• Communism (command economy)
• complete opposite of capitalism
• government owns all resources
• central government owns economic decision making
• Socialism
• industries owned by government, or privately,
  with government control
• smaller businesses owned privately
• state controls (varying degrees) goals of
  business and economy
• Great Britain, Denmark, China, Israel
• Mixed economic systems
• Make use of more than one type of economic system
• some government ownership control exists along
  with private enterprise
• Canada, Great Britain, Sweden

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Trends in Global Competition

• Exports account for increasing proportion of
  world gross domestic product
• More companies can compete globally
• improved technology
• improved communications
• more companies meeting ISO 9000 and ISO 14000
  standards
• Ford was the 1st US Automaker to require ISO
  14000 certification of suppliers (Source
  globenet)
• Increased productivity
• downsizing
• increased use of technology

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Factors of Production

• Inputs that are common to all productivity to
  create goods and services
• Natural resources
• Commodities that are useful inputs in their
  natural state. Examples is land,
• Labor
• Contribution of people working with their minds
  and muscles.
• Capital
• The inputs (tools, machinery, equipment,
  buildings) used to produce goods and services.
• Entrepreneurship
• People who combine inputs in order to produce
  goods and services with the intention of making a
  profit
• Knowledge
• The combined talents and skills of the workforce.

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Understanding Evolving Economic Systems and
Competition

• Chapter 2

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Chapter Overview

• Economics
• The study of how a society uses scarce resources
  to produce and distribute goods and services.
• Macroeconomics
• Focus on the economy as a whole considers
  aggregate data from large groups of people,
  companies, or products.
• Microeconomics
• Focus on individual parts of economy, such as
  households or
• firms
• Fiscal Policy
• The programs of taxation and spending.

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Macroeconomics' 3 Main Goals

• Economic growth Desires slow steady growth rate
• Business Cycle Upward and Downward changes in
  the level of economic activity.
• Gross Domestic Product (GDP) Increased output
  of a nations goods and services. (reported qtly)
• Recession When a decline occurs in 2
  consecutive quarters.
• Benefits
• Increased standard of living, employment, income
• Drawbacks
• Pollution, Strain on facilities
• Full employment Jobs for all who want to work
• Unemployment Rate
• Percentage of total labor force looking for a job
• Full employment 94 to 96 who are available
  to work have jobs
• Types if Unemployment
• Frictional Short-term that is not related to
  the business cycle (ex. Someone who waiting to
  start a new job.)
• Structural like Frictional but is involuntary
• Cyclical Downturn in the business cycle reduces
  the demand for labor.
• Seasonal occurs during specific seasons in
  certain industries

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Macroeconomics

• Economic growth is measured by the gross domestic
  product (GDP)

US economys growth during the 1990s
Source Fortune, Mar. 1, 1999, p. 34.
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The Goal of Steady Prices

• Inflation is measured by the consumer price index
• Inflation rates in the US
• 1979 13.3
• 1987 4.4
• 1998 2.0

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Tools to ReachMacroeconomic Goals

• Monetary Policy
• Federal Reserve System (the FED) central
  banking system, prints money
• Governments programs for controlling the amount
  of money circulating in the economy
• and change the interest rates charged to Banks.
• When growth is too fast, the Federal Reserve may
  raise interest rates to prevent inflation by
  slowing down the economy
• A real GDP of 3 is the Federal Reserves
  preferred rate of growth
• Contractionary Policy Feds restricts or
  tightens the money supply
• Expansionary Policy Feds increase, or loosen,
  growth in the money supply
• Fiscal Policy
• governments use of taxation and spending to
  affect the economy
• Federal Budget Deficit Government spends more
  than the have.
• National Debit accumulative total of past
  deficits
• Approx 5 trillion dollars or 20,000 per person
  in USA

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Microeconomics

• Demand Curve A graph showing the quantity of a
  good or service that can be sold at various
  prices
• Changes in demand
• change in customer income
• changes in fashion or taste
• change in price of related products
• expectations about future prices
• change in number of buyers
• Supply Curve A graph showing the quantity of a
  good or service that a business is willing to
  provide at various prices
• Changes in supply
• new technology
• change in price of resources
• change in price of related products
• change in number of producers
• change in taxes
• Characteristics
• the higher the price goes the higher quantity
  supply goes the lower the quantity demanded
  goes
• the lower the price goes that the higher the
  quantity demanded the lower the supply goes.

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Types of Market Structure

• Market structure Number of suppliers in a market
• Perfect competition
• large number of firms in the market
• firms sell similar products
• good information about products
• easy to open/close a new business
• ideal market!
• Stock market and agricultural market
• Pure monopoly
• a firm is the only firm in the industry
• high barriers to entry, for example technology or
  legal barriers
• control of natural resource
• government created
• Polaroid (instant camera) uncut diamonds U.S.
  Post Office
• Monopolistic competition
• many firms in the market
• firms offer products that are close substitutes
  but that differ in some way
• relatively easy to enter the market
• consumer products such as clothing or food

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Types of Market Structure
Perfect competition
Monopolistic competition
Pure monopoly
Oligopoly
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Customer Value

• Customer Value is the customers perception of
  the ratio of benefits to the sacrifice necessary
  to obtain those benefits.
• Customer benefits the functionality,
  performance, durability, design, ease of use, and
  serviceability.
• Customer value of goods and service the quality
  they expect that are sold at prices they are
  willing to pay.
• Offering products that performs
• Giving consumers more than they expect
• Avoiding unrealistic pricing
• Giving the buyer facts.
• Relationship management is the practice of
  building, maintaining, and enhancing interactions
  with customers and other parties in order to
  develop long-term mutually beneficial
  partnerships.

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Competing in theGlobal Marketplace

• Chapter 3

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Global Vision
Global Vision the ability to recognize and
react to international business opportunities, be
aware of threats from foreign competition, and
effectively use international distribution
network to obtain raw materials and move finished
products to customers
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Global Trade
Trade Between Nations
Advantages/ Disadvantages
Threats/ Opportunities
Governments Global Trade
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Measuring Trade Between Nations

• Exports and Imports
• Exports goods and services made in country and
  sold to others
• Imports goods and services that are bought from
  other countries
• Balance of Trade
• Trade surplus vs. trade deficit
• Balance of Payments
• the difference between total payments to other
  countries and total receipts from other countries
• Changing Value of Currency
• Exchange rate the price of one countys
  currency in terns of another
• Floating exchange rate prices of currencies
  float up and down based upon the demand for and
  supply of each currency.
• Devaluation a nation lowers the value of its
  currency relative to other currencies.

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Participating inthe Global Marketplace

• 1. Exporting
• 2. Licensing
• 3. Contract Manufacturing
• Foreign firm manufactures private-label goods
  under a domestic firms brand
• 4. Joint Ventures
• Domestic firm buys a part of a foreign company o
  join with a foreign company to create a new
  entity.
• 5. Direct Foreign Investment
• Active ownership (interest) of a foreign
  company.

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Advantages and Disadvantages to Global Trade

• Disadvantages
• Natural Barriers can be physical or cultural.
  examples distance, language
• Tariff Barriers taxes on imported goods
• Nontariff Barriers
• Import quotas, embargoes
• buy-national regulations
• custom regulations
• exchange controls
• Advantages
• Absolute advantage
• a country can sell a product at a lower price
  than any other country, or
• a country is the only country that can provide a
  given product
• Comparative advantage
• lower prices result from every country
  specializing in products it can produce most
  readily and cheaply, trading them for products
  specialized in by other countries examples
  distance, language
• Resource Acquisition
• Competition

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Threats and Opportunitiesin the Global
Marketplace

• Threats
• intense nationalism
• language barriers
• cultural misunderstanding

• Opportunities
• ability to overcome trade problems
• can sidestep regulatory problems
• flexibility to shift production as conditions
  change
• tap new technology from other countries
• save labor costs

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Fostering Global Trade

• Anti-dumping laws
• prevent charging lower price in foreign markets
  than in home market for same product
• Uruguay Round
• agreement signed in 1994 by 117 nations to lower
  trade barriers
• World Trade Organization
• provides lower trade barriers among member
  nations, and helps resolve trade disputes
• World Bank International Monetary Fund
• lend money to developing nations and troubled
  nations
• Helps promote peace
• Handles disputes constructively
• Its rules increase efficiency
• Its rules make functioning easier
• Free trade cuts cost of living
• Permits more choice of products
• Trade raises incomes
• Trade stimulates economic growth
• Shields governments from lobbying
• Encourages good government

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