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O. C. FerrellUniversity of New Mexico

Geoffrey A. HirtDePaul University

Linda FerrellUniversity of New Mexico

business

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VICE PRESIDENT AND EDITOR-IN-CHIEF BRENT GORDON

EDITORIAL DIRECTOR PAUL DUCHAM

SENIOR SPONSORING EDITOR ANKE B. WEEKES

EXECUTIVE DIRECTOR OF DEVELOPMENT ANN TORBERT

DEVELOPMENT EDITOR GABRIELA GONZALEZ

VICE PRESIDENT AND DIRECTOR OF MARKETING ROBIN J. ZWETTLER

MARKETING DIRECTOR AMEE MOSLEY

MARKETING MANAGER SARAH SCHUESSLER

VICE PRESIDENT OF EDITING, DESIGN, AND PRODUCTION SESHA BOLISETTY

SENIOR PROJECT MANAGER DANA M. PAULEY

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SENIOR DESIGNER MARY KAZAK SANDER

SENIOR PHOTO RESEARCH COORDINATOR KERI JOHNSON

PHOTO RESEARCHERS IRA ROBERTS/ALLISON GRIMES

LEAD MEDIA PROJECT MANAGER ALLISON SOUTER

MEDIA PROJECT MANAGER RON NELMS

COVER DESIGN KYU OH

TYPEFACE 10/12 MINION PRO REGULAR

COMPOSITOR LASERWORDS PRIVATE LIMITED

PRINTER QUAD/GRAPHICS

M: BUSINESS

Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2013, 2011, 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

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ISBN 978-0-07-352458-0MHID 0-07-352458-1

Library of Congress Control Number: 2011940365

www.mhhe.com

business

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v

part oneBUSINESS IN A CHANGING WORLD 2Chapter 1: The Dynamics of Business and Economics 3

Chapter 2: Business Ethics and Social

Responsibility 23

Appendix: The Legal and Regulatory Environment 46

Chapter 3: Business in a Borderless World 61

part twoSTARTING AND GROWING A

BUSINESS 82Chapter 4: Options for Organizing Business 83

Chapter 5: Small Business, Entrepreneurship,

and Franchising 103

part threeMANAGING FOR QUALITY

AND COMPETITIVENESS 118Chapter 6: The Nature of Management 119

Chapter 7: Organization, Teamwork,

and Communication 139

Chapter 8: Managing Service and Manufacturing

Options 159

part fourCREATING THE HUMAN RESOURCE

ADVANTAGE 180Chapter 9: Motivating the Workforce 181

Chapter 10: Managing Human Resources 197

part fiveMARKETING: DEVELOPING

RELATIONSHIPS 222Chapter 11: Customer-Driven Marketing 223

Chapter 12: Dimensions of Marketing Strategy 241

Chapter 13: Digital Marketing and Social

Networking 267

part sixFINANCING THE ENTERPRISE 288Chapter 14: Accounting and Financial Statements 289

Chapter 15: Money and the Financial System 315

Chapter 16: Financial Management and Securities

Markets 333

Notes 352

Photo Credits 372

Index 375

brief

contents

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contents

CHAPTER 3 BUSINESS IN A BORDERLESS WORLD 61

INTRODUCTION 61

THE ROLE OF INTERNATIONAL BUSINESS 62

China Struggles with Luxury Brands 64

INTERNATIONAL TRADE BARRIERS 65

Is There Room for Entrepreneurs in Cuba? 67

TRADE AGREEMENTS, ALLIANCES,

AND ORGANIZATIONS 70

GETTING INVOLVED IN INTERNATIONAL

BUSINESS 75

China’s Money and Hollywood Films Make for a

Partnership 78

INTERNATIONAL BUSINESS STRATEGIES 79

part one BUSINESS IN A CHANGING WORLD 2

CHAPTER 1 THE DYNAMICS OF BUSINESS AND ECONOMICS 3

INTRODUCTION 3

THE NATURE OF BUSINESS 4

Starbucks Managing Global Success 6

THE ECONOMIC FOUNDATIONS OF BUSINESS 7

Patagonia Shines during Recession 12

THE AMERICAN ECONOMY 15

Food Trucks Give Restaurants a Run for Their Money 16

CAN YOU LEARN BUSINESS IN A CLASSROOM? 19

CHAPTER 2 BUSINESS ETHICS AND SOCIAL RESPONSIBILITY 23

INTRODUCTION 23

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY 24

BP Disaster Leads to Questions about Ethics and Social

Responsibility 32

THE NATURE OF SOCIAL RESPONSIBILITY 34

Bio-Plastics Are a Growing Business, but Do They Live Up to

the Hype? 39

Majora Carter Group LLC Brings Green Living to

Distressed Communities 41

APPENDIX THE LEGAL AND REGULATORY

ENVIRONMENT 46

SOURCES OF LAW 46

COURTS AND THE RESOLUTION OF

DISPUTES 46

REGULATORY ADMINISTRATIVE

AGENCIES 48

IMPORTANT ELEMENTS OF BUSINESS

LAW 49

Patents Provide Competitive Advantage

for Kodak 51

LAWS AFFECTING BUSINESS

PRACTICES 53

THE INTERNET: LEGAL AND

REGULATORY ISSUES 55

LEGAL PRESSURE FOR

RESPONSIBLE BUSINESS

CONDUCT 56

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SKILLS NEEDED BY MANAGERS 129

Nick’s Pizza & Pub Succeeds on “Trust and Track” System

of Management 130

WHERE DO MANAGERS COME FROM? 132

Walmart Goes Smaller 133

DECISION MAKING 133

THE REALITY OF MANAGEMENT 135

CHAPTER 7 ORGANIZATION, TEAMWORK, AND COMMUNICATION 139

INTRODUCTION 139

ORGANIZATIONAL CULTURE 140

Changing the Organizational Culture by Reaching Potential

Employees 140

DEVELOPING ORGANIZATIONAL STRUCTURE 141

ASSIGNING TASKS 142

ASSIGNING RESPONSIBILITY 146

Family Team Makes Johnny Cupcakes a Business

Success 147

FORMS OF ORGANIZATIONAL STRUCTURE 149

THE ROLE OF GROUPS AND TEAMS IN

ORGANIZATIONS 151

Ford Develops All-Women Team to Green Its Vehicles 151

COMMUNICATING IN ORGANIZATIONS 153

CHAPTER 8 MANAGING SERVICE AND MANUFACTURING OPTIONS 159

INTRODUCTION 159

THE NATURE OF OPERATIONS MANAGEMENT 160

Shell Uses New Refinery to Support Sustainability 161

PLANNING AND DESIGNING OPERATIONS SYSTEMS 164

MANAGING THE SUPPLY CHAIN 169

Trader Joe’s: Secrets of Success 171

MANAGING QUALITY 174

Stella & Chewy’s: The Food Dogs Love 176

part two STARTING AND GROWING A BUSINESS 82

CHAPTER 4 OPTIONS FOR ORGANIZING BUSINESS 83

INTRODUCTION 83

SOLE PROPRIETORSHIPS 84

Stella & Dot: A Company for Women by Women 84

PARTNERSHIPS 87

Microlending Helps Small Entrepreneurs Start

Businesses 89

CORPORATIONS 90

Bob’s Red Mill Encourages Loyalty through Employee

Ownership 96

OTHER TYPES OF OWNERSHIP 97

TRENDS IN BUSINESS OWNERSHIP: MERGERS

AND ACQUISITIONS 98

CHAPTER 5 SMALL BUSINESS, ENTREPRENEURSHIP, AND FRANCHISING 103

INTRODUCTION 103

THE NATURE OF ENTREPRENEURSHIP AND SMALL

BUSINESS 104

TerraCycle Converts Trash into Profits 105

ADVANTAGES OF SMALL-BUSINESS OWNERSHIP 107

DISADVANTAGES OF SMALL-BUSINESS OWNERSHIP 108

Another Type of Entrepreneurship 110

STARTING A SMALL BUSINESS 110

THE FUTURE FOR SMALL BUSINESS 114

Guitar Syndicate, Inc. Learns to Sell on Facebook 114

MAKING BIG BUSINESSES ACT “SMALL” 117

part three MANAGING FOR QUALITY AND COMPETITIVENESS 118

CHAPTER 6 THE NATURE OF MANAGEMENT 119INTRODUCTION 119

THE IMPORTANCE OF MANAGEMENT 120

MANAGEMENT FUNCTIONS 120

Entrepreneur’s Leadership Guides Company toward

Exceptional Customer Service 120

TYPES OF MANAGEMENT 125

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part four CREATING THE HUMAN RESOURCE ADVANTAGE 180

CHAPTER 9 MOTIVATING THE WORKFORCE 181

INTRODUCTION 181

NATURE OF HUMAN RELATIONS 182

Full Yield Seeks to Revolutionize Employee

Health 182

HISTORICAL PERSPECTIVES ON EMPLOYEE

MOTIVATION 184

THEORIES OF EMPLOYEE MOTIVATION 186

Rewarding Performers with Time Off 188

STRATEGIES FOR MOTIVATING EMPLOYEES 191

Ursula Burns Motivates Employees 192

CHAPTER 10 MANAGING HUMAN RESOURCES 199

INTRODUCTION 199

THE NATURE OF HUMAN RESOURCES MANAGEMENT 200

PLANNING FOR HUMAN RESOURCES NEEDS 200

RECRUITING AND SELECTING NEW EMPLOYEES 201

Burgerville: Fast Food That Employees Can Love 203

DEVELOPING THE WORKFORCE 206

King Arthur Flour: An Employee-Centered Corporate

Culture 210

COMPENSATING THE WORKFORCE 211

Challenges of Working at Home 212

MANAGING UNIONIZED EMPLOYEES 214

THE IMPORTANCE OF WORKFORCE DIVERSITY 216

Part five: MARKETING: DEVELOPING

RELATIONSHIPS 222

CHAPTER 11 CUSTOMER-DRIVEN MARKETING 223

INTRODUCTION 223

NATURE OF MARKETING 224

P&G Makes Inroads in India 228

DEVELOPING A MARKETING

STRATEGY 229

Twitter Treasure Hunt Gets Consumers to

Hunt While They Play 232

MARKETING RESEARCH AND INFORMATION SYSTEMS 233

BUYING BEHAVIOR 235

Yelp: Where Consumers Hold the Power 236

THE MARKETING ENVIRONMENT 237

CHAPTER 12 DIMENSIONS OF MARKETING STRATEGY 241

INTRODUCTION 241

THE MARKETING MIX 242

PRODUCT STRATEGY 242

Silly Bandz: A Flash in the Pan, or Here to Stay? 246

PRICING STRATEGY 250

DISTRIBUTION STRATEGY 252

Will Baby Carrots Become the New Snack Food? 255

PROMOTION STRATEGY 257

Finding the Real Green Products 257

CHAPTER 13 DIGITAL MARKETING AND SOCIAL NETWORKING 267

INTRODUCTION 267

WHAT IS DIGITAL MARKETING? 268

GROWTH AND BENEFITS OF DIGITAL

COMMUNICATION 268

USING DIGITAL MEDIA IN BUSINESS 270

DIGITAL MEDIA AND THE MARKETING MIX 271

Nestlé Experiences the Dark Side of Social Media 272

TYPES OF CONSUMER-GENERATED MARKETING

AND DIGITAL MEDIA 274

Facebook and Twitter Offer Businesses Both Opportunities

and Challenges 277

USING DIGITAL MEDIA TO REACH CONSUMERS 280

Viewpoints Network Helps Companies Manage Brands

Online 282

USING DIGITAL MEDIA TO LEARN ABOUT

CONSUMERS 282

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LEGAL AND SOCIAL ISSUES IN INTERNET MARKETING 283

DIGITAL MEDIA’S IMPACT ON MARKETING 286

Part six: FINANCING THE ENTERPRISE 288

CHAPTER 14 ACCOUNTING AND FINANCIAL STATEMENTS 289

INTRODUCTION 288

THE NATURE OF ACCOUNTING 290

Recession Encouraged United Parcel Service (UPS) to

Rethink the Budgeting Process 292

THE ACCOUNTING PROCESS 294

Bloom Energy Servers Cut Costs, Increase

Sustainability 294

FINANCIAL STATEMENTS 296

RATIO ANALYSIS: ANALYZING FINANCIAL

STATEMENTS 306

Certified Fraud Examiners Report on Fraudsters 310

ACCOUNTING AND THE IMPACT OF THE FINANCIAL

CRISIS 310

CHAPTER 15 MONEY AND THE FINANCIAL SYSTEM 315

INTRODUCTION 315

MONEY IN THE FINANCIAL SYSTEM 316

THE AMERICAN FINANCIAL SYSTEM 320

Are Credit Unions a Better Deal Than Banks? 324

Thrust Fund Founders Encourage Investments in

Themselves 326

Consumer Financial Protection Bureau to Undertake

Financial Reform 329

CHAPTER 16 FINANCIAL MANAGEMENT AND SECURITIES MARKETS 333

INTRODUCTION 333

MANAGING CURRENT ASSETS AND LIABILITIES 334

Mission Motors Licenses the Fastest E-Bikes to Raise

Funds 334

Y Combinator Gives Boost to Startup Companies 337

MANAGING FIXED ASSETS 339

FINANCING WITH LONG-TERM LIABILITIES 341

Shareholders Enjoy Growth at Dick’s Sporting Goods 343

FINANCING WITH OWNERS’ EQUITY 343

INVESTMENT BANKING 345

THE SECURITIES MARKETS 345

NOTES 352

PHOTO CREDITS 372

INDEX 375

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