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McGraw-Hill/Irwin Understanding Business, 8e. © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh. *. *. Managing Within The Dynamic Business Environment: Taking Risks and Making Profits. *. CHAPTER. 1. *. *. 1- 1. Learning goals.

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  1. McGraw-Hill/Irwin Understanding Business, 8e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. Nickels McHugh McHugh * * Managing Within The Dynamic Business Environment: Taking Risks and Making Profits * CHAPTER 1 * * 1-1

  2. Learning goals • Describe the relationship of business’s profit to risk assumption and discuss how business and nonprofit organizations add to the standard of living and quality of life for all. • Explain the importance of entrepreneurship to the wealth of an economy. • Examine how the economic environment and taxes affect businesses. • Illustrate how the technological environment has affected businesses. • Identify various ways in which businesses can meet and beat competition. • Demonstrate how the social environment has changed and tell what the reaction of the business community has been. • Analyze what businesses must do to meet the global challenge, which includes war and terrorism. • Review how trends from the past are being repeated in the present and what such trends will mean for tomorrow’s college graduate.

  3. Business & Entrepreneurship • Business • Profit • Entrepreneur • Match Risk With Profit • Revenue • Loss • Standard of Living/Quality of Life • Stakeholders • Nonprofit Organizations

  4. Objectives of Business Survival Social Responsibility Profit Growth

  5. Creating Wealth:Factors of Production • Land • Labor • Capital • Entrepreneurship • Knowledge

  6. Business Environment

  7. Economic &Legal Environment • Minimum taxes and regulations • Freedom of ownership • Contract laws • Tradable currency • Elimination/minimization of corruption

  8. Least Corrupt Iceland Finland New Zealand Most Corrupt Bangladesh Chad Haiti Corrupt Countries Source: Transparency International, 2005; www.transparency.org

  9. Technological Environment • Productivity • E-Commerce • Responsiveness to Customer

  10. Identity Theft • Total number of identity theft victims in 2005 – 255,565 • Top four ways how victims information was misused: • Credit card fraud • Phone/utilities fraud • Bank fraud • Employment-related fraud Source: Identity Theft: Victim Complaint Data, 2005, Federal Trade Commission; www.consumer.gov/idtheft

  11. ID Theft—Protective Steps • “Focus on the cheap and easy way to keep an eye on your accounts” • Free Credit Reports • Guard Your Number • Shred • Bug Congress • To pass ultimate protection: A credit freeze anytime you want one. Source: Money, August 2005

  12. Competitive Environment • Customer Expectations • Restructure/Empower

  13. Consumer Trends • U.S. Bottled Water Sales in Past 15 Years Increased more than four-fold to $9.8 Billion • From October 2004 to September 2005, top bottle water flavors were: Blend, Lemon, Lime, and Apple Source: Business & Economic Review, Jan.-Mar. 2002; Beverage Marketing Corporation, bottledwater.org, 2004 stats; Productscan Online; datamonitor.com, November 9, 2005

  14. Social Environment • Diversity/Multicultural • Aging/Graying of America • Two-Income Families • Single-Parent Families

  15. U.S. Household Size Source: U.S. Census Bureau

  16. Buying Power ofDiverse Groups • Women $3,700 Billion • African Americans 761 Billion • Hispanic Americans 686 Billion • Gay Men & Lesbians 610 Billion • Asian Americans 397 Billion • Native Americans 51 Billion Sources: National Organization on Disability Employability; U.S. Pan Asian American Chamber of Commerce; DiversityInc.com; U.S. Census Bureau; The Augusta Chronicle, October 22, 2005; Selig Center for Economic Growth, 2005.

  17. Age • Language • Religion • SexualOrientation 21st CenturyDiversity Issues • Race • Gender • Ethnicity • Disability Source: U.S. Equal Employment Opportunity Commission

  18. Immigration • In 2005, roughly 35 million immigrants lived in the U.S. as compared to less than 25 million 10 years ago. • According to a November 2005 poll, 60 percent of Americans favor a barrier built along the US-Mexico Border. • About 49 percent believe that a child born to an illegal alien in the U.S. should be granted a US citizenship Source: Center for Immigration Studies; RasmussenReports.com

  19. Older Americans Working Source: USA Today

  20. Americans Living Longer • U.S. life expectancy rises to a record high 77.9 years • The number of deaths dropped by 50,000 in 2004 from 2003, the steepest decline since 1938 • By 2005, about one in eight Americans will be 65 or older. By 2025, it will be nearly one in five. Source: Investor’s Business Daily, December 8, 2003; Cumberland Times-News, April 20, 2006; U.S. Centers for Disease Control and Prevention; U.S. Census

  21. Exurbs: Growth of Outer Suburbs • Northeasterners are moving south and west, and west coast residents are moving inland. • The states that gained the most residents: Florida, Arizona, Nevada • The states that lost the most residents: New York, California, Illinois Source: Cumberland Times-News, April 21, 2006; U.S. Census Bureau

  22. Global Environment • International Competition and Free Trade • Improvements in Transportation and Communication • War & Terrorism • Global Changes

  23. The EconomicCost of Disaster DisasterCosts Hurricane Katrina – 2005 (estimate)$ 200 B Kobe, Japan Earthquake -- 1995 100 B September 11, 2001 Attacks 70 B Northridge, CA Earthquake – 1994 44 B Hurricane Andrew – 1992 35 B Source: Business 2.0 , November 2002; MSNBC.com, September 10, 2005.

  24. Does Global ExperienceHelp Your Career? NoResponse 5% 19% 56% Unnecessary Very Helpful Somewhat 20% Source: USA Today

  25. Evolution ofAmerican Business • Agricultural/Manufacturing • Service Industries • Future???

  26. Trends in Business • Rise of Information & Communication Technology • Globalization • Doing Business 24/7 • Educated Consumers • Aging Workforce • Increasing Diversity • Pyramid vs. Web • Self-Directed, Empowered Employees • Communication Skills • Decision-Making Skills • Teamwork • Leadership • Continual Learning Source: Keying In- Newsletter of the National Business Education Association, March 2003

  27. Leveraging Diverse Workforce • According to the Society for Human Resources’ survey, about 70 percent of the respondents actively leverage workforce diversity through: • Ensuring leadership development programs reach all employees (40%) • Meeting the needs of diverse customers (39%) • Integrating diversity into the organization’s business strategy (35%) • Increasing innovation by tapping employees of all backgrounds (34%) Source: SHRM Weekly Survey, August 3, 2004

  28. Skill Level Required 58% Average Skill Level: 3.6 40% 2% Level 2 Level 4 Level 5 Level 6 Level 3 Level 1 Source: Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post

  29. Current Skill Level 70.5% Average Skill Level: 2.6 16.1% 6.6% 6.8% Level 1 Level 2 Level 3 Level 4 Level 5 Level 6

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