Introduction to Business

1. Introduction to Business The History of Business

2. Feudalism • Definition • The business or economic system in which one class of people (aristocrats) control the property rights to all valuable resources, including people • Lasted throughout the Middle Ages (A.D. 500 – 1500) • Based on property rights • The claims by people to own, use, and sell the rights to valuable resources • Earliest times based on brute force • In most societies, ordinary, land-less people had no property rights; they themselves were simply resource owned by the estate as laborers and slaves in bondage • In Russia, the slaves who worked the estates were called serfs • On large estates, there might be 100,000 serfs whose rights were determined at the whim of the land owner

3. Mercantilism • Definition • Business or economic system in which merchants and bankers organize the trade of products across markets and countries until they are put to their most valued use • Merchants are traders who notice a discrepancy between the value and price of a product in one market and its value and price in another; they recognize the opportunity to profit from the price difference • Merchants borrowed money to purchase products in a market where they were plentiful, and then transport them to another market where they can be sold at a higher price • History Lesson: • The attempt by British merchants to artificially control the price of tea led to what famous event?

4. The Growth of Enterprise • The growing supply of profits and capital through mercantilism (brought about by combining land, labor, and trade) led to a rapid increase in the productive resource known as enterprise • This brought about the advent of bankers • The people who estimate the risks associated with a new venture and determine the way profits from a venture should be shared • Promote enterprise

5. Craft Guilds and Occupational Specialization • At the time of the signing of the Magna Carta, major changes were taking place in the world of business • Craftspeople began to spring up • Workers or artisans with the skills to produce higher-quality goods and services • Craft guilds were formed to protect the property and wealth of these craftspeople • These guilds were a group of skilled artisans organized to control and govern different aspects of a trade

6. The Industrial Revolution • Technology led to the next major change in business systems • Late 18th – early 19th century saw the advent of the Industrial Revolution • Marked by improved production and trade brought about by advances in technology • The crucial event of the Industrial Revolution was the invention of the steam engine

7. Capitalism and the Modern Class System • Capitalism is the economic or business system in which private ownership of resources becomes the basis for the production and distribution of goods and services • Capitalists are the people who personally own or control the physical capital of industrial production such as machinery, factories, distribution networks, raw materials, and technology • Today the term capitalist carries a negative overtones because of the actions of industrialists on the late 19th and early 20th century who ruthlessly pursued their own self-interests at the expense of others

8. Internet Exercise • Each of the three main kinds of business systems – feudalism, mercantilism, and capitalism – is associated with a particular ethical or moral position; for example the rights workers should have relative to the owners of land and capital. • 10 minutes – research one of the three business systems and find at least one other ethical or moral position