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Nickels McHugh McHugh

Nickels Cover. Nickels McHugh McHugh. 1. Chapter. Managing Within The Dynamic Business Environment: Taking Risks and Making Profits. 1- 2. Objectives of Business. Survival. Social Responsibility. Profit. Growth. Basic Concepts.

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Nickels McHugh McHugh

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  1. Nickels Cover Nickels McHugh McHugh

  2. 1 Chapter Managing Within The Dynamic Business Environment: Taking Risks and Making Profits 1-2

  3. Objectives of Business Survival Social Responsibility Profit Growth

  4. Basic Concepts 1. A BUSINESS is any activity that seeks to provide goods and services to others while operating at a profit. 2. PROFIT is the amount a business earns above and beyond what it spends for salaries and other expenses. 3. An ENTREPRENEUR is a person who risks time and money to start and manage a business. Note: Businesses provide people with the opportunity to become wealthy. In addition, businesses provide necessities such as food, housing, and medical care.

  5. Matching Risk w/Profit 1. Profit is revenue minus expenses: $100k rev minus $70k exp is $30 profit (PROFIT is the amount a business earns above and beyond what it spends for salaries and other expenses.) 2. REVENUE is the total amount of money a business takes in during a given period by selling goods and services.

  6. Matching Risk w/Profit 3. A LOSS occurs when a business’s expenses are more than its revenues. 4. Approximately 80,000 businesses in the U.S. fail each year, although this number may be overstated. 5. RISK is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable. 6. REWARDS AND RISK ARE RELATED. a. The more risks you take, the higher the rewards may be. b. As a potential business owner, you should do research to find the right balance between risk and profit. Risk is usually that associated with bankruptcy, etc.

  7. Businesses add to the standard of living and quality of life 1. Entrepreneurs PROVIDE EMPLOYMENT for other people. 2. They also PAY TAXES that are used for schools, hospitals, and other facilities. 3. Businesses are a part of an economic system that helps to CREATE A HIGHER STANDARD OF LIVING and quality of life for everyone.

  8. Businesses add to the standard of living and quality of life The term STANDARD OF LIVING refers to the amount of goods and services people can buy with the money they have. QUALITY OF LIFErefers to the general well-being of a society in terms of political freedom, a clean natural environment, education, health care, free time, and everything else that leads to satisfaction and joy.

  9. Business Stakeholders 1. STAKEHOLDERS are all the people who stand to gain or lose by the policies and activities of a business. 2. Stakeholders include customers, employees, stockholders, suppliers, bankers, and people in the local community, environmentalists, and elected leaders. 3. The challenge for companies in the 21st century will be to BALANCE, as much as possible, THE NEEDS OF ALL STAKEHOLDERS. 4. Pleasing all shareholders is not easy and requires balancing many factors. 5. While providing what customers need, businesses must try to CAUSE MINIMAL DAMAGE TO THE NATURAL ENVIRONMENT.

  10. Nonprofit Organization Question: What is a not-for-profit? Answer: • A NONPROFIT ORGANIZATION is an organization whose goals do not include making a personal profit for its owners or organizers. • Nonprofit organizations such as government agencies, public schools, charities, and social causes make a major contribution to the welfare of society. • You need the SAME SKILLS to work in nonprofit organizations that you need in business, including information management, leadership, marketing, and financial management. • Businesses, nonprofit organizations, and volunteer groups often strive to ACCOMPLISH THE SAME OBJECTIVES. • To accomplish these objectives, business must REMAIN COMPETITIVE with the best businesses in the rest of the world.

  11. Creating Wealth:Factors of Production Entrepreneurship Land Labor Knowledge Capital

  12. Factors of Production Explain the importance of entrepreneurship to the wealth of an economy. 1. The FACTORS OF PRODUCTION are the resources used to create wealth: a. LAND (or “natural resources”.) b. LABOR (workers.) c. CAPITAL (e.g., machines, tools, and buildings; but not money— money is used to buy factors of production.) d. ENTREPRENEURSHIP. e. KNOWLEDGE. 2. Some experts believe that the most important factor of production is KNOWLEDGE. 3. What makes rich countries rich is not land, labor, or capital; it is a combination of entrepreneurship and the effective use of knowledge. 5. Entrepreneurship also helps make some states and cities rich while others remain relatively poor.

  13. Business EnvironmentMeans the surrounding factors that either help of hinder the development of business; they are…..

  14. Economic & Legal Environment • Freedom of ownership – People are willing to take the risk of starting a new business; Governments actively promote entrepreneurship; etc. • Tradable currency- Gov’ts establish tradable currency, such the euro, etc. • Elimination of corruption – Gov’t eliminate corruption within ranks, as well as within companies (Enron, Wordcom, Tyco)

  15. State Budget Deficits(’03 & ’04)- Billions • California $ 35.00 B • New York 12.00 B • New Jersey 5.70 B • Connecticut 2.50 B • Missouri 1.30 B • Ohio 0.72 B • Nevada 0.64 B Source: BusinessWeek March 17, 2003

  16. Technological Environment • Productivity – Amount of output given your input per employee, etc. • E-Commerce – B2B & B2C, taxes, etc. • Responsiveness to Customer

  17. Competitive Environment • Customer Expectations • Speed • Restructure/Empower • Concern for Natural Environment

  18. Social Environment Question: What is Demography? Answer: the statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income. In short, the study of people’s vital statistics.

  19. Social Environment • Diversity/Multicultural • Aging/Graying of America • Two-Income Families • Telecommuting • Single-Parent Families

  20. Consumer Trends • Bottled Water Sales in Past 10 Years Tripled to $5.7 Billion (Women Majority of Drinkers) • Who is Shopping Online? Americans 38% French 10% Britons 25% Spaniards 4% Canadians 24% Poles 3% Japanese 20% Source: Business & Economic Review, Jan.-Mar. 2002

  21. U.S. Household Size Source: Census Bureau

  22. Buying Power ofDiverse Groups Women $3,700 Billion Hispanic Americans 550 Billion African Americans 500 Billion Gay Men & Lesbians 450 Billion Asian Americans 254 Billion Native Americans 35 Billion Sources: National Organization on Disability Employability; U.S. Pan Asian American Chamber of Commerce; DiversityInc.com; U.S. Census Bureau

  23. U.S. Ethnic Composition Source: Census Bureau

  24. Age Language Religion Sexual Orientation 21st Century Diversity Issues Race Gender Ethnicity Disability Source: U.S. Equal Employment Opportunity Commission

  25. The Aging of America Source: Census Bureau

  26. % U.S. Population by Age Source: Census Bureau

  27. Older Americans Working Source: USA Today

  28. Growth ofDual-Income Households Source: USA Today

  29. Women In The Workforce Source: CNNMoney, 3/3/03.

  30. Wives Outearn Husbands • All Couples* 30.7% • Two-Income Couples 24.1% *3% Involve Salaries $75,000+ Source: CNNMoney, 3/3/03.

  31. Where Americans Live Source: Census Bureau

  32. Global Environment • Quality • Productivity • War & Terrorism • Global Changes

  33. The EconomicCost of Disaster DisasterCosts September 11, 2001 Attacks $ 70 B Northridge, CA Earthquake 44 B Kobe, Japan Earthquake 100 B Source: Business 2.0 , November 2002.

  34. Does Global ExperienceHelp Your Career? No Response 5% 19% 56% Unnecessary Very Helpful Somewhat 20% Source: USA Today

  35. Evolution ofAmerican Business • Agricultural/Manufacturing • Service Industries • Future???

  36. Trends in Business • Self-Directed, Empowered Employees • Communication Skills • Decision-Making Skills • Teamwork • Leadership • Continual Learning • Rise of Information & Communication Technology • Globalization • Doing Business 24/7 • Educated Consumers • Aging Workforce • Increasing Diversity • Pyramid vs. Web Source: Keying In- Newsletter of the National Business Education Association, March 2003

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