Chapter Chapter OneOne

Meeting the Challenge Meeting the Challenge of Today’s Dynamic of Today’s Dynamic

BusinessBusiness EnvironmentEnvironment

What Is Business?• Activity seeking profit

• Provides goods/services

• Satisfy standard of living- quality of life

• Nonprofit organizations

Objectives of Business

SurvivalSurvival

GrowthGrowthSocial Social

ResponsibilityResponsibilityProfitProfit

Business Environment (Figure 1.2)

Entrepreneurship vs.

Employment

• Opportunities For Entrepreneurs• Matching Risk With Profit

– Revenue - Expense = Profit(Loss)– Risk

Factors of Production

LandLand

LaborLabor

CapitalCapital

EntrepreneurshipEntrepreneurship

KnowledgeKnowledge

Government Affects Business By Being:

A Customer

An Overseer and Regulator

A Tax Collector

Environments of Business

• Economic• Technological• Social• Competitive• Global

Economic Environment

$ Freedom of ownership

$ Contract laws

$ Elimination of corruption

$ Tradable currency

$ Minimum taxes & regulation

Technological Environment

• Internet

• E-commerce

• Role of Intermediaries ?

• Responsiveness to Customer

• Information Management

A Business and Its Stakeholders(Figure 1.4 )

Average Skill LevelRequired

Level 1Level 1 Level 2Level 2 Level 3Level 3 Level 4Level 4 Level 5Level 5 Level 6Level 6

Source: Source: Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post

Average Skill Average Skill Level: 3.6Level: 3.6

2%2%

58%58%

40%40%

Current Skill Level

Level 1Level 1 Level 2Level 2 Level 3Level 3 Level 4Level 4 Level 5Level 5 Level 6Level 6

Average Skill Average Skill Level: 2.6Level: 2.6

6.8%6.8%

70.5%70.5%

6.6%6.6%

16.1%

The 21st Century Workforce

Outsourced Suppliers

25%

Permanent Employees

35%

Contract Workers

15%

Contingent Workers

25%

Source: Workforce Magazine, Jan. 1998

Changing Intermediaries

Internet Impact• Communications

• Access

• No Borders

E-commerce Explosion• Transaction costs

• Size of purchase per transaction

• Integration

• Flexibility

• Catalog size

• Customer Interaction

Competitive Environment• Customer Service

– Customer Demands– Speed

• Community/Stakeholder Needs

• Natural/Ecological Concern

Social Environment• Diversity/Multicultural

• Aging/Graying of America

• Two Income Families

• Single Parent Families

U.S. Population Shifts

72%

12%12%

4% 1%

62%

18%13%

6%1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1999 2025

WhiteHispanicAfro-Amer.AsianAmer. Indian

Source: Census Bureau

Global Environment• Quality

• Productivity

• Changes

Dealing With A Multicultural Workforce

Show Respect for Culture/Value of Others

Avoid Stereotyping Include All Workers in Acculturalization Be Empathetic But Be Yourself Avoid Imposing Your Culture/Values on

Others

Show Respect for Culture/Value of Others

Avoid Stereotyping Include All Workers in Acculturalization Be Empathetic But Be Yourself Avoid Imposing Your Culture/Values on

Others

World Population Milestones

0

1

2

3

4

5

6

7

8

9

Billions of People

1804 1927 1960 1974 1987 1999 2013 2028 2054

Source:USA Today

Evolution of American Business

• Agricultural/Manufacturing

• Service Industries

• Future???

Key Terms

• Business 4 • Downsizing 5• Entrepreneur 4• Factors of production 9• Goods 24• Loss 7• Non profit organization 5• Profit 4• Quality 19• Quality of life 4

• Revenue 7• Risk 7• Services 25• Standard of living 4