Business in A Global Environment

Part 1
Business in a
Global
Environment
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 1
Business: 2005
and Beyond
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Distinguish between business and not-for-profit
organizations and identify the factors of production.
2. Describe the private enterprise system and explain
how competition and entrepreneurship contribute to
the system.
3. Identify the six eras of business and explain how the
relationship era influences contemporary business.
4. Describe how technology is changing the way
businesses operate and complete.
5. Relate the importance of quality and customer
satisfaction to efforts to create value for customers.
6. Explain how productivity affects competitiveness in the
global market.
1-3 Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
7. Describe the major trends that challenge managers’
skills for managing and developing human resources.
8. Identify the skills that managers need to lead
businesses in the new century.
9. Discuss the importance of good business ethics and
social responsibility in business decision making.
What is Business?
 All profit-seeking activities
and enterprises that provide
goods and services
necessary to an economic
system.
Profits—rewards for
businesspeople who take
the risks involved to offer
goods and services to
customers.
Not-for-Profit Organizations
 Businesslike establishments that have

primary objectives other than returning
profits to their owners.
For example:
The Corporate Angel Network: A Not-
for-Profit Organization providing flights to
cancer patients in need
Factors of Production
 Four basic inputs for effective operation:
Six Eras in the History of Business
 The Colonial Period
Primarily agricultural
Prior to 1776
 The Industrial Revolution

Mass productions by semi-skilled workers,
aided by machines.
 1760-1850
 The Age of the Industrial Entrepreneur
Advances in technology and increased
demand for manufactured goods, leading
to enormous entrepreneurial opportunities.
Late 1800s.
 The Production Era

Emphasis on producing more goods,
faster, leading to productions innovations
like assembly lines.
Prior to 1920s
The Marketing Era
 Consumer orientation, seeking to understand
and satisfy needs and preferences of
customer groups.
 Since 1950s
Consumer Orientation: marketing used
as a process to determine and satisfy
consumer needs
Branding: creating an identity in
consumer’s minds
The Relationship Era
 Benefits derived from developing

extensive relationships with individual
customers, employees, and suppliers.
Managing the Technology Revolution
 Technology—business applications of
knowledge based on scientific discoveries,
inventions, and innovations.
 Internet—worldwide network of
interconnected computers that, within limits,
lets anyone with a PC or other computing
device, send and receive images and data
anywhere.
World Wide Web—interlinked collection of
graphically rich information sources within
the larger Internet.
From Transaction Management to
Relationship Management
 Transaction management—building and

promoting products in hopes of covering
costs and earning acceptable profits
 Relationship management—collection of
activities that build and maintain ongoing,
mutually beneficial ties between a business
and its customers and other parties.
Strategic Alliances and Partnerships
 Businesses must form partnerships with
other organizations to take full advantage of
available opportunities.
 Partnership: an affiliation of two
or more companies with the
shared goal of assisting each
other in the achievement of
common goals
 Strategic alliance: partnership
formed to create a competitive
advantage for the
businesses involved
Creating Value through Quality and
Customer Satisfaction
 Value—customer’s perception of the balance
between the positive traits of a good or service
and its price.
 Customer satisfaction—ability of a good
service to meet or exceed a buyer’s needs and
expectations.
Competing in a Global Market
 Companies must
continually search
for both the most
efficient
manufacturing sites
and the most
lucrative markets for
their products.
 The world’s 10 most
valuable brands
 Top-10
trading
partners with
the U.S.
Productivity: Key to Global
Competitiveness
 Productivity describes the relationship
between the number of units produced and
the number of human and other production
inputs necessary to produce them.
Total Output (goods or services produced)

=
Productivity Input (human/natural resources, capital)
 Gross Domestic
Product
(GDP) The sum
of all goods and
services
produced within
a country’s
boundaries.
 Nations with the
highest GDP
Developing and Sustaining a World-Class
Workforce
 A skilled and knowledgeable workforce is an
essential resource for keeping pace with the
accelerating rate of change in today’s
business world.
Preparing for Changes in the Workforce
 In the coming decades, companies will face
several trends that challenge their skills for
managing and developing human resources.
 Aging of the population.
 Shrinking labor pool.
 Increasingly diverse workforce.
 The changing nature of work.
 The new employer-employee partnership.
 The Changing Nature of Work
Outsourcing—Contracting with another
business to perform tasks or functions
previously handled by internal staff members
Reaping the Benefits of Diversity
 Blending individuals of different ethnic

backgrounds, cultures, religions, ages,
genders, and physical and mental abilities
can enrich a firm’s success.
Wanted: A New Type of Manager
 Companies look for managers who are
intelligent, highly motivated people with the
ability to create and sustain a vision of how
an organization can succeed.
Vision
Critical Thinking
Creativity
Ability to Steer Change
 Vision: the ability to perceive marketplace
needs and what an organization must do to
satisfy them
 Critical Thinking: ability to analyze and assess
information in order to pinpoint problems or
opportunities
 Creativity: capacity to develop novel solutions
to perceived organizational problems – to see
better and different ways of doing business
 Ability to Steer Change: Must guide
employees and organizations through the
changes brought about by technology,
marketplace demands, and global competition
Managing Ethics and Social
Responsibility
 Business Ethics—conduct and moral values
involving right and wrong actions arising in
the work environment.
 Social Responsibility—a management
philosophy that highlights the social and
economic effects of managerial decisions.
 Companies enhance their image and
relationship with society by participating in
social responsibility programs
What Makes a Company Admired?
 Solid profits?
 Stable growth?
 Safe and challenging work environment?
 Commitment to social responsibility?
 You decide!

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Part 1

 Businesslike establishments that have

 The Industrial Revolution

 The Production Era

 Benefits derived from developing

 Transaction management—building and

Total Output (goods or services produced)

 Blending individuals of different ethnic

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