Characteristics of Business

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Characteristics of Business

• Chapter 1

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Nature of Business

• Production Making a product or providing a
  service
• Marketing How goods and services are exchanged
  between producers and consumers
• Finance Deals with all money matters within a
  business

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Nature of Business

• Dynamic, always changing
• Successful businesses foresee change and prepare
  for it.
• Example Xerox

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Global Competition

• The U.S. used to supply the world with goods,
  developed and manufactured in the U.S.
• Over the last 30 years many under-developed
  countries have become industrialized and now
  produce goods for the U.S. and the world.
• Most under-developed countries can produce goods
  at a low price due to lower wages and less
  regulation by governments.

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Focus on Success

• Businesses study themselves to make sure they are
  doing the right things and doing the well.
• Effectiveness Deciding what products and
  services to offer.
• Efficiency Producing the needed goods and
  services quickly and at a low price.

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Effectiveness

• Customer satisfaction.
• Warranties
• Recalls
• Input
• Customer Loyality
• Quality / Price
• Toyota / Honda
• Total Quality Management (TQM).
• Affects all levels of a corporation.

• Making good decisions takes common sense and
  skill
• What people want / need.
• Competition, both domestic and foreign.
• Information gathering.
• Buying habits of customers

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Efficiency

• Producing as much as possible in the least amount
  of time. Without reducing quality.
• Workers are productive when they are
• Well Equipped
• Well Trained
• Well Managed

• Efficiency is achieved in three ways
• Specialization
• Technology and innovation
• Reorganization

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Specialization

• Specialization of labor.
• Workers do their part extremely well.
• Leads to mass production.
• Henry Fords Assembly line

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Technology and Innovation

• Improved technology and equipment
• Improved / new materials
• Improved methods of production

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Reorganization

• Re-Think the way you are doing things
• Cut unprofitable products
• Downsize or Rightsize
• Nissan
• Empower employees
• Generate new ideas
• Let workers decide the best way of doing things
• Cuts the levels and number of managers needed

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Dell Direct (page 12)

• After reading the dell story on page 12 read the
  first 3 questions at the bottom of the page and
  prepare comments for each.

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Economic Wealth

• The U.S. can attribute much of its economic power
  to the strength of U.S. businesses.
• Economic strength can be measured in many ways

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Gross Domestic Product (GDP)

• The total market value of all goods and services
  produced in a year for a country.
• This can be used to compare year to year growth
  or to compare to other countries.
• http//en.wikipedia.org/wiki/World_Economic_Outloo
  k

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Standard of Living

• Individual Wealth
• Individual Income
• Buying Power

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Entrepreneurship

• Small Business
• Start your own business
• Service or retail
• 98 of US businesses are considered small (less
  than 100 employees)
• Small businesses account for about half of the
  GDP
• Internet provide a market for niche businesses,
  no overhead, limited employees, and low start up
  costs.

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Franchise

• Buying a business idea
• Share profits
• Large investment
• Marketing and name included
• Pizza Hut, Subway, McDonalds, Jiffy Libe, Sbarro,
  TCBY, Wendys Budget rent a car, Century 21,
  Goodyear tire centers, and many small businesses.

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Risks

• Management
• Competition
• Pricing
• Economy
• Customer taste changes

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Risks

• 1 out of every 6 small businesses fail within 5
  years of opening. (18)
• 1-1.5 of every 10 franchise business fail within
  5 years of opening. (10 to 15)

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Obligations of Ownership

• TO CUSTOMERS That they may have the best at the
  lowest cost, consistent with fairness to all
  those engaged in production and distribution.
• TO WORKERS That their welfare will not be
  sacrificed for the benefit of others, and in
  their employment relations, their rights well be
  respected.
• TO MANAGEMENT Considering always the interest of
  others.

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Obligations of Ownership

• TO COMPETITORS That there will be avoidance of
  every form of unfair competition.
• TO INVESTORS That their rights and investment in
  the company will be protected and keep them
  informed so they can make decisions based on
  current correct information.
• TO THE PUBLIC That the business will operate
  within all laws and promote the general welfare
  of society.

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Obligations of Ownership

• TO COMMUNITY Do you owe anything to the
  community you operate in, that you grew up in,
  that you like in?
• What can you do