better business vii part 2 starting and structuring a business 132 small business and the...

Better Business

Mary Anne Poatsy

Kendall Martin

PEARSON EDUCATIONAL INTERNATIONAL

CONTENTS

^ContentsVisual Walk-Through xx

Prologue P-l

PART 1 Looking at the BusinessEnvironment 2

"fl Business Basics 2

The Business Landscape 3-5Benefits of Businesses 3Goods and Services 4The Factors of Production 5

Common Business Challenges andOpportunities 6-14

Competition 6BizChaf: Apple: Taking a Bite Out of Microsoft? 7Social Environment 8Globalization 10Technological Changes 11

Types of Businesses 15-18Local and Regional Businesses 15National Businesses 16Multinational (International) Businesses 17

TOP 10: Forbes'Top 10 Small National Companiesof 2007 18

Types of Business Ownership 19-21Sole Proprietorship 19Partnership 20Corporation 20ON TARGET: Nantucket Nectars: Tom and TomPartnership 20Limited Liability Company 21The Players in Business Ownership 21

Taking Business Personally 22-23

Chapter Summary 24Key Terms 25Self-Test 26-27Team Time 28Ethics and Corporate Social Responsibility 29Web Exercises 29

Economics and Banking

Economics Basics 31-34Economics Defined 31Different Types of Economic Systems 32Business and Economics 34

Determining Price: Supply andDemand 35-41

Supply 36Demand 37Factors That Determine Price 37Factors That Shift Supply 38Factors That Affect Demand 39ON TAKGET: Nintendo Wii 41

Degrees of Competition 42-44Monopoly 42Oligopoly 43Monopolistic Competition 43Perfect Competition 44

Economic Indicators 45-49The Gross Domestic Product 45TOP 10: Countries by GDP, 2007 46Consumer and Producer Price Indexes 46BizChat: How Much Money Do You Need toGet By? 47The Unemployment Rate 48Productivity 49TOP 5: Countries by Productivity, 2006 49

Government and the Economy 50-55Economic Policies 50Fiscal Policy 51Monetary Policy 51Open Market Operations 53The Discount Rate 54Reserve Requirements 54


30

VI CONTENTS

Ethics in Business 62 ~

Ethics: The Basics 63-66Ethics Defined 63Systems of Ethical Conduct 63Personal Ethics 64BizChaf: Can Living Ethically Make You Happy? 66

Personal Ethics Meets Business Ethics 67-70You as a Person and as an Employee 67Identifying a Company's Ethics 69

Corporate Social Responsibility 71-77The Five Pillars of CSR 7 l 'The Conflict of CSR in the Business Environment 73The Benefits of CSR 74Measuring CSR 74

TOP 10: Fortune's Most AdmiredCompanies, 2008 75The Challenges of CSR 75The Effects of CSR on Society 76The Effects of Individuals on CSR 77

Dangers of a Weak Ethical Focus 78-81Legal Regulations and Legal Compliance 79Recovering from Weak Ethical Conduct 80

Business Opportunities Created by EthicalNeeds 82-84

Creating New Markets with an Ethical Focus 82Businesses Going Green 83TOP 10: "Greenest" Companies in the World 83

How Businesses Develop an EthicalEnvironment 85-87

Ethical Focus from the Start 85ONI TARGET: Playing the Ethics Game 86Ethical Focus Every Day 87


Reasons for the Rise in Globalization 98Global Business Trends 99TOP 10: Multinational Corporations in the Worldin 2007 99

International Trade 100-102Comparative Advantage 100National Competitiveness 101The Benefits and Costs of International Trade 102

Trade Barriers and Protectionism 103-109Free Trade 103Types of Trade Barriers 103Protectionist Trade Barriers: Winners and Losers 104International Organizations PromotingFree Trade 106Regional Free Trade Agreements 107

Conducting Business Internationally 110-114Three Strategies of International Business 110Entering Foreign Markets 111

International Business: Economic Factorsand Challenges 115-118

The Role of Exchange Rates 115BizChaf: Which Is Better—A Strong Dollar or aWeak Dollar? 116The Impact of a Changing Exchange Rateon a Nation 117Other Economic Challenges to ConductingInternational Business 118

International Business: Sociocultural, Political,Legal, and Ethical Challenges 119-123

Sociocultural Challenges 119OFF THE MARK: International BusinessBlunders 120Political Challenges 121Legal Challenges 122Ethical Challenges 123

Chapter Summary 124-125Key Terms 125Self-Test 126-127Team Time 128 (

Ethics and Corporate Social Responsibility 129Web Exercises 129

CHAPTTIiR 4 Business in a GlobalEconomy 94

International Business: What's It AllAbout? 95-99

Globalization 96

miniE-Commerce

1 Special Issues in130

To read the entire mini chapter, visitwww.myb/zlab.com

CONTENTS VII

PART 2 Starting and Structuring aBusiness 132

Small Business and theEntrepreneur 132

Entrepreneurs and the AmericanDream 133-137

The Traits of Successful Entrepreneurs 133

Types of Entrepreneurs 136

What It Takes to Be an Entrepreneur 136

ON TARGET: Facebook 137

Small Business: The Mainstream of theAmerican Economy 138-142

Small Business and the Economy 138

Small Business and the Workforce 140

The Impact of Technology on Small Businesses 141

Reasons for Starting a Small Business 141

OFF THE MARK: iSmell 141

Small Business Structures 142

TOP 10: Places to Live and Launch a SmallBusiness, 2008 142

Buying Franchises and ExistingBusinesses 143-148

Franchising Basics 143

Pros and Cons of Franchising 144

Franchising Considerations 145

Buying an Existing Business 146

BizChat: What's in a Name? 148

The Risks of Small Businesses and Where toGet Help 149-153

Why So Many Small Businesses Fail 149

Getting Help 152

Financing Considerations 154-155

Cash and Credit 154

Bank and Other Loans 154

Venture Capital and Other Forms of Financing 155f


<s> Forms of BusinessOwnership 162

Sole Proprietorships 163-165

Starting a Sole Proprietorship 164

Advantages and Disadvantages 164

Partnerships 166-170

Advantages and Disadvantages 166

BizChat: How Do You Find the Right BusinessPartner? 167

Elements of a Partnership Agreement 167

Types of Partnerships 169

Corporations 171-179

Advantages of Incorporation 171

Structure of a Corporation 173

TOP 10: U.S. Public Corporations by Profitin 2008 174

Disadvantages of Incorporation 174

S Corporation 175

Limited-Liability Company 176

Alternative Business Arrangements 180-181

Not-for-Profit Corporations 180

Cooperatives 181

Business Combinations and CorporateRestructuring 182-185

Mergers and Acquisitions 182

ON TARGET: BP Buys Amoco 184

Chapter Summary 186-187Key Terms 187Self-Test 188-189Team Time 190Ethics and Corporate Social Responsibility 191Web Exercises 191

mini ©IMlAPTli 2 Constructing anEffective Business Plan 192

To read the entire mini chapter, visitwww.mybfzlab.com

VIII CONTENTS

PART 3 Managing a Business andEmployees 194

1 Business Management andOrganization 194

The Foundations of Management 195-198Business Management 195The Skills of Successful Managers 195

The Functions of Management:Planning, Strategic Management,and Organizing 199-207

Planning and Strategic Management 199Organizing 204

The Functions of Management: Leadingand Controlling 208-215

Leading 208TOP 10: Companies for Cultivating LeadershipSkills, 2007 209BizChaf: Do Successful Managers Need toBe Effective? 210Controlling 212

ON TAUGHT: Sausage Solution 213


© Motivation, Leadership, andTeamwork 222

Motivation: The Basics 223-226Personal Motivation 223Motivation in the Workplace 224Theories of Motivation 225

Motivation: Business Applications 227-231Applying Motivational Theories 227 k

Evolution of Motivational Theories in Business 230TOP 10: Fortune's Top 10 Companies to WorkFor, 2008 231

Leadership 232-236Leadership in Business 232Personality Traits 234BizChat: Do You Have to Be Tall to Bea Leader? 236

Teamwork 237-243The Advantages of Teams in the Workplace 237OFF THE MARK: Barry Bonds, Team Player:A Miss! 239Best Practices for Teams 240Your Role on a Team 242


f Human ResourceManagement 250

Human Resource Management 251-256Manpower Planning and Recruiting 251BizChot: What Is Recruiting 2.0? 254Hiring 255TOP 10: Fortune's Top 10 Most DiverseCompanies to Work For 256

Training and Evaluating Employees 257-261Training Methods and Requirements 257Performance Appraisals and Alternatives 260

Compensating, Scheduling, Promoting, andTerminating Employees 262-267

Compensation Strategies 262Benefits 263Alternative Scheduling Arrangements 264Temporary and Contingent Workers 265Promotions and Transfers 266Terminating Employees 267

Managing Workplace Diversity 268-270Managing Workforce Diversity 268Impact of Diversity 269OFF THE MARK: One Diversity Training Does NotFit All 270

Labor and Union Issues 271-273Organized Labor 271Collective Bargaining 272The State of Labor Unions 273


CONTENTS IX

Business Technology 280

Information Technology Basics 281-285IT Professionals and the IT Organization 281TOP 10: Questions to Ask Before Adopting a NewPiece of Technology 282Information Systems 283

Computer Systems in Business 286-291Hardware 286Software 288Networks 290

The Benefits and Challenges ofTechnology 292-295

IT Benefits and Challenges for Employees 292OFF THE MARK: Hewlett-Packard SpyingScandal 293IT Benefits and Challenges for Management 294BizChat: How a Simple Mistake Can Lead to aMajor Data Breach 294

The Global Impact of BusinessTechnology 296-299

Off-shoring 296The International Business Environment 297Technology Creates a Global Village 299


1"fl Production and OperationsManagement 306

The Production Process and TechnologicalInfluences 307-312

The Production Process 307TOP 10: Countries with the Largest CarProduction, 2006 308Technological Influences on the Production

^Process 310BizChat: Technology: Too Much of a GoodThing? 311

Facility Location 313-317Transportation Factors 313Human Factors 315Physical Factors 317

Production Management 318-323Determining Facility Layout 318Working with Suppliers 319Maintaining Inventory Control 321Controlling the Production Process 322

Quality Control 324-327Product Inspection 324ISO Standards 325ON TAKGIT: Six Sigma Takes Organizations to theTop 325PERT and Gantt Charts 326


mini ©CMPTm 3 BusinessCommunications 334


PART 4 Principles of Marketing 336

H2 Marketing and ConsumerBehavior 336

Marketing Fundamentals 337-342The Evolution of Marketing 337Nontraditional Marketing 340How Marketing Benefits Stakeholders 340Criticisms of Marketing 342

Marketing Tactics 343-347Marketing Strategy: The 4 Ps of Marketing 343BizChat: Is There a Fifth P? 344The Marketing Process 346

The Marketing Environment 348-351The Competitive Environment 348The Economic Environment 349The Technological Environment 349OFF THE MARK: Would You Buy Dog Food Online?The Tale of Pets.com 350The Sociocultural Environment 350

CONTENTS

The Political, Legal, and RegulatoryEnvironments 350TOP 10: Corporate Contributors to PoliticalParties 351

Marketing Research and Planning 352-357The Marketing Research Process 352The Marketing Plan 353Target Markets 355

Consumer Behavior 358-361Consumer Markets 358Business-to-Business (B2B) Markets 360


CHAPTER "03 Product Development andPricing Strategies 368 .

Developing Goods and Services 369-374The Total Product Offer 369Product Differentiation 370Product Lines and the Product Mix 371Consumer and Business-to-Business Products 372

Branding 375-381Branding Benefits 375Brand Loyalty and Brand Equity 376Branding Strategies 377TOP 10: Characteristics of a Good BrandName 377iizChat: Who's Behind Those Catchy Slogans? 378The Packaging 379ON TAKGIT AMD OFF THE MARK: Q-tips BrandCotton Swabs 380The Importance of Labels 381

New Product Development and theMarketing Mix 382-385

New Product Development 382Product Life Cycle 383

Pricing Goods and Services 386-391Product Pricing and Pricing Objectives 386Pricing Strategies 387Adjusting Prices and Price Perceptions 390


DistributionPromotion and

398

Promotion and the Promotional Mix 399-401Promotion 399Integrated Marketing Communication 401

Promotional Techniques: Advertising andPublic Relations 402-409

Advertising 402Types of Advertising 403ON TARGET: Dove Ads Break the Model Mold 404Types of Advertising Media 404Advertising Trends 406BizChat: Brand Name Movie Fame 407Public Relations 407

Promotional Techniques: Personal Sellingand Sales Promotion 410-416

Personal Selling 410Sales Promotion 413Advantages and Disadvantages of thePromotional Mix 416

Distribution: The Basics 417-419Marketing Intermediaries and DistributionChannels 417Types of Distribution Channels 418

Methods of Distribution 420-427Wholesaling 420Agents/Brokers 422Retailing 422Physical Distribution 425Warehousing and Inventory Control 426Benefits and Costs of Transportation Modes 426


CONTENTS XI

mini ©t Finding a Job 434


PART 5 Principles of Finance 436

Hi Financing and TrackingBusiness Operations 436

Financial Management 437-441The Financial Manager 437Planning for Financial Needs 438Addressing the Budget 440

Financial Needs 442-446Financing Short-Term Business Needs 442Financing Long-Term Business Needs 444

Accounting Functions 447-452Accounting Fundamentals 447OFF THE MARK: How's This for an AccountingGoof? 448Types of Accounting 448Accounting Standards and Processes 450BizChat: Fraudulent Bigwigs Face Hard Time 450

Financial Statements 453-463The Balance Sheet 453Income Statements 459TOP 10: Most Profitable Companies of 2007 461Statement of Cash Flows 462


© Securities andInvestments 470

Choosing between Debt and Equity 471-475Financing with Bonds (Debt) 471Financing with Stock (Equity) 473Primary Security Markets 474

Investment Fundamentals 476-479The Risks and Rewards of Investing 476BizChat: I Can't Lose Money by Saving, Right? 477Investment Risk 477TOP 10: Most Significant U.S. Stock MarketCrashes 478

Investing in Stocks 480-486Types of Stocks 480OFF THE MARK: The Domestic Diva's InsiderTrading Scandal 484Changing Stock Prices 484

Investing in Bonds 487-489Different Types of Bonds 487

Investing in Mutual Funds and OtherOpportunities 490-93

Mutual Funds 490Other Investment Opportunities 493


mini Personal Finance 500


Answers: 503

Glindex: 504

Reference Notes: 523

Sources: 535

Credits: 537

better business vii part 2 starting and structuring a business 132 small business and the...

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