part

1
Ferrell Hirt Ferrell
A CHANGING WORLD
FHF
McGraw-Hill/Irwin

part

Business in
a Changing
World CHAPTER 1 The Dynamics of Business and Economics
CHAPTER 2 Business Ethics and Social
Responsibility CHAPTER 3 Business in a Borderless
World
FHF

The Nature of
Business

What is a business?
Individuals or organizations trying to earn a
profit by providing products that satisfy
people's needs.

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1-3

The Nature of
Business

What is a product?
A good or service with tangible and intangible
characteristics that provide satisfaction and
benefits.

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1-4

The Primary
Goal
of Business
Earn a profit
The difference between what it costs to make
and sell a
product and what a customer pays for it.

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1-5

Profit
Is:

The difference between what it

costs to make and sell a
product and what a customer
pays for it

]
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Non-Profit
Organizations
Not all organizations are for-profit businesses
Nonprofit organizations
Provide goods and services but
Do not have the fundamental purpose of
earning profits

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Stakeholde
rs

Customers, employees, investors, government

regulators, community and society. Those that
have a stake in the success and outcomes of a
business are considered stakeholders

]
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1-8

The People and Activities

of Business

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1-9

The Activities of
Business
Management Focus on
employees

Motivating employees
toward business goals

Coordinating employees
actions

Organizing people for

efficiency

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Management: Production
and
Manufacturing
Another element
of
management

Plan activities
Organize staf
Control tasks of
the organization

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Marketing
Focus on satisfying
customers
o
o
o

Determine what products

customers want
Plan and develop products
Determine:
Distribution
Place
Promotion
Price
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1-12

Finance
Finance is the
primary
responsibility of
owners
Obtaining money
Using money

efectively
Accountants,
stockbrokers,
bankers

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1-13

Why Study
Business?
o
o
o

Develop skills for career

success
Understand business activities
Learn the importance of
profitability
Individual businesses
Local and regional impact
Global economic impact

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1-14

Business Impact
Purchase raw materials
Hire employees
Attract capital
Create products
Fuel the global economy
Contribute to society

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1-15

Economics

The Economic
Foundations
of Business

Distribution of resources for the production of

goods and services within a social system

Resources

(sometimes called factors of

production)

Natural resources (land, forests, minerals, water)

Human resources (labor)
Financial resources (capital)
Intangible (good reputation, quality products)
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1-16

Economic Systems
How a society distributes its
resources to produce goods and
services

Central issue of economics

How to fulfill an unlimited demand for goods
and
services with a limited supply of resources

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1-17

Communism
A society in which the people,
without regard to class, own all
the nations resources.

China
North Korea
Cuba

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Socialism
System in which the
government owns and operates
basic industries but individuals
own most businesses.

Sweden
Israel
India
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1-19

Capitalism
Free Enterprise
Individuals own and
operate majority of
businesses providing
goods and services

Australi
a

Japa
n

United
States
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Pure Capitalism vs
Modified Capitalism
Pure
Capitalism

Free
Market

All
economic
decisions
made without
government
intervention

Modified

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1-21

Mixed
Economies

No country practices pure capitalism,

socialism, or communism. Economic systems
can be mixtures and often contain various
elements of government intervention

]
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The Free-Enterprise
System

o Basic individual and business rights

Right to own property

Right to earn profits and use them as

one wishes (within constraints of law)

Right to make business decisions

Right to choose (careers, what

goods/services to purchase, etc.)

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Supply and
Demand

Distribution of resources and

products is determined by
supply and demand
Demand

Number of goods/services consumers buy at a

given price at a specific time

Supply

Number of products businesses will sell at

diferent prices at
a specific time

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Nature of
Competition
Competition

Rivalry among businesses for

consumers dollars

Pure Competition
Many small businesses in same product
market

Monopolistic Competition
Small number of businesses
Little difference in products
Oligopoly
Very few businesses selling a product
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Economic
Cycles &
Productivity
Economic Expansion
Economy is growing and consumers are
spending money

Economic Contraction
Spending declines, layoffs, economy
slows down

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Economic Cycles
Infation
Condition characterized by continuing rise in prices
Recession
Decline in production, employment, and income
Depression
Unemployment very high; consumer spending low;
business output sharply reduced

Unemployment
% of population that wants to work but unable to find
jobs
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Indonesia
Economic
Indicators
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FHF
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Entrepreneurship
Entrepreneur:

An individual
who risks his/her wealth, time and
efort to develop for profit an
innovative product or way of doing
something.
Entrepreneurship requires:
Risk
Innovation
Creativity
Reward
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Ethics & Social

Responsibility
in Business

Business ethics refers to

standards and principles used
by society to define appropriate
behavior at work
Stakeholders increasingly
demand that businesspeople
behave ethically and socially
responsibly
Business reputation depends on
profit and
ethical conduct and social
responsibility

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Can You Learn

Business in a
Classroom?

Yes!!!
To be
successful in
business, you
need:

Knowledge
Skills
Experiences and

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