Introduction to Business

1. Introduction to Business BSUAD-101#7516: Th 6-923PM, CR-137) (Introduction to Business) is a 3-units introductory course surveying the functions, characteristics, organization, and problemsof business. Transfer credit: CSU,UC,USC Poorna Pal,MS MBA Ph.D. Professor of Geology & Business & Coordinator: Program Review Glendale Community CollegeOffice: SG-152, Ph. Ext 5517 E-mail: ppal@glendale.edu

2. In this “Information Age” the U.S. is increasingly becoming a service economy. Note that Service Providing Jobs • Trade, Transportation and Utilities • Information • Financial Activities • Professional and Business Services • Education and Health Services • Leisure and Hospitality • Other Services • Government a b 8 c • Goods • Producing • Jobs • Natural Resources and Mining • Construction • Manufac-turing 7 6 1 a b Goods producing 8 5 2 7 c 3 Service Providing 4 Goods producing 6 Service Providing 1970 Total Employed: 71 million 5 2007 Total Employed: 137.6 million 4 1 3 • all additional jobs in U.S. since 1970 have been created in economy’s service providing segment; and • most of them are non-governmental jobs. 2 Data source: Bureau of Labor Statistics: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt

3. 3% Natural resources & Mining 2007: 22.2 million goods producing jobs 34% Construction 2007: 115.4 million service providing jobs 63% Manufacturing 22% transportation & utilities 19% Government 5% Other services 3% Information 12% Leisure and hospitality 7% Financial activities 16% Professional & business services 16% Education & health services We are mostly a service economy and most of our jobs are in the private sector. 2007: 137.6 million total non-farm employment = 115.40 million service providing (= 115.42 million private + 22.2 million government ) + 22.2 million goods producing jobs ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt

4. That our labor-force is well-educated (by 2007, almost one in three had Bachelor’s degree or better) reflects this and the fact that employability rises with educational attainment. Data source: Bureau of Labor Statistics (ftp://ftp.bls.gov/pub/special.requests/lf/aat7.txt)

5. Most of this employment growth has been in the economy’s small business sector. And small business owners are hardly an uneducated lot! 4% Not reported 19% Graduate School 24% High School or less 28% Some College 24%Bachelor’s Degree Source: U.S. Census Bureau “Survey of Small Business Owners (SBO): Owner’s Education Levels at Start-Up, Purchase, or Acquisition of the Business” (http://www.census.gov/csd/sbo/edu.html)

6. The aging of our population too poses a problem. Demographics define … 16-64 years (left scale) 70% 14% 65% 12% 60% 10% Proportion of Total Population Proportion of Total Population 65-plus years (right scale) 8% 55% 6% 50% 1940 1950 1960 1970 1980 1990 2000 • the kinds of goods and services that are needed, and • the kinds of goods producers and service providers we can have. Data source: 2008 Economic Report of the Presidenthttp://www.gpoaccess.gov/eop/2008/B34.xls

7. Demographics explain the Asian resurgence 2003 World Population = 6,651 million 12% Sub-Saharan Africa 6% South America 1% Oceania 5% North America 55% Asia (excluding Middle East) 7% North Africa & Middle East 11% Europe 3% Central America & Caribbean • Compared to the 15-65 years old “working • population”, • Europe, North America and Oceania have too many elderly (>65 years old), whereas • Central America & Caribbean, Middle East & North Africa, South America and Sub-Saharan Africa have too many children (<15 years old).

8. Small businesses have high failure* rates. For instance, these Census Bureau data show that only 29% of the 1992 start-ups still existed in 2002! 100% 80% 60% 40% 20% 0% ________________ * “Failure” here encompasses all forms of failure to continue including insolvency, aban-donment, sick-ness, death, closure, sale of business, loss of lease, acts of god etc etc. 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 The 1992 start-ups still alive Scott Shane: “Illusions of Entrepreneurship: The Costly Mythsthat Entre-preneurs, Investors, and Policy Makers Live By “ (Yale University Press, 2008)

9. The confluence of four factors today supports and expands the entrepreneurial opportunities: • Demographics • Education • Globalization and • Information Technology The Rise of China, India & Russia: The Next American Century seeprogress Indian Call Center -1 05:56 From:suprabhathalder

10. Electronic transactions and E-Commerce • Out-sourcingPlay now May 26, 2007video.yahoo.com Advances in Information Technology have aided Trade, Commerce and Globalization, e.g., …

11. Your entrepreneurial effort is likely to succeed if you start it for the following reasons: • You have a passion and love for what you'll be doing, and strongly believe ― based on educated study and investigation ― that your product or service would fulfill a real need in the marketplace. • You are physically fit and possess the needed mental stamina to withstand potential challenges. Less-than-robust health has often been responsible for bankruptcies. • You have drive, determination, patience and a positive attitude. When others throw in the towel, you are more determined than ever. • Failure doesn’t defeat you. It is a "learning process" if you learn from your mistakes, and use these lessons to succeed the next time around. Studies of successful business owners showed they attributed much of their success to "building on earlier failures“. • You thrive on independence, and are skilled at taking charge when a creative or intelligent solution is needed. This is especially important when under strict time constraints. • You like ― if not love ― your fellow man, and show this in your honesty, integrity, and interactions with others. You get along with and can deal with all different types of individuals. Source: “The Seven Pitfalls of Business Failureand How to Avoid Them” by Patricia Schaefer (http://www.businessknowhow.com/startup/business-failure.htm accessed on 8/30/08)

12. A private enterprise system rewards the firm/business for its ability to identify and serve the needs and demands of its customers, and therefore operates in the framework of four basic rights: Private Property Com-petition Freedom of Choice Profits • Right to private property: Every participant has the right to own, use, buy, sell, and/or bequeath most forms of property. • Right to profit: Every firm/business has the right to all profits, after taxes, it earns through its operations/activities. Rights • Right of free choice: Every participant in thesystem has the freedom ofchoice (with regard to jobs,purchases, and investments) • Right to compete: Every parti-cipant has the right to compete freely and fairly in the marketplace.

13. Why public policy needs strategies to promote small/medium-sized enterprises (SME)? • The growth of a vibrant, thriving, highly productive and profitable SME sector is crucial for sustaining our living standards. It creates an abundance of job and investment opportunities. • Appropriate public policies must be therefore designed to remove barriers to SME’s growth and to offer adequate incentives to foster their development. • We need to continually examine if the entrepreneurs and managers at SMEs and their financiers are doing all they can to address the growth challenges. • Rapidly changes in the international regulatory environment require that SMEs understand their implications. Adapted from Path to Prosperity http://www.cme-mec.ca/national/documents/sme_final.pdf