chapter 2 economic systems - swlearning.com

EconomicSystemsEconomicSystems

GOALSGOALSLIST the three economic questions thatmust be answered by every society.

DESCRIBE three types of economic systems.

IDENTIFY five features of ourmarket economy.

EXPLAIN why economies aremixed systems.

EXPLAIN why market economiesare becoming common around the world.

The world’s newest mar-ketplace is not even an

actual place. Thousands of busi-nesses and individuals are takingadvantage of e-commerce.E-commerce, or electronic com-merce, is the buying and sellingof goods and services via theInternet. A U.S. government sur-vey in 2001 found that 40% ofInternet users bought goods orservices online, and young

people were much more likely todo so. This activity will increasegreatly as more individuals pur-chase computers and go online.

E-commerce has changed theway people buy and sell every-thing from books to automobiles.What types of products wouldyou consider purchasing over theInternet? What concerns wouldyou have about making such apurchase?

Chapter22

E-Commerce—Marketplace of the Future

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L aszlo was a shoemaker in acountry in which the govern-ment made economic deci-

sions. He was told how many shoes he couldmake and sell each year. Things are now dif-ferent in Laszlo’s country. His country nolonger has a central committee that does allthe planning. Today Laszlo does his ownplanning and determines the number andstyle of shoes he will sell. Department storesand shops in Laszlo’s country display a vari-ety of shoes available for sale to consumers.His country has a market economy. A marketeconomy is one in which individuals are freeto engage in business transactions. In such aneconomy, the questions of what, how, and forwhom to produce are determined by the

operation of markets. A market is an arrange-ment that allows buyers and sellers to cometogether to trade goods, services, andresources. Buyers and sellers participatefreely in that market. It is open to all whowant to participate and have the means to doso. The activity of buyers and sellers is notcontrolled—there is voluntary exchange.

Voluntary exchange allows buyers andsellers to come together in a market to tradegoods, services, and resources. For example,consumers may exchange their resources(usually money) for what producers decide tomake available to them (goods and services).Voluntary exchange occurs only when thetrading parties believe that they will be betteroff after the exchange.

FOCUS ON REAL LIFEFOCUS ON REAL LIFE

Even in market economies, governments havesome influence on how the nation’s resourcesare used. Regardless of how a country lets itsmarket operate, there are key economic ques-tions which must be answered because ofscarce economic resources. The three eco-nomic questions are:

1. What goods and services are to be pro-duced?

2. How should the goods and services beproduced?

3. For whom should the goods and servicesbe produced?

What to Produce? Nations differ in their wants just as individu-als do. In one country, resources may be usedto produce spaceships and to explore otherplanets. Another might use its resources tobuild the biggest and best military force.Some might use most of their resources toprovide such consumer goods as cars,

television sets, dishwashers, and recreationalparks. Still other countries might have suchlimited resources that they must concentrateon providing only the basic needs of food,clothing, and shelter.

Meeting some or all of its people’s wantsis a challenge. A country must learn how tobest use its resources. A nation that concen-trates too heavily on military goods may nothave enough resources left for consumergoods and services. On the other hand, if allof its resources are used to supply consumergoods and services, it may not be able toprotect its people from outside forces. Deci-sions must be made on which kinds of goodsand services are valued the most and bestserve the nation.

KEY ECONOMIC QUESTIONS

Chapter 2 Economic Systems 17

The word market derivesfrom the Latin word mercari which means “to trade.” FYIFYI

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How to Produce? A country that has a great many people butlimited capital resources might build roads byhaving many workers use equipment thatrequires much manual labor. In another coun-try, road building may be accomplished withonly a few workers using labor-saving equip-ment, such as bulldozers and power earth-movers. In the first case, the country uses itshuman resources to offset its lack of capitalresources. In the second case, the countrydoes the job with more capital resources andless labor. The second method is more effi-cient and enables the country to complete theroad much sooner. Economic resources com-bine in different ways to produce the samegoods and services. Each nation decideswhich combination of resources will best suitits circumstances.

For Whom to Produce?A nation must decide which of its citizensshould benefit from the production of goodsand services. A country must also considerwhose needs and wants are the most critical.Additional questions include: How will thegoods and services be distributed? Should thegoods and services be shared equally amongthe people? Should people who contributemore to producing the goods and services beable to get a larger share of them? If youhave the money, shouldn’t you be able to buyanything you want with your money?

In some economic systems, you can buywhatever you want and can afford. But inothers, your ability to buy may be limited bythe country’s answer to the earlier question,“What to produce?” For example, a largeshare of a country’s resources might be usedto produce capital goods, such as tractors or

industrial robots. That country might limit itsproduction of consumer goods, such as high-fashion clothes and CD players. Consumergoods then become scarce. In the UnitedStates, with our plentiful supply of goods andservices, what you buy is largely determinedby the amount of money you have and arewilling to spend. In addition, the amount ofmoney that you receive in wages will beaffected by many things, including your abili-ties and how you use them. Figure 2-1 illus-trates a variety of responses to the three basiceconomic questions.

A nation’s plan for answering the key eco-nomic questions is called its

There are several kinds of economicsystems operating in the world today. system.

economic

TYPES OF ECONOMIC SYSTEMS

Unit 1 Our Economic Environment18

We have accomplished much through technology to reduce human labor (muscle power)—today we use less than 1 per-cent of the muscle power used prior tothe Industrial Revolution.

FYIFYI

Can you name various industries that useboth human and capital resources?


Governments which are democratic, socialis-tic, or communistic take differing approachesto how they allow their economic systems tooperate. There are no systems that operate ina pure form.

Custom-Based EconomyIn some countries, mainly those which areless developed and less responsive to theglobal economy, the answers to key economic questions are established by custom. In a

goods are producedthe way they have always been produced.Children of each generation are taught to usethe same method to make the same goodstheir parents and grandparents produced. The

custom may be weaving cloth on a handloom, making straw baskets, or planting riceby hand. Goods typically are produced byhand with simple tools using people or ani-mals for energy. Change and growth occurslowly in countries whose economies followcustoms and in which the people are poor inmaterial goods.

Directed (Planned) EconomyIn some countries, economic questions areanswered by the owners of the resources. Ina or resourcesare owned and controlled by the government.The officials of the government, usuallythrough centralized agencies and bureaucrats,

planned economy,directedcustom-based economy,


FIGURE 2-1 How are basic economic questions decided in the United States?


decide what and how goods will be producedand how they will be shared. They decidehow much of the nation’s resources will bespent on military uses and how much will beused to produce consumer and capital goods.They decide how much grain will be grownand how many pairs of shoes will beproduced. In some countries, governmentleaders assign people to careers based largelyon the leaders’ view of the needs for produc-ing the goods and services. They plan allphases of the economy and command that theplans be carried out, using the military or apolice force to do so if necessary. In directedeconomies, the average citizen has little tosay about how the three economic questionsare answered. The freedom of the people isalways limited in this system.

Market EconomyThe third type of economic system is a

Market economies aregenerally found in countries that have demo-cratic forms of government. Here the threequestions are answered by individualsthrough buying and selling activities in the marketplace. The is anyplace where buyers and sellers exchangegoods, services, and some form of money.People who order goods from a mail-ordercatalog, go to a movie, buy food in a super-

market, subscribe to cable TV, buy shares ofstock, or have a sweater cleaned are operat-ing in the marketplace. When an airlineorders a new jet, a business launches a satel-lite, or the government hires computer operators, each is operating in the market-place. No one tells the consumers what tobuy and no one tells businesses what to makeand sell.

Consumers and businesses make economicdecisions based on their own interests. Forexample, you may use your money to buy aleather jacket. One of your friends may spendhis or her money to take tennis lessons andanother may buy a compact disc player.When people in a market economy buy aproduct, they help to answer the question,“What to produce?” Resources are combinedin such a way that the goods people want

marketplace

market economy.


What advantages or disadvantages do youthink a custom-based economy has?

Diversity index is a measure ofthe likelihood that if twopeople are randomly selectedin a particular area, they will bedifferent from each otherracially or ethnically. TheUnited States has an averagediversity index ofapproximately 40. In otherwords, if two persons arerandomly selected, there is a40 percent chance that theywill be racially or ethnicallydifferent from each other.States like Maine and Vermontare the least diverse, with adiversity index of 4. NewMexico is the most diversestate, with an index of 60.


and buy will be produced. This answers thequestion, “How to produce?” Since peoplebuy what they want and can afford in a market economy, they largely answer thequestion, “For whom to produce?”

Were you able to identify our economy asyou read the three types? If you selected“market economy,” you were correct. Themain differences among economic systemsinvolve who owns the economic resourcesand who makes the decisions about produc-tion and distribution. Our system fits the definition of a market economy. But our economic system also has other names.

Another name for the economic system inthe United States is capitalism. means that economic resources are usuallyprivately owned by individuals rather than bythe government. Individual owners are free todecide what they will produce with theresources. This freedom of the individual tochoose what to produce provides the rationalefor another name: or

The terms capitalism and free orprivate enterprise system mean the samething. They refer to a system in which mosteconomic resources are privately owned anddecisions about production and distributionare largely made by inthe marketplace.

There are many aspects of our economicsystem that make it different from other sys-tems of the world. You are aware that thewords “freedom” and “individual choice” arefrequently used in discussing our economy.The five major features, or rights, of ourmarket economy are shown in Figure 2-2.

Private EnterpriseA is an establishment or enterprisethat supplies goods and services in exchangefor payment in some form. The right of theindividual to choose whether to own a busi-ness, what business to enter, and what to pro-duce with only limited government direction

is referred to as Thisprivate enterprise right ensures your freedomto decide how you will earn a living. In aprivate enterprise system, you may start orinvest in any business you wish as long asyou obey the law in doing so. You are free tochoose to be a bricklayer, teacher, karateinstructor, business owner, astronaut, dancer,or anything you strive for.

As a businessperson, you are generally freeto offer goods and services at times, prices,and places of your choice. You are free tosucceed or to fail in a business you select. Ofcourse, there are some regulations that pre-vent you from performing activities thatwould harm others. For example, you maynot dispose of chemical wastes in a way thatwould pollute the environment. Nor can youpractice surgery unless you have been granteda medical license by the appropriate agencyin the state in which you plan to practicesurgery. These regulations are not designed tolimit freedom but to protect people fromharmful practices.

Private PropertyIf your family owns the home in which youlive or the television set you watch, the family is enjoying the right of private prop-erty. The right of meansyou can own, use, or dispose of things of value. You may dispose of things you own by selling them, giving them away, oreven by throwing them away. In our country,you can own any item and do what you want with it, as long as you do not violate alaw in doing so. You also have the right toown, use, and sell whatever you invent orcreate.

private property

private enterprise.

business

voluntary exchange

system.private enterprisefree

Capitalism

OUR ECONOMIC SYSTEM


One of the problems with the term “free enterprise” is that some think too much about “free” and too little about “enterprise”—the workrequired to succeed.

FYIFYI


Businesses also have the right to ownproperty. This property includes land, build-ings, tools, and the goods the business pro-duces. Businesses also have the right to useand dispose of their property in any lawfulway.

ProfitBusinesses supply goods and services to themarketplace for one main reason—to earnmoney. Unless business owners can expect tomake a profit, they would not want to puttime, energy, and money into an enterprise.


FIGURE 2-2 Why are freedom and private property critical to the success of the U.S. economy?

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is the money left from sales after subtracting all the costs of operating the business. Business owners are entitled tomake profits because they run the risk of losing the money they invested to start thebusiness. They also face the extra hours ofwork and stress that are part of owning andrunning a business.

The desire to work hard and be creative toearn a higher profit is the Thisprofit motive also helps make our economystrong. Because of it, people are willing toinvest money in a business and to developnew products to satisfy consumers’ wants.

The profit motive is not the only reasonfor putting time, money, and effort into busi-nesses. Some people enjoy bringing out newproducts or improving existing ones. Othersget pleasure from knowing that the goods orservices they produce make other people hap-pier. Some individuals like the excitement ofstarting and running a new business. How-ever, the profit motive is the heart of the pri-vate enterprise system.

CompetitionYou probably have seen television commer-cials that make you want to buy a “new” and“improved” product. A supermarket mayclaim in bold letters, “Ours are the lowestprices in town.” An ad in a magazine urges

you to buy the basketball shoes being mod-eled by a famous player. The rivalry amongbusinesses to sell their goods and services tobuyers is called

This feature of a market economy givesyou as a consumer the opportunity to makechoices among countless goods and servicesthat are available. You make these choices bycomparing prices, quality, appearance, useful-ness, and appeal of the goods and servicesyou buy. And, if you are not satisfied with apurchase, you are free to buy from a compet-ing business another time. Competitionencourages business owners to improve prod-ucts, offer better services, keep prices reason-able, and produce new things.

Freedom of ChoiceThe private enterprise system gives you theright to enter a business or career of yourchoice, to own property, to make a profit, andto compete. You also have other rights thatcontribute to your economic freedom ofchoice.

competition.

profit motive.

Profit


Sellers mark up the price of goods they purchase before selling them, but their profit is usually much less than the markup—sometimes only 1 percent on their sales.

FYIFYIE-Commerce forEconomic DevelopmentE-Commerce forEconomic DevelopmentBy many measures, the World Wide Web

is not “world wide.” In industrializedcountries such as the United States, morethan 50 percent of people have Internetaccess. In many developing economies,however, the Internet is available to fewerthan 5 percent of the population.

As countries expand economic develop-ment, technology will help create more effi-cient production, faster distribution, andmore effective information flow. These devel-oping economies will encourage increased

electronic connections among businessesand consumers. As the Internet growth rateincreases around the globe, the U.S. isexpected to have less than 50 percent of theworldwide Internet connections in the nextfew years.

Critical ThinkingPrepare a table summarizing the advantagesand disadvantages of e-commerce for con-sumers and businesses.


You have the right to buy where and whatyou please. The sale of some products and

services that the government declares harmful to you, however, may be prohibited. Someproducts may have to carry a warning message.

There are a number of other rights thatyou have that you probably take for granted.You have the right as a worker to organizewith other workers. Through such organiza-tion, you can strive to improve working


What advantages or disadvantages do you seewith our market economy?

An Internet address is a set of numbersor words that identifies a unique user orcomputer. Every user and computer onthe Internet must have a differentaddress so that the system knowswhere to send electronic mail and other data.

Would you expect to see Mercedes auto-mobiles, mobile telephones, and DVDs

in China? Would you expect thriving privateshops alongside dreary state departmentstores? Well, that is happening today. Thereis an economic revolution under way—atleast in certain parts of China. In cities suchas Beijing, Shanghai, Guangzhou, and Shen-zhen, some people earn many times the aver-age Chinese income of $840 a year.

In Guangdong province on China's south-ern coast, thousands of businesses are runfrom neighboring Hong Kong. Hong Kongitself, which had the freest economy in theworld under British rule until 1997, is nowruled by China. China has pledged to let it

remain capitalist. Meanwhile, Chinese organi-zations, many with ties to the government,have increased their ownership of Hong Kongenterprises.

Capitalism is still an exception in other-wise communist China. But the prosperitythat private enterprise creates brings in for-eign money and taxes to the central govern-ment, so it has been permitted.

Critical Thinking1. What do you think will be the future of

capitalism in Hong Kong?2. What effect do you think this "experiment"

will have on the rest of China? On coun-tries that trade with China?

China “Frees” EnterpriseGLOBAL PERSPECTIVESGLOBAL PERSPECTIVES


conditions. You have the right to travel whenand where you please in this country and tomany other countries. You also have the rightto express your opinions in newspapers, overradio and television, and in talking with oth-ers as long as you do not slander anotherperson. The private enterprise systemprovides greater freedom of choice to theindividual than any other economic system.

An economic system usually gets its namefrom the way its economic resources areowned and controlled. But economies arecomplex and do not neatly fall under one cate-gory or another. In general, we think of mostcountries as having mixed economic systems.

Some countries combine government own-ership and control of basic industries withsome private ownership of consumer-goodsbusinesses. In some countries, a limitedamount of private enterprise is tolerated. Forexample, after farmers in some directedeconomies meet the government’s quota forcrop production, they are allowed to sell therest of their crop in a free market and keepthe profit.

In the United States there is some govern-ment regulation of business. There are alsosome government-operated enterprises, suchas the post office, schools, and city wateragencies. Our economic system is not purecapitalism, so it is often referred to as modi-fied or mixed capitalism.

The economic success of market economieshas caused many countries to reexamine theireconomic systems. Many directed orcontrolled economies have not prospered incomparison to market economies. Directedeconomies are not designed to meet thewants and needs of individuals. In most con-trolled economies, workers with differentskills and responsibilities receive similarwages. Therefore, there is little incentive forpeople to work hard.

The weaknesses of controlled economieshave caused many nations throughout theworld to change to market or mixedeconomies. The most notable example is thecollapse of communism in the Soviet Union.

The Soviet Union was dominated bytoday’s Russia. In the case of the SovietUnion, an entire generation was forced to dowithout many consumer goods such as cars,home appliances, and adequate housing.Emphasis was placed on industrial develop-ment. Today Russia is moving toward a mar-ket economy. Other countries once within theSoviet bloc, such as Poland, Hungary, and theCzech Republic, have made great stridestoward establishing new economies. All ofthese economies now experience voluntaryexchange and benefit from it.

One of the new “rights” that Laszlo nowhas is the “right to fail.” There was a meas-ure of security in his former economy. Laszloknew how many shoes he would make andsell. Laszlo now does not know exactly howmany of his shoes will sell. However, Laszlohas the potential to profit if his shoes are asgood as or better than those of his competi-tion. Free enterprise has given Laszlo anopportunity to succeed in the marketplace ifhe operates a dynamic business.

EMERGING MARKET ECONOMIES

MIXED ECONOMIC SYSTEMS


As in the old Soviet Union, what disadvan-tages exist with government ownership of industries?


26

ChapterREVIEWREVIEW

REVIEW YOUR READING

COMMUNICATE BUSINESS CONCEPTS

1. Every society must answer the questions:what to produce, how to produce, andfor whom to produce.

2. There are three types of economic sys-tems: custom-based, directed or con-trolled, and market.

3. The five important features of our mar-ket economy are private enterprise,

private property, profit, competition, andfreedom of choice.

4. Economies are complex and do not falleasily and neatly into one category.

5. Market economies have replaced mostcontrolled economies because of the suc-cesses of market economies around theworld.

1. What are the three key economic questions thatevery society must answer to set up an eco-nomic system?

2. What are the major characteristics of the threetypes of economic systems?

3. Who owns and controls most economicresources in a system of capitalism?

4. What are the five features of a market economy?

5. What does the right to earn a profit influence abusiness owner to do?

6. What does the right of private property entitlethe owner to do?

7. Give three ways in which consumers benefitfrom competition among businesses.

8. In addition to the profit motive, give two otherreasons that might encourage people to investtheir time, money, and energy in operating theirown businesses.

9. In addition to private property and private enter-prise, what are four other rights that are includ-ed in our economic freedom of choice?

10. Explain the nature of a mixed economy.

11. What are some reasons why market economiesare becoming popular around the world?

12. How is the question of what goods and ser-vices will be produced determined under a custom-based system?

13. Who decides what will be produced in a directed, planned economic system?

14. Give examples showing how enterprises stay inbusiness when they sell at higher prices thesame goods and services sold by other busi-nesses.

15. If you can choose any kind of work you wishunder the right of free enterprise, why can’t you

open a law office, practice dentistry, or pilot aplane when you feel you are ready to do so?

16. If the United States operated as pure capital-ism, what changes might occur?

17. It has been said that the term “market” in ourmarket economy refers to an idea and not to aplace. What do you think this means?

18. Explain how the decisions of buyers and sellersin the marketplace largely answer the questionof what to produce in our private enterprisesystem.

Unit 1 Our Economic Environment



DEVELOP YOUR BUSINESS LANGUAGE

DECISION-MAKING STRATEGIES

For each numbered item, find the term that has the same meaning.

20. A nation’s plan for making decisions on whatand how to produce and how to distributegoods and services.

21. An economic system in which goods are pro-duced the way they have always been pro-duced.

22. Buyers and sellers make their own economicdecisions to determine what the price will befor goods and services produced and sold.

23. Any place where buyers and sellers exchangegoods and services for some form of money.

24. The rivalry among businesses in selling tobuyers.

25. The right of the individual to choose whetherto own a business, what business to enter,and what to produce with only limited govern-ment direction.

26. The right to own, use, or dispose of things ofvalue.

27. An economy in which individuals are free toengage in business transactions with buyerswho are able and willing to buy and sellerswho supply goods and services from whichthey earn a profit.

28. An economy in which resources are ownedand controlled by the government.

29. The desire to work hard and be creative toearn a higher profit.

30. An economic system in which most economicresources are privately owned and decisionsabout production are largely made by freeexchange in the marketplace.

31. Money left from sales after subtracting thecost of operating the business.

32. An establishment or enterprise that suppliesgoods and services in exchange for someform of payment.

KEY TERMSbusiness

capitalism (free or private enterprise system)

competitioncustom-based economy

directed or planned economyeconomic systemmarket economy

marketplaceprivate enterpriseprivate property

profitprofit motive

voluntary exchange

Johakaim Jameson owns and operates a one-man deli. His regular and faithful customers lovehis “JJ Special.” Recently he developed a newrecipe and created his “Bountiful Muffin”—goodtasting and nutritious. His new muffin is growing inpopularity and is bringing in new customers. Hisproblem: He can spend only four hours each daymaking “JJ Specials” and/or “Bountiful Muffins.” Hecan make 50 specials in an hour and earns a

50-cent profit on each. He can make 60 muffins inan hour and can earn 60 cents on each.

33. How should Johakaim divide his productiontime between the “JJ Special” and the“Bountiful Muffin” to keep his profits up and tosatisfy his customers?

34. If you were Johakaim, what are some thingsyou could do to resolve this dilemma?

19. Even though you have many freedoms under oureconomic system, there are many activities thatyou are not free to do. For example, you are not

permitted to hunt and kill animals that are desig-nated as endangered species. List several activi-ties that you are not allowed to do in our society.



TECHNOLOGY APPLICATION

35. Countries that make efficient use of capitalgoods can produce more with fewer people ina shorter time than countries in which manyworkers perform the work by manual labor.Study the figures below for farm workers andtheir yearly output in two different kinds ofeconomic systems; then answer the questionsthat follow.

a. How many more people were working inagricultural jobs in the directed, plannedeconomy than in the private enterprisesystem?

b. In which system was each farm workermore productive?

c. In terms of people supplied from the output of each farm worker, how muchmore productive was the worker cited initem (b)?

36. Lani Oolan compares food prices in newspa-per ads each week before doing her groceryshopping. One week she found these pricesfor Grade A eggs at three competing super-markets: Food Mart, $1.09 per dozen; Farm-to-You, $1.17 per dozen and 20 cents off witha newspaper coupon; and Kitchen Pride, spe-cial, 2 dozen for $2.09.

a. At which store would Lani pay the lowestprice per dozen?

b. Will the coupon be an advantage?Explain.

c. Do you think the fact that there were threestores from which Lani could buy eggsbenefited her in any way?

37. The table below shows the average number ofworking hours for a worker in three capitalcities in different countries. Each worker livesunder a different kind of economic system.The table shows how many hours an averageplant worker would have to work to earnenough money to buy the items listed.

a. How much longer than workers in CapitalNo. 1 must workers in Capital No. 3 workto earn enough to buy food for four for aweek?

b. How much longer than a worker in CapitalNo. 1 must a worker in Capital No. 2 workto earn enough to buy the weekly foodneeded?

c. How many eight-hour days would a work-er in each capital city have to work toearn enough to buy the color television?

d. If the color television costs $650, whatwould workers’ wages in Capital No. 1 beper hour?

Using the Intro to Business Data CD and yourdatabase program software, select problem CH02.After the problem appears on your screen, com-plete the following activities. After you have com-pleted each step, display or print a report for eachactivity. If you do not have a printer available, answerthe questions before you leave the computer.

38. Select and list the ZIP Code areas in which

the average household income was greaterthan or equal to $30,000. How many ZIPCodes are listed?

39. Sort the ZIP Code areas in descending orderby population. Answer the following questions:

a. What is the fourth ZIP Code area listed?

b. What is the last ZIP Code area listed?

CALCULATE BUSINESS DATA

Private Enterprise Directed, PlannedSystem System

Agricultural labor force 4,380,000 34,350,000

Number of people supplied with food from the output ofeach farm worker 49 7

Capital Capital Capital No. 1 No. 2 No. 3

Hamburger meat, 1 lb. 17.0 min. 29.0 min. 56.0 min.

Color TV, large screen 65.0 hrs. 132.0 hrs. 701.0 hrs.

Toothpaste 16.0 min. 13.0 min. 27.0 min.

Bus fare (2 mi.) 7.0 min. 11.0 min. 3.0 min.

Men’s shoes(1 pair) 8.0 hrs. 7.0 hrs. 25.0 hrs.

Week’s food for family of 4 18.6 hrs. 24.7 hrs. 53.5 hrs.



INTRODUCTIONS—MORE THAN JUST A FIRST

IMPRESSION

Introductions, whether presenting yourselfor introducing others, set the tone andhelp determine the future of the relation-

ship between those being introduced. In abusiness setting, the purpose of introductionsis to lay the foundation for a working rela-tionship between two or more people. Sug-gestions for an effective business introductionare:

• Offer a greeting, followed by the clearstatement of your first and last name.(“Hello, my name is Amy Garcia.”)

• If appropriate, tell how you prefer to beaddressed. (“Please call me Amy.”)

• Give your title and purpose for meeting.(“I’m the Director of Sales with FashionsUnlimited. I’d like to talk with you aboutcarrying our line.”)

• Present a firm handshake and make eyecontact. Keep in mind that this step may beadapted for various cultures.

• Offer your business card.

Good methods for conducting introduc-tions in a business meeting include:

• Ask everyone to introduce themselves,using names and titles. Begin with your-self.

• Introduce yourself as well as everyoneelse at the meeting.

• Ask one or more co-workers to introducemeeting participants.

Special attention to etiquette is necessarywhen making introductions withinternational or and cross-cultural individu-als. Following are some techniques foreffective international and cross-culturalintroductions:

• Avoid using slang or jargon your listenermay be offended by or not understand.

• Enunciate words carefully and speak a bitmore slowly when addressing individualswhose first language is not English.

• Try to eliminate cultural stereotypes youmay believe in. Focus on the individual.

• Avoid gestures—some could be offensiveto the listener.

• If you have the opportunity, study theindividual’s cultural background to beaware of appropriate conventions forintroductions.

It is important to be culturally sensitivewhen making introductions, as differentgroups of people have different rules of eti-quette. If you are not prepared, you couldlose their business.

CRITICAL THINKING1. What is the purpose of a business intro-

duction?2. What are some suggestions for an effec-

tive business introduction?

40. Sort the database in ascending order by averagemonthly housing expenses. Answer the followingquestions:

a. What is the first ZIP Code area listed?

b. What is the fifth ZIP Code area listed?


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