©2007 prentice hall 1-1 the fundamentals of business and economics chapter 1
TRANSCRIPT
©2007 Prentice Hall1-1
The Fundamentals of Business and Economics
Chapter 1
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 Hall1-2
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 Hall1-3
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
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What is Business?
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For-ProfitFor-Profit Non-ProfitNon-Profit
Money MotiveMoney Motive Social ServiceSocial Service
Ethical ConductEthical Conduct
Social ResponsibilitySocial Responsibility
EfficiencyEfficiency EffectivenessEffectiveness
Web 2.0
• Definition
• Activities: Blogging Podcasting Wikis Newsfeeds Tagging Virtual Worlds
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Types of Business
Goods Producing Business
Service Business
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Capital Intensive Labor Intensive
Why is the Service Sector Growing?
• More disposable income.
• Changing demographic patterns and lifestyle trends.
• Support complex goods and new technology.
• Professional advice.
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Economics
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Factors of Production
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Economic System
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Goods Services
HumanResources
NaturalResources
Capital KnowledgeEntrepreneurs
Factors of Production
ScarceResources
Types of Economic Systems
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CapitalismMixed
CapitalismSocialism Communism
Privatization
Free-MarketSystem
PlannedSystem
Supply and Demand
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10 15 20 25 30
Pairs of blue jeans (quantity)
Pri
ce$35
$30
$25
$20
$15
$10
Not enough demandD
Right pricemakes supply & demand equal
E
Not enough supply
S
Free-Market Competition
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Competitive Advantage
• Price
• Speed
• Quality
• Service
• Innovation
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Role of the Government
• Foster competition
• Regulate and Deregulate industries
• Protect Stakeholder and Stockholder’s rights
• Contribute to economic stability
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Economic Indicators
• Interest Rates
• Unemployment Rates
• Housing Data
• Industrial Productivity
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Inflation vs. Deflation
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InflationInflation DeflationDeflation
Consumer Price Consumer Price Index (CPI)Index (CPI)
Purchasing PowerPurchasing Power
Producer Price Index (PPI)
• Gross Domestic Product (GDP)
• Gross National Product (GNP)
• Globalization
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Challenges of Globalization
• Products and Services
• Managing Small Business (Entrepreneurship)
• Globalization and Workforce Diversity
• Ethics and Social Responsibility
• Technology and Electronic Commerce
©2007 Prentice Hall1-20