1. Chapter One: The World of Business and its Environments
McGraw-Hill
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 1-2
Learning Outcomes
1.
2.
3.
4.
5.
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Define and explain business and its basic
terms.
Explain the evolution of business in the
United States.
Describe different classifications of
business.
Describe the five elements of the business
environment.
Understand your options in the world of
business in the future.
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

3. 1-3
Types of Businesses
Business – Definition
 Defining Business

Wealth Opportunity
 Entrepreneurs


Profit, Revenue, Loss, Risk and Reward
Definitions
 Standard of Living

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4. 1-4
Evolution of American Business

Progress in the Agricultural and
Manufacturing Industries



Strong economic development
Agriculture
Manufacturing industry


Outsourcing – define
Progress in Service Industries


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Employment – shift from manufacturing to service
More high-paying jobs
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5. 1-5
Defining Business
 Business
to
can be classified according
 Size
 Profit-motive
 Manufacturing
versus service (sector)
 Let’s discuss each in detail…
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6. 1-6
Business Classifications
 By
Size
 No
concrete measures, but usually the
number of employees is a good
measure
 Large
Business
 Small to Medium Size (SME)
 Microenterprises
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7. 1-7
Business Classifications
 By
Profit Motive
 Non-Profit
 Goals
profit
Organization
do not include making a personal
 Stakeholders
 Anyone
who cares about the success
of a business (customers, suppliers)
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8. 1-8
Business Classifications
 Manufacturing
and Service
 Manufacturing
firms produce a
tangible product
 Service
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products are intangible
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9. 1-9
The Business Environment
 The
Business Environment:
 Can
help or hinder success
 Understanding these factors is
important
 Reading is key to understanding these
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10. 1-10
The Business Environment
Economic and
Legal
 Technological
 Competitive
 Social
 Global

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11. 1-11
The Economic and Legal Environment


Business has to work within laws and the economic
environment
Conditions such as fear of losing jobs and not having
enough will cause people to spend less


Return on Investment



Of course, this affects all business!
Money gained from taking a business venture risk
Businesses operate within framework of legal and
regulatory forces
Businesspeople benefit from awareness of current
laws.
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12. 1-12
The Economic and Legal Environment

What Can Government Do?


Allow private ownership
Pass laws that enable people to write enforceable
contracts



Tradable currency
Laws to minimize corruption and illegal activities


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Uniform Commercial Code (UCC)
 Covers things like contracts and warranties
Ethical lapses
Capitalist system
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

13. 1-13
The Technological Environment
Business have always been affected
 Information Technology (IT)
 Increased Productivity







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Technology
Effectiveness
Efficiency
Resources
Productivity
Greater Profit
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14. 1-14
The Technological Environment

Making Buying and Selling easier

E-Commerce
Business-to-Customer (B2C)
 Business-to-Business (B2B)



Success through quality and service
Responsiveness to Customers

Use of technology



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Uniform Product Code (UPC)
Databases
Social Networking as communications tool
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

15. 1-15
The Competitive Environment

Value




Companies must be competitive based on the
value
Awareness of what competitors are doing
Constantly improve products and processes
Customer-Driven Organizations


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Companies that offer high value to customers
Employee empowerment is a factor
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

16. 1-16
The Social Environment

Diversity
 Increase in minority owners and employees
 Business concerned about diverse
workforce and customer base
 Boomers, Generations X and Y

Aging consumers
Baby Boomers growing older
 Catering to Baby Boomers

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17. 1-17
The Social Environment

Dual Incomes
Result of dual income trend
 Cafeteria-style benefits
 Part-time work


Single parents

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Work-life balance
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18. 1-18
The Global Environment

Two important changes
Growth of international competition
 Increased free trade

All business compete in global
marketplace
 How wars and terrorism affect the way
business is done

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19. 1-19
Stakeholders
All the people and organizations that
stand to gain or lose from the activities
of a business
 Competitors



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Individuals or businesses that offer similar
products or services and contending for the same
customers
Companies need to offer value
© 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

20. 1-20
Stakeholders

Customers

Individual or business that is going to
purchase
 Customer-driven
organizations
High quality
 High value

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21. 1-21
Stakeholders

Suppliers


Distributors


Individuals or companies that produce
products
Individuals or companies that sell the
products or services for another company
Special Interest Groups

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A group of people with a common interest
to promote change
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22. 1-22
Stakeholders

Employees



Culture



A company’s biggest asset
Empowerment as a way to motivate and keep
employees
The overall environment of a company that sets it
apart from other companies
Owners
Stakeholder vs. Shareholder
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23. 1-23
Your Future in Business

Entrepreneurship vs. Working for Others

Two ways to succeed:
 Working
for other businesses
 Entrepreneurial challenge

Creation of wealth
 Five
factors
 What makes countries rich?
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24. 1-24
Your Future in Business

Working for a Non-Profit Organization or
Government Agency




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Businesses can’t do everything for communities
Social entrepreneur
Government agency
Business concepts applicable
Why study business?

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Business major or not: concepts still apply!
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