Chapter 1

1. Chapter 1 Current Issues in Contemporary Business

2. What is Business? All profit-seeking activities and enterprises provide goods and services necessary to an economic system. Profit is the reward for businesspeople who take the risk involved to offer goods and services to customers.

3. What is Business? Accounting definition of profit: Revenue – expense • Serves as a primary motive to start business and expand them. • Without profits, no business can survive. • To be successful in the long run, companies must behave ethically at every aspect.

4. Not-for-Profit Organizations • Business like establishments that have primary objective to provide public service other than returning profits to their owners. • For example:The Corporate Angel Network: A Not-for-Profit Organization providing flights to cancer patients in need • Private sector, such as libraries, business associations, charitable and religious organizations, and most college and universities (Ex- BRAC, Ibn Sina Trust) • Public sector, such as Government agencies, political parties and labor unions (BRDB- Bangladesh Rural Development Board) • Sources of fund??

5. Not-for-Profit Organizations

6. Factors of Production • Natural Resources- agricultural land, building sites, forests and mineral deposits. • Capital- technology, tools, information, and physical facilities. • Human Resources- Effective, well-trained human resources. • Entrepreneurship- the willingness to take risks to create and operate a business. An entrepreneur is someone who sees a potentially profitable opportunity and then devises a plan to achieve success in the marketplace and earn those profits. • An economic system is a system for producing, distributing and consuming goods and services, including the combination of the various institutions, agencies, consumers, entities or even sectors, that comprise the economic structure of a given society or community. It also includes how these various agencies and institutions are linked to one another, how information goes between them, and the social relations within the system. Among actual economic systems, today the dominant form of economic organization at the global level is based on capitalist mixed economies. • Economic systems require certain inputs for successful operation and production-

7. Factors of Production

8. The Private Enterprise System • Economic system determines how goods and services are produced, distributed, and consumed. • The Private Enterprise System is an economic system that rewards firms for their ability to serve the needs of consumers & minimizes government intervention. • Communism is another example of an economic system where there is government controls on business ownership, profits and resources.

9. The Private Enterprise System Capitalism – another name for private enterprise system. Adam Smith is the father of capitalismin his 1776 book, The Wealth of Nations, in which he described that an economy is best regulated by the “invisible hand” of competition, the battle among businesses for consumer acceptance. Failure to have competitive differentiation leads businesses to collapse. • Competitive differentiation- the unique combination of organizational abilities, products, and approaches that sets a company apart from competitors in the minds of consumers.

10. Basic Rights in the Private Enterprise

11. Basic Rights in the Private Enterprise Private property- Every participant has the right to own, use, buy, sell, and bequeath most forms of property, including land, buildings, machinery, equipment, patents on inventions, individual possessions, and intangible properties. Profits-guarantees business owners the right to all profits—after taxes—they earn through their activities. Freedom of choice- a private enterprise system relies on the potential for citizens to choose their own employment, purchases, and investments. They can change jobs, negotiate wages, join labor unions, and choose among many different brands of goods and services. Competition- permits fair competition by allowing the public to set rules for competitive activity. U.S. government has passed laws to prohibit “cutthroat” competition—excessively aggressive competitive practices.

12. The Entrepreneurship Alternative • Entrepreneur- person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business. • Fuels the economy • Provides innovation • Creates employment or self-employment • Entrepreneurial thinking is important inside of large firms for flexibility, innovation and new market opportunities. This is called intrapreneurship. • Ex-Throneburg runs his family’s North Carolina sock- manufacturing firm, Thorlo.

13. Strategic Alliances and Partnerships A strategic alliance is a form of partnership, formed to create a competitive advantage for both parties. A partnership is an affiliation of two or more companies that help each other achieve common goals. Ex- eBay or Amazon, may team up with traditional retailers.

14. Today’s Business Workforce* A skilled and knowledgeable workforce is an essential resource for keeping pace with the accelerating rate of change in today’s business world. • Employers need Dedicated workers who can foster strong ties with customers • Capable of high-quality production • Ability to compete in global markets • Technologically conscious and focussed • Foundation of firm’s competitive differentiation

15. Changes in the Workforce-Outsourcing* Not only is the workforce changing, but so is the very nature of work. Manufacturing used to account for most of U.S.annual output, but the scale has now shifted to services such as financial management andcommunications. Outsourcing is using outside vendors to produce goods or fulfill services and functions that were previously handled in-house or in-country. Ex- call center service from India Offshoring is the relocation of business processes to lower cost locations overseas. include both production and services. Ex-. China, India

16. Innovation Through Collaboration* • Collaboration i.e. team work is replacing working alone • Employers value risk taking and innovation • The relationship between employees and workers needs to be a valuable partnership that drives innovation through collaboration. • Ex- A successful result of “gab sessions”- Epcot Center’s (theme park, Florida) spacecraft simulator by Walt Disney.

17. The 21st Century Manager* • Vision: the ability to perceive marketplace needs and what an organization must do to satisfy them • Critical Thinking: ability to analyze and assess information in order to pinpoint problems or opportunities • Creativity: capacity to develop novel solutions to perceived organizational problems – to see better and different ways of doing business • Ability to Lead Change: Must guide employees and organizations through the changes brought about by technology, marketplace demands, and global competition

18. What Makes a Company Admired* • Solid profits • Stable growth • Safe and challenging work environment • High-quality goods and services • Business ethics and social responsibility. • Criteria for making the list include innovation, people management, use of corporate assets, social responsibility, quality of management, and quality of products and services.

19. What Makes a Company Admired • Business Ethics—conduct and moral values involving right and wrong actions arising in the work environment. • Social Responsibility—a management philosophy that highlights the social and economic effects of managerial decisions. • Companies enhance their image and relationship with society by participating in social responsibility programs.