part i: organization of a business introduction to business 3e 1 copyright © 2004 south-western....
TRANSCRIPT
Copyright © 2004 South-Western. All rights reserved.
Part I: Organization of a BusinessPart I: Organization of a Business
Jeff MaduraIntroduction to
Business 3e
Introduction to Business 3e
11Planning A BusinessPlanning A BusinessPlanning A BusinessPlanning A Business
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Organization of a BusinessOrganization of a Business
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Learning GoalsLearning Goals• Identify key business stakeholders.•Describe key business functions.•Explain how to develop a business plan.
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Business DefinedBusiness Defined
A business is an enterprise that provides products or services
desired by customers.
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Key Business DecisionsKey Business Decisions•Product
– What type of product should be produced?
•Production – How should the product be produced?
•Promotion– How should the product be promoted?
•Financing– How should the company obtain funds to
finance the cost of producing the product?
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Business DecisionsBusiness Decisions
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Key StakeholdersKey Stakeholders•Owners
– Entrepreneurs– Co-owners– Stockholders
•Creditors•Employees
– Managers
•Suppliers•Customers
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Interaction among Owners, Interaction among Owners, Employees, Customers, Suppliers, Employees, Customers, Suppliers,
and Creditorsand Creditors
Exhibit 1.1
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Creating a Business IdeaCreating a Business Idea• Identify a competitive advantage.•Differentiate the product or service from competitors.
•Determine necessary resources.•Assess feasibility of the idea.
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business onlinebusiness online ee -- businessbusiness
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Success StoriesSuccess Stories• Domino’s Pizza
– Managhans bought bankrupt pizza parlor– Started with little funding– Now generates sales of $1 billion per year
• Jeremy’s Micro Batch Ice Cream– Applied microbrewery concept to ice cream– Makes ice cream in small batches, sold in limited
editions• Glow Dog, Inc.
– Sells light-reflective clothing for pets– After two years, average annual sales of $1 million
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Lessons to RememberLessons to Remember•Successful businesses do not require a great invention. – Many focus on making life more convenient
for customers.
•Some business ideas will fail—but entrepreneurs can learn from failures and make revisions.
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Impact of TechnologyImpact of Technology•Technology defined
– Knowledge or tools used to produce products and services
• Information technology– Represents over 1/3 of the growth in U.S.
output– Reduces cost of producing products– Workers in technology industries earn more
than workers in other industries.
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Impact of TechnologyImpact of Technology•E-business or e-commerce
– Use electronic communications to produce or sell products and services Sales to individual customers B2B e-business: transactions between a business
and its suppliers Generates $301 billion in revenue and creates 1.2
million jobs each year
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Successful E-BusinessesSuccessful E-Businesses• Started out small• Created to sell a product or service that was not offered by competitors
• Transformed how traditional firms conducted business– Improved communication with customers– Improved information flow– Improved efficiency– Complemented traditional business operations
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E-Business ExamplesE-Business Examples• Amazon
– Online seller of books, music and other products– Low overhead costs allow price discounting
• Yahoo!– Internet search engine and the most visited site on
the Web– Offers variety of services - free email, web page
hosting, custom-designed start-up pages– Generates revenue by selling advertising
• eBay– Online auction service
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Key Functions of BusinessKey Functions of Business• Management
– Means by which employees and other resources are used by the firm
• Marketing– Means by which products and services are
developed, priced, distributed, and promoted to customers
• Finance– Means by which firms obtain and use funds for their
business operations
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Key Functions of BusinessKey Functions of Business•Accounting
– Summary and analysis of the firm’s financial condition
– Used to make various business decisions
• Information systems– Information technology, people, and
procedures that provide appropriate information to make effective decisions
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How Business Decisions How Business Decisions Affect a Firm’s EarningsAffect a Firm’s Earnings
Exhibit 1.4
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Common Business Common Business DecisionsDecisions
•Management Decisions
– What equipment is needed?
– How many employees should be hired?
– How can employees be motivated to perform well?
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Common Business Common Business DecisionsDecisions
•Marketing Decisions
– What price should be charged?
– Should the product be changed to be more appealing to customers?
– Should the firm use advertising or some other strategy to promote its product?
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Common Business Common Business DecisionsDecisions
•Finance Decisions
– Should financial support come from the sale of stock or from borrowing money or some combination?
– Should the firm attempt to obtain borrowed funds for a short-term or long-term period?
– Should the firm invest funds in a new business project?
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A Business PlanA Business Plan•Detailed description of the proposed business– Description of the product or service– Types of customers the business would
attract– Competition– Facilities needed for production
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Developing a Business Developing a Business PlanPlan
•Assess the Business Environment– Economic environment– Industry environment– Global environment
•Develop Management Plan– Organizational Structure– Production– Human Resources
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Developing a Business Developing a Business PlanPlan
• Marketing Plan– Target Market– Product Characteristics– Pricing– Distribution– Promotion
• Financial Plan– Financing– Feasibility
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Online ResourcesOnline Resources•Advice and basic information
– Yahoo’s Small Business site– American Express– Small Business Administration
•Financing Options– Quicken Small Business– Garage.com– The Elevator
•Business Planning Software
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Assessing a Business PlanAssessing a Business Plan•Potential revenue•Potential demand for product or service
•Potential expenses•Profit potential
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Expected Monthly Expenses of Expected Monthly Expenses of CHCCHC
Exhibit 1.6
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Expected Performance of CHC Expected Performance of CHC in the First Yearin the First Year
Exhibit 1.7