NICKELS • MCHUGH • MCHUGH© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

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Chapter Chapter OneOne

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

BusinessBusiness EnvironmentEnvironment

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What Is What Is Business?Business?Activity seeking Activity seeking profitprofitProvides goods/servicesProvides goods/servicesSatisfy standard of Satisfy standard of

living- quality of lifeliving- quality of lifeNonprofit Nonprofit

organizationsorganizations

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Objectives of Objectives of BusinessBusiness

SurvivalSurvival

GrowthGrowthSocial Social

ResponsibilityResponsibilityProfitProfit

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Business EnvironmentBusiness Environment (Figure 1.2)(Figure 1.2)

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Entrepreneurship Entrepreneurship vs.vs.

EmploymentEmployment Opportunities For Opportunities For

EntrepreneursEntrepreneurs Matching Risk With ProfitMatching Risk With Profit

Revenue - Expense = Revenue - Expense = Profit(Loss)Profit(Loss)

RiskRisk

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Factors of Factors of ProductionProduction

LandLand

LaborLabor

CapitalCapital

EntrepreneurshipEntrepreneurship

KnowledgeKnowledge

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Government Affects Government Affects Business By Being:Business By Being:

A CustomerA Customer

An Overseer and An Overseer and RegulatorRegulator

A Tax CollectorA Tax Collector

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Environments of Environments of BusinessBusiness

EconomicEconomicTechnologicalTechnologicalSocialSocialCompetitiveCompetitiveGlobalGlobal

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Economic Economic EnvironmentEnvironment

$ Freedom of ownershipFreedom of ownership$ Contract lawsContract laws$ Elimination of corruptionElimination of corruption$ Tradable currencyTradable currency$ Minimum taxes & Minimum taxes &

regulationregulation

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Technological Technological EnvironmentEnvironment

InternetInternet E-commerceE-commerce Role of Role of

Intermediaries ?Intermediaries ? Responsiveness to Responsiveness to

CustomerCustomer Information Information

ManagementManagement

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A Business and Its StakeholdersA Business and Its Stakeholders(Figure 1.4 )(Figure 1.4 )

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Average Skill Average Skill LevelLevelRequiredRequired

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%

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CurrentCurrent Skill Level 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%

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The 21The 21stst Century Century WorkforceWorkforce

Outsourced Suppliers

25%

Permanent Employees

35%

Contract Workers

15%

Contingent Workers

25%

Source: Workforce Magazine, Jan. 1998

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Changing Changing IntermediariesIntermediaries

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Internet Internet ImpactImpact

CommunicationsCommunicationsAccessAccessNo BordersNo Borders

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E-commerce E-commerce ExplosionExplosion

Transaction Transaction costscosts

Size of Size of purchase per purchase per transactiontransaction

IntegrationIntegration

FlexibilityFlexibility

Catalog sizeCatalog size

Customer Customer InteractionInteraction

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Competitive Competitive EnvironmentEnvironment

Customer ServiceCustomer Service Customer DemandsCustomer Demands SpeedSpeed

Community/Stakeholder NeedsCommunity/Stakeholder Needs

Natural/Ecological ConcernNatural/Ecological Concern

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Social Social EnvironmentEnvironment

Diversity/MulticulturalDiversity/MulticulturalAging/Graying of Aging/Graying of

AmericaAmericaTwo Income FamiliesTwo Income FamiliesSingle Parent FamiliesSingle Parent Families

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U.S. Population U.S. Population ShiftsShifts

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

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Global Global EnvironmentEnvironment

QualityQuality

ProductivityProductivity

ChangesChanges

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Dealing With A Dealing With A Multicultural Multicultural WorkforceWorkforce

Show Respect for Culture/Value of Show Respect for Culture/Value of OthersOthers

Avoid StereotypingAvoid Stereotyping Include All Workers in Include All Workers in

AcculturalizationAcculturalization Be Empathetic But Be YourselfBe Empathetic But Be Yourself Avoid Imposing Your Culture/Values Avoid Imposing Your Culture/Values

on Otherson Others

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World Population World Population MilestonesMilestones

0123456789

Billions of People

1804 1927 1960 1974 1987 1999 2013 2028 2054

Source:USA Today

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Evolution of Evolution of American BusinessAmerican Business

Agricultural/ManufacturingAgricultural/Manufacturing

Service IndustriesService Industries

Future???Future???