Understanding business 8th by mcchugh nickels chapter 01

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Nickels

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McHugh

McGraw-Hill/Irwin
Understanding Business, 8e

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McHugh

Managing
Within The
Dynamic
Business
Environment:
Taking Risks
and Making
Profits

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CHAPTER

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1-1

© 2008 The McGraw-Hill Companies, Inc., All Rights


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Business & Entrepreneurship
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Business
Profit
Entrepreneur
Match Risk With Profit

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Revenue

Loss

Standard of Living/Quality
of Life
Stakeholders
Nonprofit Organizations
1-2


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Objectives of Business
Survival

Growth

Profit

Social
Responsibility

1-3


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Creating Wealth:
Factors of Production

• Land
• Labor
• Capital
• Entrepreneurship
• Knowledge

1-4


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Business Environment

1-5


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Economic &
Legal Environment

$ Minimum taxes and regulations
$ Freedom of ownership

$Contract laws
$Tradable currency
$Elimination/minimization of
corruption
1-6


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Government Takeover

• Crude oil price per barrel:
2000
Mid $20 range

2006
Mid $70 range

• Russia, Venezuela, and Bolivia have

asserted greater state control over its oil
or natural gas assets

• Which country will be next?
Source: wtrg.com; Cumberland Times-News, May 3, 2006

1-7

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Corrupt Countries
Least Corrupt
1. Iceland
2. Finland
3. New Zealand

Most Corrupt
1. Bangladesh
2. Chad
3. Haiti

Source: Transparency International, 2005; www.transparency.org

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Technological Environment
• Productivity
• E-Commerce
• Responsiveness
to Customer

1-9


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Identity Theft

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Total number of identity theft
victims in 2005 – 255,565
Top four ways how victims
information was misused:

1. Credit card fraud
2. Phone/utilities fraud
3. Bank fraud
4. Employment-related fraud
Source: Identity Theft: Victim Complaint Data, 2005, Federal Trade Commission; www.consumer.gov/idtheft

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ID Theft—Protective Steps

• “Focus on the cheap and easy way
to keep an eye on your accounts”

• Free Credit Reports
• Guard Your Number
• Shred
• Bug Congress
 To pass ultimate protection: A credit
freeze anytime you want one.
Source: Money, August 2005

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Competitive Environment

• Customer

Expectations

• Restructure/Empower

1-12

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Consumer Trends
• U.S. Bottled Water Sales in Past 15

Years Increased more than four-fold
to $9.8 Billion

• From October 2004 to September

2005, top bottle water flavors were:
Blend, Lemon, Lime, and Apple

Source: Business & Economic Review, Jan.-Mar. 2002; Beverage Marketing Corporation, bottledwater.org, 2004 stats;
Productscan Online; datamonitor.com, November 9, 2005

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Social Environment
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Diversity/Multicultural
Aging/Graying of
America

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Two-Income Families
Single-Parent Families

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U.S. Household Size

Source: U.S. Census Bureau

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Buying Power of

Diverse Groups
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Women

$3,700 Billion

African Americans

761 Billion

Hispanic Americans

686 Billion

Gay Men & Lesbians

610 Billion

Asian Americans

397 Billion

Native Americans

51 Billion

Sources: National Organization on Disability Employability; U.S. Pan Asian American Chamber of Commerce; DiversityInc.com; U.S. Census Bureau; The Augusta Chronicle,
October 22, 2005; Selig Center for Economic Growth, 2005.

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21st Century
Diversity Issues

• Race

• Age

• Gender

• Language

• Ethnicity

• Religion

• Disability

• Sexual

Source: U.S. Equal Employment Opportunity Commission

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Immigration
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In 2005, roughly 35 million immigrants
lived in the U.S. as compared to less
than 25 million 10 years ago.

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According to a November 2005 poll,
60 percent of Americans favor a
barrier built along the US-Mexico
Border.

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About 49 percent believe that a child
born to an illegal alien in the U.S.
should be granted a US citizenship
Source: Center for Immigration Studies; RasmussenReports.com

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Older Americans Working

Source: USA Today


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Americans Living Longer
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U.S. life expectancy rises to a
record high 77.9 years

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The number of deaths dropped
by 50,000 in 2004 from 2003,
the steepest decline since 1938

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By 2005, about one in eight
Americans will be 65 or older.
By 2025, it will be nearly one in
five.
Source: Investor’s Business Daily, December 8, 2003; Cumberland Times-News, April 20, 2006; U.S. Centers for Disease
Control and Prevention; U.S. Census

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Exurbs:
Growth of Outer Suburbs

• Northeasterners are moving south and
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west, and west coast residents are
moving inland.
The states that gained the most
residents: Florida, Arizona, Nevada
The states that lost the most residents:
New York, California, Illinois

Source: Cumberland Times-News, April 21, 2006; U.S. Census Bureau

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Global Environment
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International Competition and Free Trade

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Improvements in Transportation
and Communication

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War & Terrorism

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Global Changes

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The Economic
Cost of Disaster
Disaster

Costs

Hurricane Katrina – 2005 (estimate)$ 200 B
Kobe, Japan Earthquake -- 1995

100 B

September 11, 2001 Attacks

70 B

Northridge, CA Earthquake – 1994

44 B

Hurricane Andrew – 1992

35 B

Source: Business 2.0 , November 2002; MSNBC.com, September 10, 2005.

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Does Global Experience
Help Your Career?
No Response
5%
19%
Unnecessary

Somewhat
20%

56%
Very
Helpful

Source: USA Today

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Evolution of
American Business

• Agricultural/Manufacturing
• Service Industries
• Future???
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