bk1.ppt

Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.1-1

2DAY: Get in YOUR seat2DAY: STOX CONTEST2DAY: Finish icebreaker2DAY: CHAPTER ONE2DAY: NCE #1KNAPPKNOTE: Exam One coming

up . . .

TWO ONETWO ONE


Goldman Sachs 9 Tootsie Roll 6 Reynolds American 5 Dr. Reddy’s 14 Ariba 10 Google 17 HOGs 11 Placer Dome 6 Starbucks 12 Tommy Hilfiger* 1

STOCK PIXSTOCK PIX

*Chris W.: You chose the “mystery stock.” No can do!! Gave you Tommy boy instead.


Knapp’s Mystery StockKnapp’s Mystery Stock


Goldman Sachs $102.86 Tootsie Roll 31.99 Reynolds American 79.91 Dr. Reddy’s 17.02 Ariba 12.82 Google 177.12 Harley Davidson 58.51 Placer Dome 17.34 Starbucks 54.00 Tommy Hilfiger 10.56 Manny Moe & Jack 16.26

OPENING STOCK PRICESOPENING STOCK PRICES


Goldman Sachs 48.6 Tootsie Roll 156.3 Reynolds American 62.6 Dr. Reddy’s 293.8 Ariba 390 Google 28.2 Harley Davidson 85.5 Placer Dome 288.4 Starbucks 92.6 Tommy Hilfiger 473.5 Manny Moe & Jack 307.5

Shares Purchased--$5,000Shares Purchased--$5,000


1. Google $5,5162. Ariba 5,413

3. Manny & Moe 5,2954. Goldman Sachs 5,2425. HOGS 5,139

First Stock Market ReportFirst Stock Market Report


6. Cancer Sticks $5,0347. Tooty Roll 5,0288. Starbucks 5,0009. Doc Reddy’s 4,965

10. Placer Dome 4,91711. TOMMY BOY 4,650

First Stock Market ReportFirst Stock Market Report


“Bo” Derek Michael Chasen “his dream” Moran Matthew “Dillon” Davis Rachel “the” Brice “is right” “Handy” Shandy Gosnell Juan “Valdez” Gomez Carolina T. J. Gillette Casey Colclasure Kimberly Canning

Ariba AribaAriba Ariba


BREAKING THE ICEBREAKING THE ICE

5. M&A 30. EPS 39. Stock options 41. Business Week 42. World Bank 43. Partnership 44. Merrill Lynch 45. Corporate bond 46. Footsie 100 47. Aunt Martha 50. Proprietorship

Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 1Chapter 1

Business: 2005 and Beyond


Bizness Bizness QuoteQuote

The business of America is business.

Calvin Coolidge


Price College of BusinessPrice College of Business . . . Other . . . Other learning opportunitieslearning opportunities

BAD 2110 Intro to Biz ACCT 2113 Introduction to Financial

Accounting ACCT 3113 Cost Accounting ACCT 5543 Contemporary Issues in

Auditing ACCT 6343 Doctoral Seminar in

Auditing


Current Events: “Why Companies Current Events: “Why Companies Fail,” Fail,” FortuneFortune

Slave to Wall Street See no evil Overdosing on risk Dysfunctional board Softened by

success

Strategy du jour Acquisition lust Fearing the boss Dangerous culture Death spiral (have a

plan to “stop the bleeding”)


“The Great Debate over Social Security” “Wal-Mart’s Growth Will Slow Down” “Full Speed Ahead: Toyota CEO is Driving

Company to New Heights” “100 Best Companies to Work for in 2005”

[#1: Wegmans?]

Mo’ Current Events: Mo’ Current Events: From From FortuneFortune magazine magazine


K-Mac’s Office HoursK-Mac’s Office Hours


Key Job Role: Key Job Role: Chief Information OfficerChief Information Officer

Not all major corporations have created this executive position, which typically reports to the CEO.

Key responsibilities: develops an appropriate IT (information technology) infrastructure for an organization; coordinates a company’s networking and communication activities; develops and implements security policies and measures to protect a company’s information resources.

And . . . “Advocates the creation, collection, and use of information as a corporate asset.”


Company ProfileCompany Profile

Goldman Sachs

Group, Inc.


Goldman SachsGoldman Sachs One of the world’s most prominent investment

banking firms. Founded in 1860s by Marcus Goldman, a

German immigrant and former clothing store salesman.

Became a member of the NYSE in 1906. In early 1900s, managed the IPOs for several

small companies that eventually grew into major corporations: Woolworth, Goodrich, Merck.

Suffered huge financial setbacks during the Depression but recovered during the post-World War II economic boom experienced by the U.S.

Went public in 1998. Currently has over $300 billion in total assets

and annual revenues exceeding $30 billion.


Goldman SachsGoldman Sachs Principal sources of revenue: investment

banking services, asset management, interest

Key challenge: operating results are closely tied to overall health of national and global economies

Key challenge: recent decline in IPOs and M&A activity

Key strength: worldwide reputation for integrity and innovation

Key strength: highly trained and skilled workforce


Learning GoalsLearning Goals1. Distinguish between business and not-for-profit

organizations and identify the factors of production.2. Describe the private enterprise system and explain

how competition and entrepreneurship contribute to the system.

3. Identify the six eras of business and explain how the relationship era influences contemporary business.

4. Describe the major trends that challenge managers’ skills for managing and developing human resources.

5. Identify the skills that managers need to lead businesses in the new century.


Textbook Tidbits: Chapter 1Textbook Tidbits: Chapter 1

JetBlue pilots earn only 60% of the average salary of major airline pilots

“Business drives the economic pulse of the nation.”

There are more than 1.5 million not-for-profit organizations in the U.S.

“No business operates in a vacuum.”


Textbook Tidbits: Chapter 1Textbook Tidbits: Chapter 1 One in seven U.S. businesses was

established in the past 12 months. There are 20 million businesses in the U.S.

—3/4 of those are one-human operations. Wal-Mart CEO: “Simply put, our long-term

strategy is to be where we’re not.” Creative thinking exercise: “Think about

how to make familiar concepts unfamiliar.”


What is Business?What is Business?

All profit-seeking activities and enterprises that provide goods and services necessary to an economic system.Profits—rewards for

businesspeople who take the risks involved to offer goods and services to customers.


NFPs: ExamplesNFPs: Examples

United WayRed CrossThe University of Oklahoma


Factors of ProductionFactors of Production

Four basic inputs for effective operation:


Private Enterprise . . Private Enterprise . . ..

An economic system that rewards businesses for their ability to perceive and serve the needs and demands of customers.


Basic Rights within the Private Basic Rights within the Private Enterprise SystemEnterprise System


The Entrepreneurship AlternativeThe Entrepreneurship Alternative

Entrepreneur—risk taker in the private enterprise system.

Two critical variables in any business venture: RISK and RETURN.

Generally, the more risk assumed, the greater the potential return.


Six Eras in the History of BusinessSix Eras in the History of Business


The Colonial Period Primarily agriculturalPrior to 1776

The Industrial RevolutionMass productions by semi-skilled workers,

aided by machines. 1760-1850


The Age of the Industrial EntrepreneurAdvances in technology and increased

demand for manufactured goods, leading to enormous entrepreneurial opportunities.

Late 1800s.

The Production EraEmphasis on producing more goods,

faster, leading to productions innovations like assembly lines.

Prior to 1920s


The Marketing EraThe Marketing Era

Consumer orientation, seeking to understand and satisfy needs and preferences of customer groups. Since 1950sConsumer Orientation: marketing used

as a process to determine and satisfy consumer needs

Branding: creating an identity in consumer’s minds


The Relationship EraThe Relationship Era

Benefits derived from developing extensive relationships with individual customers, employees, and suppliers.Delta and AeroMexico

Airlines often build relationships to improve product offerings.


From Transaction Management to From Transaction Management to Relationship ManagementRelationship Management

Transaction management—building and promoting products in hopes of covering costs and earning acceptable profits

Relationship management—collection of activities that build and maintain ongoing, mutually beneficial ties between a business and its customers and other parties.


Strategic Alliances and PartnershipsStrategic Alliances and Partnerships

Businesses must form partnerships with other organizations to take full advantage of available opportunities.

Partnership: an affiliation of twoor more companies with the shared goal of assisting each other in the achievement of common goals

Strategic alliance: partnership formed to create a competitive advantage for the businesses involved


Competing in a Global MarketCompeting in a Global Market

Companies must continually search for both the most efficient manufacturing sites and the most lucrative markets for their products.The world’s 10 most

valuable brands


Top-10 trading partners with the U.S.


Productivity: Key to Global Productivity: Key to Global CompetitivenessCompetitiveness

Productivity describes the relationship between the number of units produced and the number of human and other production inputs necessary to produce them.

TotalTotal Output (goods or services produced) Output (goods or services produced)ProductivityProductivity Input (human/natural resources, capital) Input (human/natural resources, capital)

=


Gross Domestic Product(GDP) The sum of all goods and services produced within a country’s boundaries.Nations with the

highest GDP


Developing and Sustaining a World-Class Developing and Sustaining a World-Class WorkforceWorkforce

A skilled and knowledgeable workforce is an essential resource for keeping pace with the accelerating rate of change in today’s business world.


Preparing for Changes in the WorkforcePreparing for Changes in the Workforce

In the coming decades, companies will face several trends that challenge their skills for managing and developing human resources. Aging of the population. Shrinking labor pool. Increasingly diverse workforce. The changing nature of work. The new employer-employee partnership.


DEVELOPING AND SUSTAINING A WORLD-DEVELOPING AND SUSTAINING A WORLD-CLASS WORKFORCECLASS WORKFORCE

Increasingly Diverse WorkforceIncreasingly Diverse WorkforceBy 2005, ethnic minorities will be By 2005, ethnic minorities will be

28% of the U.S. population28% of the U.S. populationBy 2050, almost 50% of Americans By 2050, almost 50% of Americans

will belong to ethnic groupswill belong to ethnic groups Diversity will allow us to compete Diversity will allow us to compete

and win locally and globallyand win locally and globally

© PhotoDisc

© PhotoDisc


Reaping the Benefits of DiversityReaping the Benefits of Diversity

Blending individuals of different ethnic backgrounds, cultures, religions, ages, genders, and physical and mental abilities can enrich a firm’s success.Coca-Cola

promoting its diversity in employment


Wanted: A New Type of ManagerWanted: A New Type of Manager

Companies look for managers who are intelligent, highly motivated people with the ability to create and sustain a vision of how an organization can succeed.VisionCritical ThinkingCreativityAbility to Steer Change


Vision: the ability to perceive marketplace needs and what an organization must do to satisfy them

Critical Thinking: ability to analyze and assess information in order to pinpoint problems or opportunities

Creativity: capacity to develop novel solutions to perceived organizational problems – to see better and different ways of doing business

Ability to Steer Change: Must guide employees and organizations through the changes brought about by technology, marketplace demands, and global competition


Managing Ethics and Social Managing Ethics and Social ResponsibilityResponsibility

Business Ethics—conduct and moral values involving right and wrong actions arising in the work environment.

Social Responsibility—a management philosophy that highlights the social and economic effects of managerial decisions.


What Makes a Company Admired?What Makes a Company Admired?

Solid profits? Stable growth? Safe and challenging work environment? Commitment to social responsibility? You decide!

Fortune Magazine’s annual list of most admired companies.


WHY STUDY BUSINESSWHY STUDY BUSINESS??

Businesspeople are catalysts Businesspeople are catalysts for change, create new for change, create new opportunitiesopportunities

Studying business will help Studying business will help prepare you for the futureprepare you for the future

© PhotoDisc


Random ReminderRandom Reminder


Chapter 1 Study QuestionsChapter 1 Study Questions

1. Profits are a primary mechanism for improving the quantity and quality of tangible products and services.

2. The U.S. Postal Service is an example of a not-for-profit organization.

3. Profits equal revenues minus expenses.

4. All factors of production are found in equal amounts in all businesses.

5. “Productivity” is a measure of a country’s economic strength.


QuestionsQuestions 6. Finding unique ways to use factors of

production is a common characteristic of successful entrepreneurs.

7. Adam Smith’s “invisible hand” refers to the competition between companies.

8. _____ is the customer’s perception of the balance between the positive traits of a good or service and its price.

9. Technology has had the greatest impact on which of the following business areas? manufacturing, marketing, finance, communications.


QuestionsQuestions 10. In his book Wealth of Nations, Adam Smith

was the first person to describe _______. 11. A key element of the “production era” was

the use of consumer research. 12. “Social responsibility” refers to standards of

conduct and moral values of a firm. 13. Private property is the single most important

right in a private enterprise system. 14. Canada is the U.S.’s largest trading

partner. 15. Socialism is founded on the belief that

competition among businesses best serves the needs of society.


QuestionsQuestions

16. Foreign companies are prohibited from owning 50% or more of any U.S. firm.

17. Internet usage is growing faster in the U.S. than in the rest of the world.

18. “Relationship management” concentrates on short-term interactions with customers.

19. Which organization is credited with developing the Internet? United Nations, U.S. Department of Defense, U.S. Department of Commerce, National Science Foundation


QuestionsQuestions 20. Business practices designed specifically to

eliminate competitors are prohibited in the U.S. 21. If the number of workers in an industry declines

but output remains the same, then that industry’s “productivity” is unchanged.

22. GDP is the sum of the output of both U.S. firms and foreign firms operating within the U.S.

23. A shrinking labor force is especially a problem in the U.S., Canada, Mexico, or Western Europe?

24. You learn much less by studying business failures than you do by studying business successes.

25. Finding unique ways to use the factors of production is a common characteristic of most successful entrepreneurs.

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business of america

business week

eras of business

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tommy hilfiger

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