Introduction to Business Summary

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Introduction to Business
Chapter 1 (read summary in book)
Businesses provide goods (tangible) and/or (services) to others while operating at a profit. Entrepreneurs risk time and money to start a business in order to make a profit. Higher risk means higher profit, because of the reduced competition. Businesses contribute to the standard of living (amount of goods and services people can buy with the money they have) and the quality of life (general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure and rewards that add to the satisfaction and joy that other goods and services provide). Businesses provide employment (income, wealth) and tax income; this increases the standard of living in a country. Raising the standard of living may lower the quality of life, for example because of more stress. Stakeholders are all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address. For the businesses of the 21st Century it will be a primary challenge to recognize and respond to the needs of their stakeholders. In order to stay competitive outsourcing (contracting other companies to do some/all function of a firm) is done. Loss of jobs is compensated by insourcing. Nonprofit organizations are organizations whose goals do not include making a personal profit for its owners. They use their profit for social causes. Social entrepreneurs manage these. The five factors of production, land, labor, capital, entrepreneurship and knowledge, are the resources used to create wealth. The last two are the most important, because the first three don’t add anything without an entrepreneur starting a business and using them. Therefore a healthy business environment (surrounding factors that help or hinder the development of businesses) is important for a country, the foundation for social benefits. The five elements in the business environment: * The economic and legal environment, make this favorable for businesses by: * Minimize spending, keep taxes and regulation to a minimum * Allow private ownership of businesses

* Minimize interference with the free exchange of goods and services (developing countries) * Passing laws that enable businesspeople to write enforceable contracts. * Establish a currency that’s tradable in world markets * Minimize corruption

* The Technological Environment; creating tools that make work easier, mainly IT * Technology (phones, copiers, medical imaging devices) makes business processes more effective (producing the desired result), efficient and productive (output vs. input). * The growth of E-commerce (buying/selling goods over the internet). Buyer to consumer as well as buyer to buyer. * Being responsive to customers, saving information about past purchases in databases and using this to send fitting advertisements. This opens the door to identity theft, the obtaining of individuals’ personal information for illegal purposes. * The competitive environment, competing by;

* Today’s businesses are customer-driven
* Empowerment (giving frontline workers the responsibility, authority, freedom, training and equipment they need to respond quickly to customer requests) and restructuring * The social environment, influenced by the demography (the statistical study of the human population with regard to its size, density and other characteristics such as age, race, gender and income) affects businesses; * Managing diversity

* Increase in the number of older citizens (opportunity for businesses, social security becomes a problem) * Increase in the number of single-parent families
* The global environment, surrounding all other environmental influences, globalization has grown, with benefits and costs; * War and terrorism, more government money to military, more precautions for businesses. Lessen...
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