Business Principles & Management

1. 1 Chapter 1 - Business and Its Environment Business Management Class- Mr. Sherpinsky Council Rock School District Business Principles & Management

2. Vocabulary • Business • Production • Marketing • Finance • Industrial businesses • Commercial businesses • Service businesses • Industry

3. 1.1 The Nature of Business The Nature of Business

4. Business Activities • An organization that produces or distributes a good or service for profit is a business. • All businesses engage in3 Major Activities: • Production (Manufacturing) • Marketing (Sales) • Finance (Money)

5. First Activity of a Business • Production: involves a company making a product or providing a service for the customer. What do they provide? What types of companies? • Goods: Tangible, made and stored prior to use • Services: Intangible, labor intensive, can’t be made prior to need • Manufacturing companies • Service companies

6. Second Activity of a Business • Marketing: deals with how goods or services that are exchanged between producers and consumers. • That’s everything from purchasing the right raw materials to the actual shipping to wholesaler or retailer markets.

7. Third Activity of a Business • Finance – deals with all money matters related to running a business. That could include things like… • Investments • Purchase of raw materials • Purchase of equipment to produce • Cost analysis and comparisons • What are some other things that involve money in a business?

8. Different Types of Businesses • Two Major Kinds of Businesses • INDUSTRIAL • Industrialfirms- produce goods that are used by other businesses or organizations to make things. • COMMERCIAL • Commercialfirms-firms engaged in marketing, (wholesalers and retailers), in finance, (banks and investments companies), and in providing services (medical offices, fitness centers, and hotels).

9. COMMERCIAL: Manufacturing Businesses that produce goods. • (Tangible) • (Examples): automobile, television m, clothing and shoes • Mills

10. Video Moment: Manufacturing

11. COMMERCIAL: Service Provide assistance to supply a need to a customer • Intangible • Can NOT be produced prior to need • (Examples): doctors, lawyers, travel agents, plumbers, government agencies, etc… • Today service firms far exceed the number of manufacturing firms.

12. Service Companies Can you name some local manufacturing and service companies?

13. Determinates of Business • Supply and Demand • Supply-the number of similar products that will be offered for sale at a particular time and at a particular price. • Demand-refers to the number of similar products that will be bought at a given time at a given price

14. Do you understand? Can you explain? • How does supply and demand effect pricing? • Why is it so important to businesses?

15. Web Quest: Blog and Checkpoint • CHECKPOINT 1.1 • CRITICAL THINKING 1.1

16. MORE Terms to KnowCan you explain them all? • Servicefirm-provides intangible products/ assistance to satisfy specialized needs through skilled workers • Industrialfirm- produce goods that are used by other businesses or organizations to make things. • Commercialfirm-firms engaged in marketing, finance, and furnishing services.

17. Terms to KnowCan you explain them all? • Industry-refers to all businesses within a specific category (auto, medical, music, publishing, advertising)

18. More About Industry • Industry is the term often used to refer to all businesses within a category, i.e., • music industry (instruments, songs, singers) • publishing industry (books, magazines, newspapers) • Government industry (fire, police, state, federal, etc.) • Page 6 shows growth in employment in industries/ businesses. Which has had the most growth?

19. WEB QUEST: OCC • Go to the BLS.gov website • Research employment growth in major industries • Which service industries are projected to have the greatest growth from 2008-2018? • Name top 4!

21. Changes Affecting Businesses 1.2 Goals: Describe how innovations affect businesses Identify the impact global competition has had on U.S. businesses Discuss ways in which businesses can improve their business practices.

22. Key Terms • Innovation • Global competition • Effectiveness • Efficiency • Domestic goods • Foreign goods • Output • Productivity • Downsize • Empowerment

23. INNOVATION1.2 Changes Affecting Business What is Innovation? Steve Jobs: Innovation

24. Innovation • Innovation is something entirely new. • For example: • Natural fibers like cotton and wool • Chemical develops led to synthetic fibers like rayon, nylon, and polyester • Can also affect business operations • Computers used in design and manufacturing • Internet changed relationships, information • Small versus Large has now been equalized

25. Web Quest: Teams: Innovation • Using the Internet • Find an example of eight (8) products or services that used innovation to revolutionize what they offer… Be ready to share with the class!!!

26. Still MORE Terms to KnowCan you explain them all? • ThirdWorldNation-countries that have few manufacturing firms and a population that is generally poor and uneducated to a large degree. • Domesticgoods-products made by firms in the United States. • Foreigngoods-products made by firms in other countries.

27. Impact of Global Competition • What is meant by Global competition? • What is an example of a company falling behind? The ability of profit-making organizations to Compete with other businesses in other countries. The United States automobile manufacturers is an example of an industry that fell behind. How and Why?

28. Global competition is the driving force behind the major decisions made by most large companies today. Ability of businesses from one country to compete with businesses from another country

29. Newly Industrialized Countries • NICs are countries whose economies have not yet reached first world status but have outpaced their developing counterparts. • NICs are nations undergoing rapid economic growth (usually export-oriented). • In many NICs, social upheaval can occur as primarily rural, agricultural populations migrate to the cities, where the growth of manufacturing concerns can draw many thousands of laborers.

30. First World Countries Second World Countries Third World Countries Three Worlds During Cold War Era

31. Barriers for competing globally? Where Do Your Customers Come From?

32. Classroom Activity: Web Quest Web Quest- • Research one of the major retailers you know. • (Wal-Mart, Target, or Sears) • Answer these questions: • What percentage of goods do they sell come from outside the United States? • Name 8 countries they buy from? • Give examples of what types of products they buy from each country

33. Companies must be… • Effective • Efficient To Compete and Survive! What does that mean and how does it occur?

34. Effectiveness • Occurs when an organization makes the right decisions in deciding 3 things: • What products or services to offer to customers. • How to produce the products • How to deliver them to the consumers

35. Efficiency • Occurs when an organization produces needed goods or services • Expected Quality AND • Quickly AND • At a low cost, without wasting time or materials

36. Quality-Quickly-At Lowest Price

37. Focusing on the Right Things • Which of the following actions represents effectiveness and which represents efficiency? • Survey people to see what they like in a product • New equipment was installed to produce more items in less time • A new product is produced by a robot based on customers’ answers to 5 questions

38. Focusing on the Right Things • Which of the following actions represents effectiveness and which represents efficiency. • Survey people to see what they like in a product (Effectiveness) • New equipment was installed to produce more items in less time (Efficiency) • A new product is produced by a robot based on customers’ answers to 5 questions (Efficiency and Effectiveness).

39. About Efficiency Companies MUST BE efficient • Extent of efficiency is measured by output or amount produced within a given time. • Productivity refers to producing largest quantity in least amount of time by using efficient methods an modern equipment. • Workers are more productive when they are • Well equipped • Well trained • Well managed

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41. Total Quality Management • Why is Quality is important to customers • Why is Quality important to retailers • TQM is a commitment to excellence • Baldridge National Quality Award (National honor given annually by federal agency) • Japan’s Quality Award Program is the Deming Award • Recipient of these prestigious awards always show increase in sales.

42. Three Ways Efficiency Can Be Achieved • Specialization • Technology and Innovation • Reorganization

43. Specialization • Employees are training for specific types of jobs rather than general training • Example: General mechanic or workers that specialize in transmission repair, body repair, engine repair, etc. • Specialization builds experts in their field • Improves quality and increases amount produced. • Specialization improves efficiency. • Effectiveness improved by mass production, assembly line production, up-to-date equipment…robots

44. Technology & Innovation • Effectiveness can be improved though advanced technology…equipment, process, & materials. • United States improves efficiency by encouraging invention and innovative ideas from their workers.

45. Reorganization • Most difficult way to increase efficiency • Old way to increase efficiency in the US: • downsize (layoff workers) and • cut back on goods and service offered. • Rethink organization • Redesign the workflow • Recognize employees • EMPOWER the entire team showed improvement in production, quality, morale, and profits. • Reorganizing made US competitive in global market.

46. Web Quest: Blog and Checkpoint • CHECKPOINT 1.2 • CRITICAL THINKING 1.2

47. Video Moment: Shared Future Lisa Gansky - TED January 2011

48. #1 Is Quality Important? • Consumer Reportsmagazine rates consumer products, including cars. • For many years, the annual car ratings listed foreign cars as superior to domestic ones. • BUT DOES QUALITY REALLY MATTER?

49. Ways to Achieve Effectiveness • Focus attention on customers’ needs. • Provide excellent customer service. • Offer high-quality goods and services.

50. The Contributions of Business Growth and Prosperity