learning objectives the importance of studying...

Introduction to Business Management 09-Jan-13

Chukiat Worasuchep 1

Chukiat Worasucheep

STA 473Business Management

Chapter 1

The Dynamic Business Environment

Chukiat Worasucheep 2


Learning Objectives

� Understand the importance of studying business.� Explain the evolution of American business.� Describe the five elements of the business

environment.� Understand your options in the world of business in

the future.


The Importance of Studying Business

� Business – Definition – A business is an individual or organization that seeks to

provide goods and services to others while operating at a profit.

– An Entrepreneur is a person who owns and operates his or her own business

� Wealthy– Sam Walton (Wal-Mart) and Bill Gates (Microsoft)



Walmart

Chukiat Worasucheep 5 Chukiat Worasucheep 6

The Importance of Studying Business

� Profit, Revenue, Loss, and Risk and Reward– Profit is the amount a business earns above and beyond what it

spends for salaries and other expenses.

� Standard of Living– is a grade or level of subsistence (basic needs) and comfort in

everyday life enjoyed by a community, class, or individual

� Risk– is exposure to the chance of a financial or time loss due to

something that is not successful.– The more risks you take, the higher the rewards may be.– As a potential business owner, you should do research to find the

right balance between risk and profit.


Defining Business

� Shareholders

� Stakeholders– are all the people who stand

to gain or lose by the policies and activities of a business.

– Customers, employees, stockholders, suppliers, bankers, people in community, elected leaders, among others.

� Challenge – to balance the needs


SELF CHECK QUESTIONS (Text page 8)

� Define business and explain why the study of business is important. Define risk. Are you willing to take risks in order to own your own business? Why or why not?

� How are revenue and profit different? Are they related to each other also?

� How are stakeholders and shareholders different? The same?



agricultural

industry

service


Evolution of Business

� Progress in the American agricultural and manufacturing Industries– The number of farmers dropped from 1/3 to < 2% of population, each

of which owns larger than 440 acres.� Employment

– shift from manufacturing to service – More high-paying jobs

� Industrial revolution– 1850s-1950s

– Lodging, health, legal, educational, recreational, business, financial, personal services, etc.

– In USA, since 1980s, with currently the largest growth.


The Five Parts of the Business Environment


The Economic and Legal Environment

� Businesses operate within framework of laws and economic forces.

– How government works with or against businesses?– Governments can lessen the risk of starting a businesses

and increasing entrepreneurship and wealth.

� Entrepreneurs are looking for acceptable Return on Investment (ROI).

– ROI is the money gained from taking a business venture risk; in addition to money, investment of time is also an important consideration.

– If the investment of time and money becomes too high, the ROI may no longer be worth the risk.

� Businesspeople benefit from awareness of current laws.


The Economic and Legal Environment

� What Can Government Do?– Allow private ownership– Board of directors

� is a group that oversees the activities of a corporation.� generally represents a mix—a small number of company executives

and a greater number of outsiders.– Pass laws that enable people to write enforceable contracts – Commercial laws (acts)– Tradable currency– Laws to minimize corruption and illegal activities

� Capitalist system– companies and businesses are owned by citizens instead of

government




The Technological Environment

� Businesses have always been affected by Information technology (IT)

� Increased Productivity– Effectiveness

� is producing the desired results.– Efficiency

� is the ability to produce using the least amount of resources.– Resources– Productivity

� is the amount of output you generate given the amount of input (e.g. hours worked.)

– Greater profit

Technological Environment


� A soybeans farm in the city of Tangara da Serra, Brazil, on March, 2012. (Reuters/Paulo Whitaker) Source: www.theatlantic.com/infocus/2012/04/images-of-earth-from-above/100283

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� Making Buying and Selling Easier

� E-commerce– Business-to-consumer (B2C)– Business-to-business (B2B)

� Success through quality and service

� Responsiveness to Customers





� Databases

� Barcode (∼ 1949)� are the series of lines and numbers that

you see on most consumer packaged goods; they identify the type of product.

� Uniform Product Code (UPC)– Used in Canada & USA

� 2D barcode – Aztec code (1995)


The Competitive Environment

� Focus on quality and value

� Customer-driven Organizations– Outstanding customer services

� Listen to customers� Quick response to customer requests� Employee Empowerment

– is giving frontline workers the responsibility, authority, and freedom to respond quickly to customer requests.

– Requires more training and educated staff!� Cross-functional teams

– a group of people with different expertise working together to achieve a common goal


The Social Environment

� Diversity– Definition? Advantage?

� Increase in minority owners and employees� Businesses concerned about diverse workforce

and customer base

The Social Environment - Generations

� The Boomers, or Baby Boomers– born between 1946 and 1964– have been called workaholics.

� Generation X– born between 1965 and 1980– want work-life balance.

� Generation Y, or the Millennial Generation– born between 1981 and 1994– are the children of Baby Boomers.– More familiar with communication, IT, and digital

� Generation Z, Net Gen– More familiar with digital communication, Internet 2 (e.g. social

networking) and broadband





The Social Environment� Aging Consumers

– Baby Boomers growing older– Catering to Baby Boomers

� Dual Incomes– Result of dual income trend

� Cafeteria-style benefits … menu-style benefits� Part-time work

� Single Parents� Work-life balance

� (Late) Marriage� Changing views

– Children vs. no children


The Global Environment

� Two important changes– Growth of international competition

– Increased free trade� Free trade is the reduction of barriers to trade, such as

elimination of tariffs (or taxes) on goods brought into another country

� All businesses compete in the global marketplace� How terrorism affects the way business is done


�

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Your Future in Business

� Entrepreneurship vs. Working for Others� Two ways to succeed:

– Working for Other Businesses– Entrepreneurial Challenge

� Assignment !!

� Career planning?




Creation of Wealth

� Five factors of production– Land

– Labor

– Capital

– Entrepreneurship

– Knowledge

� What makes most countries rich today?– The last two items aboveanswer


Your Future in Business

� Working for a Nonprofit Organization or a Government Agency

� Businesses can’t do everything for communities� Social entrepreneur� Government agency� Business concepts applicable


Assignments

� Case 1 ‘The World’s Largest Charity’– About Bill Gates and Warren Buffet– Four discussion questions– Downloadable from the class web.

� Question ‘To be an entrepreneur or to be employed?’– Discuss pros and cons of each way– What’s your plan (and reasons)? Next 2 years and at 30 years old?– Hints: thoroughly study Chapter 1 in the main text.

� Both are due on: next class!– Remind: use your own words in writing every report!!!– Clearly have your name and ID on top-right corner of the first page.


Any questions?If not, thenProceed on the assignments for Chapter 1Prepare next class by reading Chapter 2

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