>>>>>>>> Chapter 1

The Framework of
Contemporary
Business
 n g G oa l s
Learni
1 Distinguish between business and
not-for-profit organizations.
2 Identify and describe the factors of
production.
3 Describe the private enterprise
system, including basic rights and
entrepreneurship.
4 Identify the six eras of business, and
explain how the relationship era-
including alliances, technology, and
environmental concerns-influences
contemporary business.
5 Explain how today’s business
workforce is changing.
6 Describe how the nature of work
itself is changing.
7 Identify the skills and attributes
managers need to lead businesses in
the 21st century.
8 Outline the characteristics that make
a company admired by the business
community.
 u s i n e s s ?
Wh at i s B

Profit-seeking activities and enterprises provide

goods and services necessary to an economic
system.

Profit is the reward for businesspeople who

take the risk involved to offer goods and
services to customers.
 P ro d u cti on
Facto r s of

 Natural Resources
 Capital
 Human Resources
 Entrepreneurship
 e En t er pr i s e
The Pr iv a t

• Capitalism
– Adam Smith is the father of capitalism.
• Economic system determines business
ownership, profits and resources
• Rewards firms for their ability to serve the needs
of consumers
• Minimized government intervention
• Competition is the battle among businesses
for consumer acceptance.
 g h t s i n t h e
Basic Ri e
E n t er p r i s
Private
 re n e u r sh ip
Th e En t r e p
Al t e r n a t i v e

• The risk-taker
• Fuels the U.S. economy
• Provides innovation
• Entrepreneurial thinking is important
inside of large firms.
 t h e H is t o ry
Six E r a s i n
u s i ne s s
of U S B
 el a t i on s h i ps
Ma n a g i n g R
n e c ti on s
through Con

• Relationship Management
– Activities to build and maintain mutually
beneficial ties with customers and other
parties
• Relationship management depends upon
technology.
 A l l ia n ce s
Strategic i ps
rt n e rsh
and Pa

A strategic alliance
is a partnership
A partnership is an formed to create
affiliation of two or a competitive
more companies that advantage for both
help each other parties.
achieve common
goals.
 ’s B u s in es s
To da y
W o r kf or c e

 Dedicated workers who can foster strong

ties with customers

 Capable of high-quality production

 Ability to compete in global markets

 Technically savvy
 o r k f o r c e-
s in th e W
Change u l a t io n
Aging P o p

• By 2030, the number of U.S. workers 65 or older

will reach 72 million.

• Many baby boomers are hitting the peak of their

careers while Generation X and Y are launching
their careers.

• Technology has intensified the hiring challenge

by requiring workers to have ever more
advanced skills.
 W o r k fo rc e -
n g e s i n th e
Cha o l/ D iv ers ity
i n g La b o r Po
Shrin k

• Economists predict the U.S. labor pool could

soon fall short by as many as 10 million people.

• The two fastest-growing ethnic populations in

the United States are Hispanics and people of
Asian origin.

• Blending individuals of different genders,

ethnic backgrounds, cultures, religions,
ages, and physical and mental abilities.
 e s in th e
Chang in g
e-O u ts ou r c
Workfo rc

Offshoring is the
Outsourcing is using relocation of business
outside vendors to processes to lower
produce goods or cost locations
fulfill services and overseas.
functions that were
previously handled
in-house or in-country.
 rk fo rc e s -
i n t he W o
Changes a nd M o b ili ty
Flex ib ility
and Innovation Through Collaboration

• Younger workers are looking to something

other than work-comes-first
• Part-time and temporary workers are
growing
• Collaboration is replacing working alone
• Value risk taking and innovation
 a n a g er
st Century M
The 21

 Critical-thinking
 Creativity
 Ability to lead change
 Vision
 o f C r i ti c a l
Importance t i v i t y
d C r ea
Thinking an

• Critical thinking is the ability to analyze

and assess information to pinpoint
problems or opportunities.

• Creativity is the capacity to develop novel

solutions to perceived organizational
problems.
 a d Ch a n ge
Abilit y to L e

• Guide employees and organizations

through changes

• Managers must be comfortable with tough

decisions.

• Factors that require organizational change

can come from external and internal
sources.
 M a ke s a
What d
a n y A d m i re
C o mp
• Solid profits

• Stable growth

• Safe and challenging work environment

• High-quality goods and services

• Business ethics and social responsibility