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Understanding the Fundamentals of Business and Economics

Understanding the Fundamentals of Business and Economics. Why Study Business?. Learn what it takes to run a business Build business vocabulary Develop workplace skills Learn about a variety of jobs Appreciate today’s business career. What Is a Business?. For-Profit Money motive

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Understanding the Fundamentals of Business and Economics

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  1. Understanding the Fundamentals of Business and Economics Business In Action 3e

  2. Why Study Business? • Learn what it takes to run a business • Build business vocabulary • Develop workplace skills • Learn about a variety of jobs • Appreciate today’s business career Business In Action 3e

  3. What Is a Business? • For-Profit • Money motive • Not-for-profit • Social service Business In Action 3e

  4. Categories of Business • Producing goods • Capital intensive • Providing services • Labor intensive Business In Action 3e

  5. Manufacturing Construction Agriculture Mining Wholesale and retail Transportation and utilities Finance and insurance Other services Growth in the Service Sector Goods-Producing Sector Service-Producing Sector Business In Action 3e

  6. Why Is the Service Sector Growing? • More disposable income • Changing demographics and lifestyles • Complex goods and technologies • Need for professional advice • Low barriers to entry Business In Action 3e

  7. What Is an Economic System? • Five production factors • Human resources • Capital • Entrepreneurs • Knowledge • Natural resources Business In Action 3e

  8. The New Economy Old Economy New Economy General Characteristics • Physical Assets • Cost Control • Intellectual Assets • Adding Value Technology • Mechanical • Information Workforce • Job-Specific Skills • Transferable Skills • Lifelong Learning Geography • Close to Resources • Near to Collaborators • Near to Competitors Capital • Debt Financing • Venture Capital Business In Action 3e

  9. Types of Economic Systems • Free-market system • Capitalism • Mixed capitalism • Planned system • Socialism • Communism Business In Action 3e

  10. How Does a Free-Market System Work? • Supply and demand • Competition • Government intervention Business In Action 3e

  11. Effects of Higher Airfare on Demand • Increase use of corporate or chartered aircraft • Reduce attendance at conventions and conferences • Use alternative airports • Reduce number of employees traveling • Reduce number of domestic trips • Increase Saturday-night stayovers • Promote teleconferencing and videoconferencing Business In Action 3e

  12. Supply and Demand Relationship • High price reduces demand • Low price reduces supply • Right price balances supply and demand Business In Action 3e

  13. Free-Market Competition • Pure competition • Monopoly • Oligopoly • Monopolistic competition Business In Action 3e

  14. Competitive Advantage • Price • Speed • Quality • Service • Innovation Business In Action 3e

  15. Foster competition Regulate industries Deregulate industries Protect stakeholder’s rights Contribute to economic stability The Role of Government Business In Action 3e

  16. Fostering Competition • Antitrust legislation • Mergers and acquisitions Business In Action 3e

  17. Regulating and Deregulating Industries • Fair competition • Business ethics • Working conditions • Public safety Business In Action 3e

  18. Protecting Stakeholders • Consumer Product Safety Commission (CPSC) • Environmental Protection Agency (EPA) • Equal Opportunity Employment Commission (EEOC) • Federal Communications Commission (FCC) • Federal Aviation Administration (FAA) • Federal Energy Regulation Commission (FERC) Business In Action 3e

  19. Protecting Stakeholders • Federal Highway Administration (FHA) • Federal Trade Commission (FTC) • Food and Drug Administration (FDA) • Interstate Commerce Commission (ICC) • Occupational Safety and Health Administration (OSHA) • Securities and Exchange Commission (SEC) Business In Action 3e

  20. Contributing to Economic Stability • Business cycle • Economic expansion • Economic contraction • Fiscal policy • Revenue and spending • Monetary policy • Interest rates Business In Action 3e

  21. The FED and Money Supply • Reserve requirements • Discount rate • Open-market operations • Selective credit controls Business In Action 3e

  22. Fiscal Policy: Revenues • Income taxes • Real property taxes • Sales taxes • Excise taxes • Payroll taxes Business In Action 3e

  23. Fiscal Policy: Expenditures • Increasing purchases • Creating new programs Business In Action 3e

  24. Monitoring Economic Performance • Interest rates • Housing starts • Unemployment statistics • Durable-goods orders Business In Action 3e

  25. Measuring Price Changes • Consumer Price Index • Purchasing power • Inflation • Deflation Business In Action 3e

  26. Measuring National Output Dollar Value Gross Domestic Product (GDP) Gross National Product (GNP) Final Goods and Services Yes Yes Domestic Businesses Yes Yes Foreign-Owned Businesses Yes No Overseas Operations No Yes Business In Action 3e

  27. Challenges of Globalization • Products and services • Managing a small business • Globalization and workforce diversity • Ethics and social responsibility • Technology and electronic commerce Business In Action 3e

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