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Chapter 1What Is Business?

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Defining Business and Profit◦ Key Concepts

Businesses

Profit

Not-for-profit organizations

Risk

Introduction

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The Industrial Revolution and the Growth of the Factory System in the United States◦ Key Concepts Factory system

Specialization of labor

The Railroad Era◦ Key Concepts Laissez-faire system

Market domination

Antitrust policies

The Evolution of Business in the United States (cont’d)

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The Assembly Line Era, Speculation, and the Great Depression

The Post-World War II Period: International Institutions

The Globalization Era

The Evolution of Business in the United States (cont’d)

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The New Society of Knowledge Workers◦ Key Concepts

New economy

Knowledge workers

The Evolution of Business in the United States (cont’d)

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Economic Resources◦ Scarce Land, Labor, Capital, and Technology

The Free Enterprise, or Capitalist, System◦ Demand, Supply, and Price

Theory or law of demand

Price inelastic demand

Price elastic demand

Theory or law of supply

Price inelastic supply

Price elastic supply

Market clearing, or equilibrium, price

Types of Economic Systems and Their Impact on Business

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The Free Enterprise, or Capitalist, System◦ Demand, Supply, and Price Shortage

Surplus

◦ Private Property and Property Rights

Types of Economic Systems and Their Impact on Business (Cont’d)

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The Free Enterprise, or Capitalist, System◦ Product Life Cycle Theory

◦ Degrees of Competition

Market structure

Pure competition

Monopoly

Imperfect competition

Firm concentration ratios

Barriers to competition

Patents, Licensing, and tariffs

Types of Economic Systems and Their Impact on Business (Cont’d)

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The Free Enterprise, or Capitalist, System◦ Degrees of Competition Oligopoly

Monopolistic Competition

Product differentiation

Types of Economic Systems and Their Impact on Business (Cont’d)

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The Command, or Planned, Economic System◦ Key Concept

State Owned Enterprises

The Mixed Economic System◦ Key Concept

Privatization of State Owned Enterprises

The Transition Economies◦ From Command and Socialist to Free Market System

Types of Economic Systems and Their Impact on Business (cont’d)

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How Economic Performance Is Measured◦ Key Concepts Outputs

Inputs Land

Labor Entrepreneurs

Capital Money (financial capital)

Capital goods (physical capital)

Technology

Production of Goods and Services

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Business Must Provide Value to Customers◦ Not-for-Profit

Public Broadcasting System

National Public Radio

State Universities

◦ Private Sector

Investors

Managers

Employees

Suppliers

Society

Measuring Business Performance

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Maximizing Profit and Shareholder Wealth

Measuring Business Performance (cont’d)

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Measuring Consumer Confidence Consumer Confidence Index

Conference Board

Consumer Confidence Survey

The Consumer Knows Best

Consumer Demographics and Psychographics

◦ Key Concepts Target group

Market segmentation

Psychographics

Cultural Diversity

◦ Key Concept Culture

Diverse Workforce

Consumer Demand for Goods & Services

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Measuring Gross National Product (GNP),

Gross National Income (GNI), and

Gross Domestic Product (GDP)◦ Key Concepts

Consumption

Investment

Government expenditure

Net exports

National Output of Goods and Services

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National Output of Goods and Services

The Components of U.S. GDP, 2017

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Measuring Gross National Product, Gross National Income, and Gross Domestic Product (cont’d)◦ Key Concepts

Nominal GNI, GNP, or GDP

Real GNI, GNP, or GDP

Real National Output of Goods & Services

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Real GDP =Nominal GDP

GDP deflator

Measuring Gross National Product, Gross National Income, and Gross Domestic Product (cont’d)◦ Key Concepts

Nominal GNI, GNP, or GDP

Real GNI, GNP, or GDP

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Exhibit 1.7 U.S. Nominal and Real GDP, 2007-2016 (US$ billions)

Business Cycles

Demand for Goods and Services (Cont’d)

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Innovations in Information Technology◦ Key Concept Bandwidth

Smartphones

E-Business◦ Examples Alibaba.com

Amazon.com

◦ Key Concepts B2C

B2B

The Digital Era

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Impact of IT on Globalization, Culture, Society, and Politics◦ Helping developing countries

A Better Life Foundation

Social media

The Digital Era (cont’d)

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Private Versus Public and Not-for-profit Sector Functional Areas Include:

◦ Accounting

◦ Consulting

◦ Finance

◦ Information Systems◦ International Business

◦ Management◦ Marketing◦ Supply Chain

Careers in Business

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Websites that focus on business careers include:◦ Careers in Business

◦ Major Private Business Websites (Like Bechtel’s)

Careers in Business (cont’d)

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Largest Company by Revenue in Each State 2015

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Chapter 1 Exhibits

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