Lecture Business (4/e): Chapter 1 - Ferrell, Hirt, Ferrell

Part 1
Business in a
Changing
World

© 2015 McGraw­Hill Education.


1-2

 
CHAPTER 1

The Dynamics of Business and Economics

CHAPTER 2

Business Ethics and Social Responsibility

APPENDIX B

The Legal and Regulatory Environment

CHAPTER 3

Business in a Borderless World


1-3

Learning Objectives

LO 1-1

Define basic concepts such as business, product, and
profit

LO 1-2
Identify the main participants and activities of
business and explain why studying business is important
LO 1-3
Define economics and compare the four types of
economic systems
LO 1-4
Describe the role of supply, demand, and
competition in a free enterprise system
LO 1-5

Specify why and how the health of the economy is
measured

LO 1-6

Trace the evolution of the American economy and
discuss the role of the entrepreneur in the economy
.


1-4

The Nature of Business

1-5

The Goal of Business


1-6

People and Activities of Business
Management is concerned with
acquiring, developing, and using
resources effectively and
efficiently
The focus of all marketing
activities is satisfying customers
The owner is primarily
responsible for obtaining financial
resources for the operation of the
business, including obtaining
money and using money
effectively


1-7

Economic Foundations of Business


1-8

Economic Systems


1-9

Free-Enterprise System
Free enterprise allows a company
to succeed or fail on the basis of
market demand
Basic individual and business
rights which must exist in order to
motivate companies to succeed
► Right to own property
► Right to earn profits and use
them as one wishes
► Right to determine business
operations
► Right to choose


1-10

Forces of Supply and Demand

Supply

Demand

Equilibrium
price is the price

at which the
number of
products
supplied equals
the amount of
products
consumers are
willing to buy at
a specific time


1-11

The Nature of Competition
Competition is the rivalry among businesses for consumer’s dollars


1-12

Economic Cycles and Productivity
May lead to
inflation – a
continuing rise
in prices
May lead to
recession – a
decline in
production,
employment
and income

Recessions are often characterized by rising levels of
v

Unemployment – the condition in which a percentage of the
population wants to work but is unable to find jobs


1-13

Economic Cycles and Productivity
Severe recession may turn into a...
v

Depression – a condition of the economy in which unemployment
is very high, consumer spending is low, and business output is
sharply reduced

v

Gross Domestic Product (GDP) – the
sum of all goods and services produced
in a country during a year

v

Budget Deficit – the condition in which
a nation spends more than it takes in
from taxes

1-14

The American Economy


1-15

Ethics and Social Responsibility in
Business