The Fundamentals of Business and Economics

1. The Fundamentals of Business and Economics Chapter 1 ©2007 Prentice Hall

2. Chapter 1 Objectives After studying this chapter, you will be able to: • Define what a business is and identify four vital social and economic contributions that businesses make. • Differentiate between goods-producing and service businesses, and list five factors contributing to the increase in the number of service businesses. • Differentiate between a free-market system and a planned system. ©2007 Prentice Hall

3. Chapter 1 Objectives, cont. • Explain how supply and demand interact to affect price. • Discuss the four major economic roles of the U.S. government. • Explain how a free-market system monitors its economic performance. • Identify five challenges you will face as a business professional in the coming years. ©2007 Prentice Hall

4. How this Course Will Help Your Career • Understand what it takes to be an entrepreneur • Learn the lingo • Develop soft skills • Learn about career opportunities • Understand the role business plays in society • See the business world through the eyes of a business rather than a consumer ©2007 Prentice Hall

5. What is Business? For-Profit Non-Profit Money Motive Social Service Ethical Conduct Efficiency Effectiveness Social Responsibility ©2007 Prentice Hall

6. Web 2.0 • Definition • Activities: • Blogging • Podcasting • Wikis • Newsfeeds • Tagging • Virtual Worlds ©2007 Prentice Hall

7. Types of Business Goods Producing Business Service Business Capital Intensive Labor Intensive ©2007 Prentice Hall

8. Why is the Service Sector Growing? • More disposable income. • Changing demographic patterns and lifestyle trends. • Support complex goods and new technology. • Professional advice. ©2007 Prentice Hall

9. Economics ©2007 Prentice Hall

10. Factors of Production ©2007 Prentice Hall

11. Economic System Scarce Resources Human Resources Natural Resources Capital Entrepreneurs Knowledge Factors of Production Goods Services ©2007 Prentice Hall

12. Types of Economic Systems Free-Market System Planned System Mixed Capitalism Capitalism Socialism Communism Privatization ©2007 Prentice Hall

13. $35 $30 $25 $20 $15 $10 Not enough demand D Right price makes supply & demand equal E Price S Not enough supply 10 15 20 25 30 Pairs of blue jeans (quantity) Supply and Demand ©2007 Prentice Hall

14. Free-Market Competition Pure Competition Monopoly Oligopoly Monopolistic Competition ©2007 Prentice Hall

15. Competitive Advantage • Price • Speed • Quality • Service • Innovation ©2007 Prentice Hall

16. Role of the Government • Foster competition • Regulate and Deregulate industries • Protect Stakeholder and Stockholder’s rights • Contribute to economic stability ©2007 Prentice Hall

17. Economic Indicators • Interest Rates • Unemployment Rates • Housing Data • Industrial Productivity ©2007 Prentice Hall

18. Inflation vs. Deflation Inflation Purchasing Power Deflation Consumer Price Index (CPI) ©2007 Prentice Hall

19. Producer Price Index (PPI) • Gross Domestic Product (GDP) • Gross National Product (GNP) • Globalization ©2007 Prentice Hall

20. Challenges of Globalization • Products and Services • Managing Small Business (Entrepreneurship) • Globalization and Workforce Diversity • Ethics and Social Responsibility • Technology and Electronic Commerce ©2007 Prentice Hall