Business a changing world 7e by ferrell chap001

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Business in a
Changing World

Chapter 1

The Dynamics of Business and
Economics

McGraw-Hill/Irwin

Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights


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Crocs focuses on core competencies
Market opportunities, timing, and
circumstances

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The Nature of Business
What is a business?
Individuals or organizations trying to earn a
profit by providing products that satisfy
people's needs.

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The Nature of Business
What is a product?
A good or service with tangible and
intangible characteristics that provide
satisfaction and benefits

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Products
Tangible Goods & Services
Tangible Goods

Services

Automobile
Computer
Loaf of bread
Television

Dry cleaning
Photo processing
Checkup at doctor’s
Movie star performance

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The Primary Goal of Business
Earn a Profit
The difference between what it costs to
make and sell a product and what a
customer pays for it.

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The Primary Goal of Business
PROFIT -The reward for the risks that businesses take
in providing products.

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Non-Profit Organizations
Not all organizations are businesses.
Nonprofit organizations provide goods and
services but do not have the fundamental
purpose of earning profits.

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Maintaining Profitability
Management skills
•Planning

•Organizing
•Controlling
•Leading

Marketing Expertise
•Products
•Price
•Promotion
•Distribution

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Stakeholders
Customers, employees, investors, government regulators,
community and society. Those that have a stake in the success
and outcomes of a business are considered stakeholders.
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Stakeholders & the Environment
Environmentally Friendly Practices
•Hewlett-Packard
•Cummins, Inc.
•Diversity Pipeline Alliance
•Home Depot
•U-Haul

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The People & Activities of Business

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The People & Activities of Business

Management – Focus on employees
•Coordinating employee’s actions
•Organizing people for efficiency
•Motivating employees toward business goals

.
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The People & Activities of Business

Management – Production and Manufacturing
•Plan activities
•Organize staff
•Control tasks

.
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The People & Activities of Business

Marketing – Focus on satisfying customers
•Determine what products customers want
•Plan and develop products
•Determine distribution
•Determine place
•Determine promotion
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The People & Activities of Business

Marketing & Promotion
•Advertising
•Personal selling
•Sales promotion
•Publicity
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The People & Activities of Business

Finance – Primary responsibility of owners
•Obtaining money
•Using money effectively
•Accountants, stockbrokers, bankers
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Why Study Business
•Develop Skills for career success

•Understand business activities
•Importance of profitability
•Individual businesses
•Local and regional economic impact
•Global economic impact

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Why Study Business
Business impact
•Purchase raw materials
•Hire employees
•Attract capital
•Create products
•Fuel the global economy
•Contribute to society

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The Economic Foundations of Business
Distribution of resources for the production of
goods and services within a social system.

Resources -•Natural resources (land, forests, minerals, water)
•Human resources (labor)
•Financial resources (capital)
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Factors of Production -Natural, human, and financial resources used to produce goods
and services --

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Economic Systems
How a society distributes its resources to produce
goods and services

Central issue of economics –
•How to fulfill an unlimited demand for goods and
services with a limited supply of resources
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Economic Systems
How a society distributes its resources to produce
goods and services

Three Important questions –
1. What types and quantities of goods/services will
satisfy consumer needs?
2. How will goods/services be produced? By whom?
With what resources?
3. How are goods/services distributed to consumers?
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