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*Chapter One

Taking Risks and Making Profits within the Dynamic

Business Environment

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Profile

• A 17-year-old high school student• Reopened small town’s only

grocery store • Borrowed $22,000 to buy building

& fixtures• Worked to save $10,000 to stock

the store• Worked 90-100 hours per week• Paid off loan in one year

NICK GRAHAMMain Street Market

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*Entrepreneurship and Wealth Building

• Business -- Any activity that seeks to provide goods and services to others while operating at a profit.

• Entrepreneur -- A person who risks time and money to start and manage a business.

• Successfully filling a market need means you could make money for yourself and provide jobs for others.

BUSINESS and ENTREPRENEURSHIP

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Famous Entrepreneur – worldwide

Bill Gates Steve Jobs

Warren Buffet Who is he?

Oprah Winfrey

Famous Entrepreneurs – Bangladesh

Muhammad YunusFazle Hasan Abed

Latifur RahmanKaniz Almas

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*Revenues, Profits and Losses

• Revenue -- The total amount of money a business takes in during a given period by selling goods and services.

• Profit -- The amount of money a business earns above and beyond what it spends for salaries and other expenses.

• Loss -- Occurs when a business’ expenses are more than its revenues.

REVENUE, PROFIT AND LOSSLG1

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*Businesses Add to the Standard of Living and Quality of Life

• Quality of Life -- The general well-being of a society in terms of its political freedom, natural environment, education, healthcare, safety, amount of leisure and rewards that add to personal satisfaction.

• Standard of Living

QUALITY of LIFELG1

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*Businesses Add to the Standard of Living and Quality of Life

• Stakeholders -- All the people who stand to gain or lose by the policies and activities of a business and whose concerns the businesses need to address.

• Stakeholders- customers, employees, stockholders, suppliers, government etc.

• Non-profit organizations- school, college, hospital, charity, RAB, police force etc.

• Outsourcing• Social Entrepreneurs- Mohammad Yunus

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* Using Business Principles in Nonprofit Organizations

BRAC

Grameen Foundation

ASA

Action Aid

CARE program Bangladesh

WELL-KNOWN NONPROFITSin the Bangladesh

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*Businesses Add to the Standard of Living and Quality of Life

Entrepreneurship• Own the business• Freedom to succeed as well as freedom to fail• Do not receive any benefits such as paid

vacation time, day care, a company car or health insurance.

Working for others• Somebody else assumes entrepreneurial risk• Provides with benefits such as paid vacation

and health insurance.

Entrepreneurship VS Working for others

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*The Importance of Entrepreneurs to the Creation of Wealth

1. Land

2. Labor

3. Capital

4. Entrepreneurship

5. Knowledge

• Entrepreneurs use what they’ve learned to grow their businesses and increase wealth.

FIVE FACTORS of PRODUCTIONLG2

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*The Business Environment

TODAY’S DYNAMIC BUSINESS ENVIRONMENT

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*The Economic and Legal Environment

A government can promote business by…

1.Minimizing spending and keeping taxes and regulations to a minimum.

2.Allowing private ownership of businesses.

3.Minimizing interference with the free exchange of goods and services.

4.Passing laws that enable businesspeople to write enforceable contracts.

5.Establishing a currency that’s tradable in world markets.

6.Minimizing corruption.

GOVERNMENT’S ROLE in BUSINESS

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*How Technology Benefits Workers and You

• Technology -- Everything from phones to copiers and the various software programs that make businesses more effective, efficient and productive.

• Effectiveness -- Producing the desired result. (doing the right things)

• Efficiency -- Producing goods and services using the least amount of resources. (doing things right)

• Productivity -- The amount of output you generate given the amount of input (example: hours you work).

• E-Commerce-- The buying and selling of goods and services over the internet.(B2B, B2C)

BENEFITS of TECHNOLOGY

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*How Technology Benefits Workers and You

Universal Product Code to scan what product was bought, in what size and color and at what price.A scanner at the checkout counter can read that information and put it into a database.Database is an electronic storage file where information is kept. One use of database is to store vast amounts of information about customers (name, address, telephone numbers)Identity theft: unfortunately, the legitimate collection of personal customer information also opens the door to identity theft. Identity theft is the obtaining of individual personal information for illegal purpose

BENEFITS of TECHNOLOGY

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*The Competitive Environment

•Focus on quality

•Main goal: zero defects – no mistakes in making products.

•Offer both high quality product and outstanding services at competitive price.

Customer is King

Competitive Environment LG5

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Competitive Environment (contn)

• How competition has changes business• Traditional Business World Class Business• Customer Satisfaction Delight the customer• Customer Orientation Customer and Stakeholder Orientation• Profit Orientation Profit & Social Orientation• Reactive Ethics Proactive ethics• Product orientation Quality and service orientation• Managerial Focus Customer Focus

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*The Social Environment and Managing Diversity

• Demography

• Diversity has grown from just recruiting minority and female workers.

• Two income families

Social Environment LG6

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*The Global Environment

1. Growth of global competition

2. Increase of free trade among nations

3. More efficient distribution systems and communication advances.

IMPORTANT CHANGES to the GLOBAL ENVIRONMENT LG7

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*The Global Environment

• Wars, like those in Iraq and Afghanistan, cost billions of dollars.

• Tax money is diverted.

• Cost of security goes up.

• Cost of insurance goes up.

INCREASING COSTS of the GLOBAL ENVIRONMENT LG7

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Dealing With A Multicultural Workforce

• Show Respect For Others Cultures

• Avoid Stereotyping

• Avoid Imposing Your Cultural Values On Others