What to Know: Chapter 1

What was the RELATIONSHIP era, and what time frame did it fall in?

(Now): Modern firms seek to build long-term relationships. Satisfied customers can turn to advocates and spread the word with credibility. Technology was used to gather data on customer to serve.

What are the four factors of production?

- Natural resources - Capital - Human resources - Entrepreneurship

What is the SOCIAL environment?

Embodies the values, attitudes, customs, and beliefs shared by groups of people. • Values - Attitudes - Customs - Beliefs • Demographics • Diversity - Marketing & Workforce • Aging population • Rising worker expectations • Ethics & Social Responsibility

What is BLEEDING EDGE?

Launching products too far ahead of the market and, as a result, experiencing failure.

Who are ENTREPRENUERS?

People who risk their time, money, and other resources to start and manage a business.

How does ENTREPRENEURSHIP effect the economy?

People who take the risk of launching and operating their own businesses, largely in response to the profit incentive. Creating a tidal wave of opportunity by harnessing the other factors of production. The key ingredient is economic freedom: freedom of choice (whom to hire, for instance, or what to produce), freedom from excess regulation, and freedom from too much taxation. Protection from corruption and unfair competition is another entrepreneurial "must." Ex: Risk takers, largely in response to profit motive

What is the QUALITY OF LIFE?

The overall sense of well-being experienced by either an individual or a group.

What is a MULTI-PRONGED THREAT?

War, terrorism, disease, and natural disasters have taken an economic toll globally.

A country's changing demographics can affect trends in consumer preferences. For example, the increase in the U.S. Hispanic population could increase the need for Spanish-language marketing, and in turn, the need for Spanish-speaking marketers. This is an example of how _________ can affect the job market.

business trends

Brands that disregard trends in the _______ environment are often ridiculed for being insensitive and risk being "canceled" (aka boycotted) by consumers. An example of this is when PepsiCo aired a commercial showing Kendall Jenner handing a can of Pepsi to a policeman in full riot gear during a staged protest. This commercial aired briefly during the initial Black Lives Matter protests in 2017.

social

Subway is the most popular fast food chain in the world, but recent health trends in the United States, such as the demand for gluten-free, locally-sourced, and organic ingredients, have decreased its popularity in some countries. This is an example of how Subway is facing pressure from the ________ environment.

social

What is THE WORKFORCE ADVANTAGE?

• Finding and holding the best talent contributes to a firm's competitive edge • Investing in worker satisfaction yields tangible, bottom-line results • Excellent product and superb top management also play major roles in employee satisfaction

What was the INDUSTRIAL REVOLUTION era, and what time frame did it fall in?

(1750-1850): Technological advances fueled rapid industrialization in America. Mass production took hold, huge factories replaced artisan workshops. Factories hired big numbers of semi-skilled workers who could do limited tasks. Loss of individual ownership and personal pride.

What was the MARKETING era, and what time frame did it fall in?

(After WWII): Businesses developed brands to differentiate their products from competitors. This is where the marketing concept emerged, and the power shifted from the producers to the consumers.

What was the PRODUCTION era, and what time frame did it fall in?

(Early 1900s): Businesses refined production and created greater efficiencies. Jobs became more specialized, increasing productivity, and lowering costs and prices. The customer was not the focus. HARD SELL: aggressive persuasion designed to separate consumers from their cash

What was the ENTREPRENEURSHIP era, and what time frame did it fall in?

(Second half of 1800s, 1850-1900): Large-scale entrepreneurs emerged and built business empires. As referred, they raised the overall standard of living. Many also dominated their markets, forcing out competitors, manipulating prices, exploiting workers, and decimating the environment. Later on, the government came in and regulated to protect consumers and workers.

What is FREE TRADE?

An international economic and political movement designed to help goods and services flow more freely across international boundaries.

What is the GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)?

An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide. Reduce trade restrictions worldwide.

What is a BUSINESS?

Any organization or activity that provides goods and services in an effort to earn a profit.

What is the TECHNOLOGICAL environment?

Any tools that businesses can use to become more efficient and effective. But more specifically, in today's world, business technology usually refers to computers, telecommunications, and other digital tools. • Incredible advancements in travel, banking, music • E-commerce • Business-to-business selling

What is BUSINESS TECHNOLOGY?

Any tools—especially computers, telecommunications, and other digital products—businesses use to become more efficient and effective.

What is E-COMMERCE?

Business transactions conducted online, typically via the internet.

What is a NONPROFIT?

Businesslike establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain. − Often focus on health, human services, art, religion, and culture − Can contribute to a community's economic stability and growth

What is the COMPETITIVE environment?

Companies develop long-term, mutually beneficial relationships with customers. Customer satisfaction is important and the key to value is quality.

U.S. President Donald Trump attempted to persuade U.S. auto manufacturers to move their factories from Mexico back to the United States. Although some companies did make the move, other companies were more persuaded by the abundant, cheap labor available and chose to ignore calls to bring production back to the United States. These companies are able to seek cheap labor in other countries thanks to the global movement toward _______.

free trade

Sara Blakely founded Spanx, a shapewear manufacturing company, when she was only 27 years old. She worked tirelessly to develop her concept of comfortable and flattering shapewear and was able to secure a patent for her design using the help of a patent lawyer. She eventually partnered with a mill to produce her designs. Which factor of production did the lawyer fulfill in the creation of the business?

human resources

Business also contributes to society through ______________

innovation

Business improves the standard of __________ and quality of ____________

living, life

For its first few years as a public company, Amazon spent more money than it was able to earn, resulting in a financial _______.

loss

Paul's great-grandmother, Betty, worked at a small local textile factory prior to the World War I, where she was tasked with running an industrial sewing machine. There were many other specialized jobs at the factory, but she remained part of the sewing team throughout her career, becoming an expert at using those specific machines. Betty's job was typical of the ______ era.

production

Jackson has operated a small consulting business in his hometown for the past ten years. He pays local and state taxes on behalf of his business, and those taxes were used to construct a new accessible playground. This park has brought joy and contributed to the overall well-being of families with children who have disabilities. This is an example of how businesses can positively impact a community's ________.

quality of life

Starbucks developed a smartphone app that allows consumers to customize their in-store experience: They can build their order right from the app, pay ahead and skip the line, save their favorite items, and earn points for their purchases. Also, Starbucks will sometimes offer special discounts through the app based on their past purchases. This is an example of how businesses operate in the ________ era.

relationship

Leandra owns her own dental practice and pays a certain amount of taxes to the local government based on a percentage of the revenues she earns. She found out that some of this tax money was used to improve the sidewalks in a popular pedestrian area of town. This is an example of how businesses increase a society's _______.

standard of living

Philomena helps run a museum dedicated to the preservation of local history in her hometown. The museum is able to cover the cost of rent, maintenance, and utilities by asking visitors to pay an entry fee and through sales in their gift shop. Refer to Scenario 1.1. Nonprofits like this help increase the _______ of a society.

standard of living

What are the SOCIAL TRENDS?

− Diversity − Aging population − Rising worker expectations − Ethics and social responsibility

Businesses must...

− Seek opportunities and avoid pitfalls − Evaluate risks − Understand their market − Adhere to ethical practices − Meet their goal of generating profits while delivering value to customers

What is the STANDARD OF LIVING?

The quality and quantity of goods and services available to a population.

What is SPEED-TO-MARKET?

The rate at which a new product moves from conception to commercialization. This also provides competitive advantage.

What is VALUE?

The relationship between the price of a good or a service and the benefits that it offers to customers

What is a LOSS?

When a business incurs expenses that are greater than its revenue.

Belinda just started her freshman year of college, but she hasn't yet chosen a major. She likes the idea of working in the hotel industry, but she worries about disruptions similar to what happened during the COVID-19 pandemic. She believes that with the increase in the number of U.S. adults 65 years and older, a job in the healthcare industry would be more stable. Belinda is considering her future career within the context of _________.

business trends

Amazon warehouses increasingly rely on complex machinery and robotics to quickly organize, pick, pack, and ship orders. These large pieces of equipment are an example of the _______ needed for Amazon's operations.

capital

Businesses like Uber rely on smartphone applications to connect their services to consumers. Without the _______ factor of production, Uber would not have been able to change the way consumers interacted with taxi services.

capital

Traditional wired cable TV services are waning in popularity thanks to the rise in internet-based streaming services like Netflix and Disney+. Entertainment companies that traditionally aired their content through cable have responded by launching their own streaming services, like NBC's Peacock TV. NBC's decision to launch this type of service was likely in response to the ________ environment.

competitive

Jamila understands that certain industries, like luxury goods retailing, thrive during strong economic periods. That's why she decided to open a designer boutique in the mid-90s. Her boutique struggled during the Great Recession, but she was able to pivot her operations to focus on lower-cost designer accessories, which allowed her to keep her business afloat. Jamila shows an understanding of how to operate in different ________ environments.

economic

Fernanda grew up baking pastries with her grandmother. After working as a pastry chef for a few years, she decided to open her own bakery using the recipes she learned as a child. Fernanda spent her free time outside of work developing the business plan and used her personal savings and credit cards to purchase supplies and rent space for her venture. Fernanda is an example of a(n) ________.

entrepreneur

Many small steel manufacturing businesses were either integrated or made redundant by Andrew Carnegie's innovations in the steel industry in the late nineteenth century. Eventually, Carnegie would come to control the largest steel operation owned by an individual in the United States. His success is a hallmark of the ________ era.

entrepreneurship

The wool industry depends on many inputs for successful operations: the farmers who raise and sheer the sheep each year, the machines that process the wool into yarn that can be used to make different textiles, and the business owners who use those textiles in their products. Sheep, in turn, need plenty of uncultivated land on which to roam and graze. Refer to Scenario 1.2. These inputs are collectively known as _______.

factors of production

How does CAPITAL effect the economy?

Includes machines, tools, buildings, information, and technology—the synthetic resources that a business needs to produce goods or services. Businesses use money to acquire, maintain, and upgrade their capital. Ex: Man-made resources businesses need to produce goods or services

How do NATURAL RESOURCES effect the economy?

Inputs that offer value in their natural state, such as land, fresh water, wind, and mineral deposits. Must be extracted, purified, or harnessed; people cannot actually create them. The value tends to rise with high demand, low supply, or both. Ex: Iron ore, crude oil, timber, water

How do HUMAN RESOURCES effect the economy?

Encompasses the physical, intellectual, and creative contributions of everyone who works within an economy. As technology replaces a growing number of manual labor jobs, education and motivation have become increasingly important. Ex: Resources—workers—physical, intellectual, creative

What is the GLOBAL environment?

Technology & Free Trade have blurred international boundaries/individual economies around the world. -War, terrorism, disease, and natural disasters

What are DEMOGRAPHICS?

The measurable characteristics of a population. Demographic factors include population size and density, as well as specific traits such as age, gender, and race.

What is a PROFIT?

The money that a business earns in sales (or revenue), minus expenses, such as the cost of goods and the cost of salaries. Revenue minus Expenses equals Profit (or Loss)

The large population of older adults in America will drive an increase in demand for certain services, like healthcare, senior-living facilities, and accessible entertainment. This means that there will likely be ________ opportunities for workers in these fields.

more

The wool industry depends on many inputs for successful operations: the farmers who raise and sheer the sheep each year, the machines that process the wool into yarn that can be used to make different textiles, and the business owners who use those textiles in their products. Sheep, in turn, need plenty of uncultivated land on which to roam and graze. Refer to Scenario 1.2. This land is an example of which factor of production?

natural resources

Melodie runs a small day care center in her neighborhood to help serve families who can't afford the rising cost of childcare. Each month, she must cover the cost of rent, utilities, cleaning supplies, and the salaries for her five employees. To cover these costs, she hosts quarterly donation drives. She also sells T-shirts and other merchandise with designs created by the students to help cover costs. Sometimes she is able to bring in more revenue than she needs, which results in a small profit, which she uses to purchase additional supplies for the daycare center. Melodie is running a ________ business.

nonprofit

Philomena helps run a museum dedicated to the preservation of local history in her hometown. The museum is able to cover the cost of rent, maintenance, and utilities by asking visitors to pay an entry fee and through sales in their gift shop. Refer to Scenario 1.1. Although the museum does not seek profits, it runs like any other business in terms of having to bring in enough money to cover its costs. The museum operates as a(n) ______ business.

nonprofit

The United Way is an international network of nearly 2,000 local affiliates committed to advancing the common good in their communities. Each affiliate is responsible for raising funds to cover their own administrative costs, like rent, utilities, and salaries, plus the funds they plan to disperse in their communities. Sometimes these local affiliates are able to raise more money than they planned, but they must reinvest those funds into their communities or use them to help grow their operations. These affiliates are ______.

nonprofit-seeking

During the global COVID-19 pandemic, governments and health officials encouraged consumers to stay home whenever possible. As a result, many restaurants pivoted their operations to take-out and delivery only, leveraging the services provided by smartphone apps like Grubhub, DoorDash, and Uber Eats. Despite poor economic conditions, these restaurants were able to take advantage of the _______ environment to stay afloat.

technological