dias1 im ch01 final1

THE DYNAMIC BUSINESS ENVIRONMENT

Other Teaching Tools 1.3

Video Notes 1.4

Brief Chapter Outline and Learning Goals 1.5

Lecture Outline and Lecture Notes 1.7

Career and Study Skills Notes 1.14

CAREER DEVELOPMENT: Understanding Career Planning 1.14

STUDY SKILLS: Study Skills Are a Learned Behavior 1.15

Lecture Links 1.16

LECTURE LINK 1-1 The World’s Richest People 1.16

LECTURE LINK 1-2 Milestones in Business 1.17

LECTURE LINK 1-3 The Language of Business 1.17

LECTURE LINK 1-4 America Loves Its Pets 1.18

Bonus Internet Exercises 1.20

BONUS INTERNET EXERCISE 1-1 Trends in Population 1.20

BONUS INTERNET EXERCISE 1-2 Opportunities in Entrepreneurship 1.21

BONUS INTERNET EXERCISE 1-3 Researching Philanthropy 1.23

BONUS INTERNET EXERCISE 1-4 Social Entrepreneurship 1.24

Critical Thinking Exercises 1.25

CRITICAL THINKING EXERCISE 1-1 How Much Profit? 1.25

CRITICAL THINKING EXERCISE 1-2 Job and Career vs. Owning 1.27a Business

Bonus Cases 1.28

BONUS CASE 1-1 Dual-Career Planning 1.28

BONUS CASE 1-2 Dealing with Changing Family Structures 1.30

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BONUS CASE 1-3 The World’s Largest Charity 1.32

BONUS CASE 1-4 Cirque du Soleil: No Clowning Around (Video Case) 1.34

1.2 INTRODUCTION TO BUSINESS: Instructor’s Resource Manual

OTHER TEACHING TOOLS

For a description of each of these valuable teaching tools, please see the Preface in this manual.

Student Learning ToolsStudent Online Learning Center (OLC) www.mhhe.com/diasbusiness

Student Study Guide

Spanish Translation Glossary (OLC)

Spanish Translation Quizzes (OLC)

Instructor Teaching ToolsAnnotated Instructor’s Resource Manual

IRCD (Instructor’s Resource Manual, Test Bank, PowerPoints, EZtest)

Asset Map

Online Learning Center (OLC) www.mhhe.com/diasbusiness

PageOut

PowerPoint Presentations (on IRCD and OLC)

Test Bank

Business Videos on DVD

Enhanced Cartridge option

Spanish Translation Glossary (OLC)

CHAPTER 1: The Dynamic Business Environment 1.3

http://www.mhhe.com/diasbusiness

http://www.mhhe.com/diasbusiness

VIDEO NOTES

Twenty videos are available, geared to individual chapter topics. The teaching notes for these videos are also included in the Video Notes section of this Instructor’s Resource Manual, beginning on page V.1.

VIDEO 1. “Cirque du Soleil: No Clowning Around”

This video features Cirque du Soleil, a unique and successful circus. Topics cov-ered include Cirque du Soleil’s mission, competitive advantages, relationships with stakeholders, and the importance of technology to its productions.

(BONUS CASE 1-4, “Cirque du Soleil: No Clowning Around,” on page 1.34 of this manual relates to this video.)


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BRIEF CHAPTER OUTLINE AND LEARNING GOALS

CHAPTER 1

The Dynamic Business Environment

I. THE IMPORTANCE OF STUDYING BUSINESSLEARNING OBJECTIVE 1Understand the importance of studying business.

II. DEFINING BUSINESS

A. Profit, Revenue, Loss, and Risk and Reward

B. Stakeholders and Shareholders

III. THE EVOLUTION OF AMERICAN BUSINESSLEARNING OBJECTIVE 2Explain the evolution of American business.

A. Progress in the Agricultural and Manufacturing Industries

B. Progress in Service Industries

C. Your Future in Business

IV. THE FIVE PARTS OF THE BUSINESS ENVIRONMENTLEARNING OBJECTIVE 3Describe the five elements of the business envi-ronment.

A. The Economic and Legal Environment

1. What Can Government Do?

B. The Technological Environment

1. Increased Productivity

2. Making Buying and Selling Easier

3. Responsiveness to Customers

C. The Competitive Environment

1. Customer-Driven Organizations

2. Employee Empowerment

D. The Social Environment

1. Diversity

2. Aging Consumers


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3. Dual Incomes

4. Single Parents

5. Marriage

E. The Global Environment

V. YOUR FUTURE IN BUSINESSLEARNING OBJECTIVE 4Understand your options in the world of business in the future.

A. Entrepreneurship vs. Working for Others

1. Working for Other Businesses

2. Entrepreneurial Challenge

3. Creation of Wealth

B. Working for a Nonprofit Organization or a Government Agency

VI. SUMMARY


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LECTURE OUTLINE AND LECTURE NOTES

CHAPTER OPENING PROFILE

Central Bark (Text pages 2-3)

The opening profile focuses on Central Bark, a small doggie day care and grooming business. Owner Curt Greenberg purchased the business after a career as a middle-school teacher. Central Bark is affected by all the business environments—economic and legal, technical, competitive, social, and global. This profile provides an opportunity to introduce the basic business principles and concepts, such as profit, risk, stakeholders and entrepreneurship.

LECTURE OUTLINE LECTURE NOTES

I. THE IMPORTANCE OF STUDYING BUSINESS

LEARNING OBJECTIVE 1Understand the importance of studying busi-ness. (Text page 4)

A. Each of us is affected by business daily.

B. A BUSINESS is an individual or organiza-tion that seeks to provide goods and ser-vices to others while operating at a profit.

POWERPOINT 1-1Chapter Title(Refers to text page 2)

POWERPOINT 1-2Learning Objectives(Refers to text page 3)

POWERPOINT 1-3The Importance of Studying Business(Refers to text pages 4-6)

II. DEFINING BUSINESSA. Businesses provide people with the oppor-

tunity to become wealthy.

1. Examples: Sam Walton (Wal-Mart) and Bill Gates (Microsoft)

2. An ENTREPRENEUR is a person who owns and operates his or her own business.

B. Profit, Revenue, Loss, and Risk and Re-ward

1. PROFIT is the amount a business earns above and beyond what it spends for salaries and other ex-penses.

2. Starting a business involves risk-tak-

CRITICAL THINKING EXERCISE 1-1How Much Profit?

Profit is the amount a busi-ness earns above and beyond what it spends for salaries and other expenses. Students often have a very inaccurate idea of how much profit businesses actually make. This exercise leads students to find this actual profit per-centage. (See complete exer-cise on page 1.25 of this manual.)



ing, a critical element for improving the standard of living.

3. STANDARD OF LIVING is a grade or level of subsistence (basic needs) and comfort in everyday life enjoyed by a community, class, or individual.

4. RISK is exposure to the chance of a fi-nancial or time loss due to something that is not successful.

a. The more risks you take, the higher the rewards may be.

b. As a potential business owner, you should do research to find the right balance between risk and profit.

5. An entrepreneur must calculate the risks and the potential REWARDS, or the gratification as a result of some ac-tion, for a venture.

C. Stakeholders and Shareholders

1. STAKEHOLDERS are all the people who stand to gain or lose by the poli-cies and activities of a business.

a. Stakeholders include customers, employees, stockholders, suppli-ers, bankers, and people in the lo-cal community, environmentalists, and elected leaders.

b. The challenge for companies in the 21st century is to balance, as much as possible, the needs of all stakeholders.

c. To stay competitive, firms may outsource jobs to other countries.

d. However, outsourcing may cause

LECTURE LINK 1-1The World’s Richest People

These are the world’s 20 richest people—their wealth, age, country of residence, and country of citizenship. (See complete lecture link on page 1.16 of this manual.)

TEXT REFERENCE Real World Business Apps (Box in text on page 5)

Rochelle Johnson, the owner of a small marketing com-pany, and her employee John discuss the importance of keeping stakeholders in mind when making business deci-sions. This box introduces the concept of multiple stake-holders and the importance of balancing the needs of all of them.

POWERPOINT 1-4Defining Business (Refers to text pages 6-8)

TEXT FIGURE 1.1A Business and Its Stakeholders (Text page 7)

TEXT REFERENCE Thinking CriticallyAll Hail the Entrepreneur(Box in text on pages 7-8)

Roughly 45 million Ameri-cans run their own business. The entrepreneurship hap-pening today is different from what came before. Big companies are adapting and new entrepreneurial enter-prises are filling unmet needs.


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more harm to the country than good for the company.

2. A SHAREHOLDER, in contrast, is a person who actually owns stock in a company.

3. Businesses try to satisfy the needs of the stakeholders, including its share-holders.

SELF CHECK QUESTIONS (Text page 8)

1. Define business and explain why the study of business is important. Define risk. Are you willing to take risks in order to own your own business? Why or why not?

2. How are revenue and profit different? Are they related to each other also?

3. How are stakeholders and shareholders different? The same?

III. THE EVOLUTION OF AMERICAN BUSINESS

LEARNING OBJECTIVE 2Explain the evolution of American business. (Text pages 9-11)

A. Progress in the Agricultural and Manu-facturing Industries

1. The use of technology allowed the agricultural industry to become so pro-ductive that the number of farmers dropped from about a third of the pop-ulation to less than 2%.

a. Agriculture is still a major industry in the U.S., but fewer and larger farms have replaced millions of small farms.

b. Many farmers lost their jobs and went to work in factories.

2. Technology made manufacturing more

LECTURE LINK 1-2Milestones in Business

Some important dates in the history of business. (See complete lecture link on page 1.17 of this manual.)

TEXT REFERENCE Career Development: Understanding Career Planning (Box in text on page 11)

Career planning is the process by which an individ-ual develops objectives for the future and acquires the necessary resources and takes appropriate steps to achieve the desired career outcome. The key is to start planning now. An additional exercise and discussion is available in this chapter on page 1.14 of this manual.



productive and workers again lost their jobs.

3. However, new jobs were created in other industries.

4. The challenge managers face today is balancing profit with the good of the employees and society.

B. Progress in Service Industries

1. Many workers who lost their manufac-turing jobs found jobs in service indus-tries.

2. SERVICES are intangible products (i.e., products that can’t be held in your hand,) such as education, health care, insurance, recreation, and travel and tourism.

a. Since the mid-1980s, the service sector has generated almost all of our economy’s increases in em-ployment.

b. Service-sector growth has slowed, but is still the largest growth area.

3. There are more high-paying jobs in the service sector than in the goods-pro-ducing sector.

SELF-CHECK QUESTIONS (Text page 13)

1. What do you think is the biggest change that has oc-curred in business discussed in this section?

2. In what area of the service industry would you be most interested in working? Why?

POWERPOINT 1-5Evolution of American Business (Refers to text pages 9-11)

TEXT FIGURE 1.2What Is the Service Sector? (Text page 12)


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IV. THE FIVE PARTS OF THE BUSINESS ENVIRONMENT

LEARNING OBJECTIVE 3Describe the five elements of the business en-vironment. (Text pages 13-29)

A. The business environment is the surround-ing factors that either help or hinder the de-velopment of business; they are:

1. the economic and legal environment

2. the technological environment

3. the competitive environment

4. the social environment

5. the global business environment

Businesspeople must be aware of all the environments in which they operate.

B. The Economic and Legal Environment

1. If people feel that the risk is accept-able, they are willing to take the risk of starting businesses

a. Part of entrepreneurs’ risk in-volves the setup of the economic system and how government works with or against businesses.

b. Governments can lessen the risk of starting a businesses and in-creasing entrepreneurship and wealth.

2. Entrepreneurs seek an acceptable re-turn on investment (ROI), the money gained from taking a business venture risk.

a. RETURN ON INVESTMENT (ROI), is the money gained from taking a business venture risk; in addition to money, investment of

POWERPOINT 1-6The Five Parts of the Busi-ness Environment(Refers to text pages 13-14)

TEXT FIGURE 1.3Today’s Dynamic Business Environment (Text page 14)

LECTURE LINK 1-3The Language of Business

More businesses are looking for bilingual employees. (See complete lecture link on page 1.17 of this manual.)

POWERPOINT 1-7The Economic and Legal Environment(Refers to text pages 13-15)

TEXT FIGURE 1.4The Economic and Legal Environment (Text page 15)


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V. YOUR FUTURE IN BUSINESSLEARNING OBJECTIVE 4Understand your options in the world of busi-ness in the future. (Text page 29-33)

A. Today’s students have many career choices.

B. Entrepreneurship vs. Working for Oth-ers

1. There are two ways to succeed in business:

a. One way is to rise up through the ranks of a large company.

b. If you work for others, they as-sume the entrepreneurial risk.

c. The more risky path is to start your own business, as Curt Greenberg did.

d. Working for yourself can lead to happiness and fulfillment.

e. However, to earn rewards, en-trepreneurs must accept risks.

2. Working for other businesses

a. A college graduate earns far more than less-educated individuals.

b. Working for a medium to large company provides more opportu-nities for advancement.

c. Working for a small business gives you diversity and flexibility.

3. Entrepreneurial challenge

a. Millions of people have taken the entrepreneurial risk and suc-ceeded.

b. The number of Hispanic-owned businesses in the United States

BONUS INTERNETEXERCISE 1-2Opportunities in En-trepreneurship

This Internet exercise ex-plores the types of franchise opportunities available and the amount of investment necessary. (See complete ex-ercise on page 1.21 of this manual.)

POWERPOINT 1-15Your Future in Business(Refers to text pages 29-31)

TEXT FIGURE 1.11The Five Factors of Pro-duction (Text page 31)

TEXT REFERENCE Career Spotlight: So, You Think You Want to Be … a Businessperson (Box in text on page 32.)

A degree in business can ap-ply to almost any career. The first step in planning a career is to pick an industry, then study the business principles presented in this text. Each chapter in the text will in-clude a career focus box.

CRITICAL THINKING EXERCISE 1-2Job and Career vs. Owning a Business

This exercise guides the stu-dent through the decision making process of evaluating various career options. (See



VI. SUMMARY


CAREER AND STUDY SKILLS NOTES

CAREER DEVELOPMENT BOX:

Understanding Career Planning (Text page 11)

Instructor’s Notes on Text Box One:(Objectives to consider and implement to increase students knowledge, usage, and understanding of the concepts).

Career planning is often overlooked because of the lack of courses and guides designed to help students better prepare for their own career. Oftentimes, students who have just completed the rigors of college in hopes of landing a career, because of their lack of preparation, may make wrong job choices and become frustrated by the process. Without career planning, it is very difficult to understand how you might fit into a company or how the hiring process takes place. Consequently, developing a career plan can show an employer that you have knowledge about the specific industry and the company you have targeted to work for. This can ultimately make you look informed, interested, and a better decision maker no matter what the outcome might be.

STUDENT EXERCISE:

1. Review with the students the importance of understanding what career planning awareness can do by helping students identify what they need to start working on their own career plans as soon as they begin their college careers. Ask the basic question: If you could choose your “dream job,” what would it be? Next, ask them: How important are career planning skills considering you al-ready know where you would like to work? Continue the discussion allowing students the oppor-tunity to express how important career development is to them. Emphasize to the students that their work now in preparing a career plan can really payoff at a later time.


STUDY SKILLS BOX:

Study Skills Are a Learned Behavior! (Text page 22)

Instructor’s Notes on Text Box One:(Objectives to consider and implement to increase students knowledge, usage, and understanding of the concepts.)

Being good at studying is like anything you try…you may be better at some things than you are at other things! Do you participate in any extracurricular activities? What are you good at? What are you av-erage or below average at and why? Studying is a learned behavior like any engaged activity and you can improve your study habits and performance with more practice at it. However, before you jump into do-ing more, let’s figure what you need more of. Improving your study knowledge educates you to the two main areas of studying that can change your outcome and performance; study preparation and study exe-cution.

Study preparation involves all the activities that can help you improve the many things that aid you in becoming better at getting the most out of reading, note taking, and concentration required to learn and master the materials your are going to be tested on.

Study execution involves the actions you take to stay on course to make sure you get the positive results you are seeking. Just like the athlete that practices a sport, he or she also knows he or she will be asked to use the same techniques when in competition to assure success. However, oftentimes athletes (just like students) have good practice skills but are not mentally tough enough or ready to perform when it counts. Good students understand preparation and “battle readiness” are both required to achieve a high level of success. Both skills are necessary to be considered a good athlete, a good student, a good teacher, etc. Often students feel assured they are putting in the time necessary to do well in their classes but some-how it does not translate to consistently good grades. Learning the techniques to test-taking is a process and can help achieve better results.

STUDENT EXERCISE:

1. Explain to students the difference in preparation and execution. Ask students to describe how they have prepared for something they felt was important which required a certain amount of preparation for reaching a high level of success. Ask students to also describe an event where they had to perform or execute as well as they felt they could to reach a high level of success. Discuss the two activities and how it felt when good preparation led to desired results. Discuss when the two activities occurred and desired results were not achieved. Ask the students what might have led to the less-than-desirable outcome.


LECTURE LINKS

LECTURE LINK 1-1

The World’s Richest People

There are about 946 total billionaires in the world. According to Forbes magazine, their com-bined worth in 2007 was $3.5 trillion.

Rank Name Country of Age Worth Residence Citizenship ($billions)

1 William Gates III United States 51 56.0 United States

2 Warren Buffett United States 76 52.0 United States

3 Carlos Slim Helu Mexico 67 49.0 Mexico

4 Ingvar Kamprad & family Sweden 80 33.0 Switzerland

5 Lakshmi Mittal India 56 32.0 United Kingdom

6 Sheldon Adelson United States 73 26.5 United States

7 Bernard Arnault France 58 26.0 France

8 Amancio Ortega Spain 71 24.0 Spain

9 Li Ka-shing Hong Kong 78 23.0 Hong Kong

10 David Thomson & family Canada 49 22.0 Canada

11 Lawrence Ellison United States 62 21.5 United States

12 Liliane Bettencourt France 84 20.7 France

13 Prince Alwaleed Bin Saudi Arabia 50 20.3 Saudi Arabia Talal Alsaud

14 Mukesh Ambani India 49 20.1 India

15 Karl Albrecht Germany 87 20.0 Germany

16 Roman Abramovich Russia 40 18.7 United Kingdom

17 Stefan Persson Sweden 59 18.4 Sweden

18 Anil Ambani India 47 18.2 India

19 Paul Allen United States 54 18.0 United States

20 Theo Albrecht Germany 84 17.5 Germany

How do these modern billionaires stack up against tycoons of the past? Using inflation adjusted dollars, the ten richest men of all time are listed below.

Inflation-AdjustedRank Name Source of Wealth Wealth

1. John D. Rockefeller (Oil tycoon, 1839-1937) $200 billion

2. Andrew Carnegie (Carnegie Steel, 1835-1919) $110 billion

3. Cornelius Vanderbilt (Railroad magnate 1794-1877) $100 billion

4. John Jacob Astor (American Fur Co., 1763-1848) $85 billion

5. William Gates III (Chairman Microsoft) $60 billion


6. Lawrence J. Ellison (CEO, Oracle) $55 billion

7. King Fahd Bin Abdul Aziz Alsaud (King, Saudi Arabia) $30 billion

8. Warren Buffett (Chairman, Berkshire Hathaway) $28 billion

9. Paul Allen (Co-founder, Microsoft) $25 billion

10. Sheikh Zayed Bin Sultan Al Nahyan (Investor, United Arab Emirates) $23 billioni

LECTURE LINK 1-2

Milestones in Business

190 Development of the abacus

1776 American Revolution

1790 First patent laws are passed

1830s Labor begins to organize

1834 McCormick patents wheat harvester

1841 First American advertising agency

1867 Invention of the typewriter

1876 Invention of the phone

1903 Wright brothers invent airplanes

1911 Invention of air conditioning

1930 First supermarket/Beginning of Depression

1946 A general-purpose computer is available

1950s The service economy takes off

1955 Disneyland opens

1963 Equal pay for equal work

1972 E-mail is invented

1976 Apple Computers are introduced

1981 IBM PCs enter the fray

1996-2000 Fastest growing industries are in services: computer and data processing, health, PR, residential care, etc.

2003 Genetic engineering growing in importance

LECTURE LINK 1-3

The Language of Business

The population of the U.S. is becoming increasingly diverse. Today Hispanics are the fastest-growing minority population. In 2007, more than 43 million Hispanics resided in the U.S. These con-sumers have significantly increased the demand for bilingual salespersons and professionals throughout the economy.

i Source: “The World’s Billionaires,” Luisa Kroll and Allison Fass (editors,) Forbes, March 8, 2007 and information at http://www.askmen.com/toys/top_10/11b_top_10_list.html.


http://www.askmen.com/toys/top_10/11b_top_10_list.html

One such business is Arise Virtual Solutions, a call center that provides customer service for about 40 companies. About a third of the independent contractors who work for the company are bilin-gual, many of them immigrants or first-generation Americans who grew up speaking the language of their parents’ homelands.

According to Mary Bartlett, talent manager for Arise, by far the biggest demand by Spanish. companies is someone who can “really connect with the customer.” Among her employees is Susan Mat-tingly, who grew up speaking and writing in both English and Spanish because her Cuban-born mother wanted to keep the family’s Latino heritage alive. Mattingly is among an estimated 11% of Americans who speak English and a second language fluently, according to the Census Bureau.

Most workers in the U.S. don’t need to speak or write a second language. But recruiters say some telemarketing, banking, engineering, and financial service companies are looking for workers and man-agers with bilingual skills because of the growing immigrant population of the U.S. or because they are doing more business in foreign countries. According to Manpower Professional, the Fortune 500 compa-nies are asking more frequently for managers who speak Spanish, Portuguese, and Mandarin Chinese.

Kevin Hendzel, spokesperson for the American Translators Association, says demand for skilled people who can read and write in a foreign language is up. He attributes that to increase international trade and an executive order that requires federally funded institutions and agencies to provide bilingual services to clients with limited English skills. Professional translators and interpreters usually take not only college-level language classes but also attend professional language schools that require their stu-dents to live in the countries whose languages they want to become proficient in. “It takes a long time and a lot of effort to master a language,” says Hendzel.ii

LECTURE LINK 1-4

America Loves Its Pets

Organizations must continually scan the external environment to detect trends that could affect operations. Trends in the general economy can create challenges or threats. They can also create opportu-nities for firms nimble enough to adapt and benefit.

One such trend—pet owners who are increasingly willing to spend freely on companion animals. Americans now spend $41 billion a year on their 88 million cats and 75 million dogs. That’s double the amount spent on pets a decade ago—more than what we spend on movies, video games, and recorded music combined. After consumer electronics, pet care is the fastest-growing category in retail, expanding at about 6% a year.

Today the term “dog’s life” has a radically different meaning than a few decades ago. The Ameri-can Pet Products Manufacturers Association (APPMA) reports that 42% of dogs now sleep in the same bed as their owners. Their menu includes gourmet organic meat and vegan snacks. Almost a third of own-ers buy gifts for their dogs’ birthdays.

Businesses are feeling these changes on their bottom line. Richard G. Wolford, chairman and CEO of Del Monte Foods, refuses even to use the work “owner.” “Anyone who has a pet understands who owns whom,” says Wolford. His company’s pet business has gone from nothing to 40% of overall sales through acquisitions of brands such as Meow Mix and Milk-Bone.

Even those who shun designer doggie sweaters are increasingly willing to spend thousands on drugs for their pets. In 2007 about 77% of dogs and 52% of cats had been medicated in the past year, an

ii Sources: “Firms Seek More Bilingual Workers,” Gannett News Sercie, Clarion-Ledger, May 13, 2007; and U.S. Census Bureau (www.census.gov.)


http://www.census.gov/

increase of about 20 percentage points from 1996. About 63% of U.S. households, or 71 million homes, own at least one pet.

PetSmart, for one, has shifted its mission from being the top seller of pet food to helping con-sumers become better “pet parents.” Along with making its 928 retail locations more pet friendly, PetS-mart is rolling out $31 a night “pet hotels” (kennels) at its stores. The hotels, along with services such as grooming, training, and in-store hospitals, have helped PetSmart expand its service business from essen-tially nothing in 2000 to $450 million, or 10% of overall sales, in 2007.iii


BONUS INTERNET EXERCISESIV

BONUS INTERNET EXERCISE 1-1

Trends in Population

PURPOSE:

To gather data regarding trends in population and the social environment and to analyze how these changes affect American businesses. To answer the following questions, explore the Census Bu-reau’s website on the Internet at www.census.gov. (Sometimes the web address for a location changes. You might need to search to find the exact location mentioned.)

EXERCISE:

This exercise is an extension of “The Internet in Action” exercise in your text. Use the Census Bureau’s website to answer the following questions.

1. What is the fastest growing occupational group? What could contribute to the increase in this pro-fession? Hint: The Bureau of Labor Statistics is a great place to search for occupational growth statistics. You will find occupations with the largest job growth for the next decade.

2. What percentage of consumer expenditures is for food? Transportation? What does the informa-tion tell you about the standard of living in the United States? Hint: There is a search feature within the Census Bureau’s Website. The Bureau of Labor Statistics also has a search feature. There are even consumer expenditure surveys found within this site.

3. What percentage of mothers receiving Temporary Assistance for Needy Families (TANF)—for-merly Aid to Families with Dependent Children, (AFDC)—were never married? What is the amount of AFDC benefits received in your state? How does this number compare with the na-tional average? The AFDC site lists information on various parts of the country. What explana-tion can you give for this trend? Hint: Try searching for TANF (Temporary Assistance for Needy Families).

4. Return to the U.S. Census Bureau’s homepage. What is the population of the nation now? Record the population and the time. If you are doing this project individually, you should collect at least 10 different population counts. Be sure to record the day and the time you collect each one. If you would like to put the data in chart form, the entire class’s data can be used to make a graph. What does this chart tell you about the U.S. population? How could businesses use this information?




Opportunities in Entrepreneurship

PURPOSE:

To better understand entrepreneurship and opportunities that exist for individuals that would like to make a transition into being a single business owner. Purchasing a franchise business involves deciding on the potential investment an individual is willing to make and the type of business ownership they are comfortable pursuing. To best answer the following questions, go to the internet and visit the website www.franchise.com and learn more about purchasing a franchise business. (Sometimes the web address for a location changes. You might need to search to find the exact location mentioned.)

EXERCISE:

This exercise is an education on types of franchise opportunities that can be purchased and the amount of investment and start up capital necessary to purchase a franchise.

1. At the website (www.franchise.com), go to the “Search for a Franchise for Sale” heading (top left) and click on “Franchise by Industry”:

(a) Pick two categories that you would like to explore (“Children Related” or “Fitness” for ex-ample).

(b) Write down the two companies you have explored.

(c) Write down the franchise fee.

(d) Write down the investment required.

*You will need this information for later.

2. Go to the heading “Franchise Directory” links (second from left).

(a) Find two franchises you would have an interest in.

(b) Pick one company and read the biography. Summarize the biography below and be pre-pared to discuss this information in class.

3. Go to the heading “Small Business Information” (third from left).

(a) Click on “Franchise Business” news.


http://www.franchise.com/

http://www.franchise.com/

(b) Click on the article “Re-invest Your Career With a Franchise!”

(c) Summarize the article below and be prepared to discuss the article in class.

4. Go to the “Starting a Business Help” heading (fourth from left).

(a) Click on the “What Can I Afford” heading.

(b) Do the exercise as instructed.

(c) What is your amount to invest?

5. Based on the earlier choices you considered as franchises you might be interested in, why did you choose these particular companies? Based on the amount you could invest, could you consider making this investment? How serious would you be in considering purchasing a franchise in the near future? In the next five years? In the next ten years?



Researching Philanthropy

The world’s largest charitable organization is the Bill and Melinda Gates Foundation, created by the Microsoft founder. Go to the Foundation website (www.gatesfoundation.org,) and answer the ques-tions below. (Sometimes the web address for a location changes. You might need to search to find the ex-act location mentioned.) BONUS CASE 1-3 on page 1.32 in this manual further explores the Gates Foun-dation.

1. What year was the Foundation created?

2. Who are the Foundation’s officers?

3. What is the Foundation’s total endowment?

4. List three recent grant recipients and the amount granted.

5. What are the key values, or mission, of the Foundation?


http://www.gatesfoundation.org/


Social Entrepreneurship

Each year Fast Company magazine publishes the Fast Company/Monitor Group Social Capitalist Awards. The Awards recognize the leading social entrepreneurial organizations and their contributions to society.

Go to the Fast Company website (www.fastcompany.com) and find the Social Capitalist Awards for the latest year. (Sometimes the web address for a location changes. You might need to search to find the exact location mentioned.)

1. What criteria do Fast Company and the Monitor Group use to choose the Social Capitalist Award winners?

2. Choose two of the Social Capitalist Award winners to explore further.

Name of the organization honored ___________________________________________

a. Name of the person honored and his/her job title:

b. Location:

c. Summary of project earning the award:

Name of the organization honored ___________________________________________

d. Name of the person honored and his/her job title:

e. Location:

f. Summary of project earning the award:

3. In your own words, give a definition for “social entrepreneurship.”


http://www.fastcompany.com/

CRITICAL THINKING EXERCISES

CRITICAL THINKING EXERCISE 1-1

How Much Profit?

The text defines profit as “the amount a business earns above and beyond what it spends for salaries and other expenses.” Choose a large corporation representing each of the following types of com-panies. Using the above profit definition, how much profit as a percentage of sales do you think each cor-poration earns? In other words, out of every dollar a company earns, how much does it keep?

1. AUTOMOBILE MANUFACTURER

Corporation _____________________ Percent Estimated Profit ____________

2. GROCERY CHAIN


3. AIRLINE


4. ENERGY COMPANY


5. COMPUTER COMPANY



NOTES FOR CRITICAL THINKING EXERCISE 1-1

Students often have a much-exaggerated idea of the amount of profit big corporations make. This exercise should help set the record straight.

Each spring, Fortune magazine publishes a comprehensive listing of the largest U.S. corporations along with annual income, profit, employees, etc. There are several financial references on the Web, such as www.moneycentral.msn.com/investor, http://biz.yahool.com, or www.marketwatch.com. You can also find the information on each corporation’s Website. You can use these resources to find the most recent profit figures for comparison. Below are the published figures for 2006:

1. AUTOMOBILE MANUFACTURER: Ford Motors Corp, 3.3% annual loss (industry average 1.6% loss.)

2. GROCERY CHAIN: Kroger Inc., 1.8% annual profit (industry average 1.9% profit.)

3. AIRLINE: Southwest Airlines, 6.1% annual profit (industry average 5.4% profit.)

4. ENERGY COMPANY: Exxon, 11.6% annual profit (industry average 9.9% profit.)

5. COMPUTER COMPANY: Dell Computer, 5.0% annual profit (industry average 7.6% profit.)

(Figures above are from http://biz.yahoo.com, January 25, 2008.)


http://biz.yahoo.com/

http://www.marketwatch.com/

http://biz.yahool.com/

http://www.moneycentral.msn.com/investor

CRITICAL THINKING EXERCISE 1-2

Job and Career vs. Owning a Business

To help make a decision about the advantages of pursuing a career and the advantages of owning your own business, use the list below to answer some basic questions. At the end, look at your two choices and see where you might have a reason to pursue your anticipated career or where you might find an interest and potential desire to be a small business owner.

1. CAREER SALARY OPPORTUNITIES (circle one)

Beginning Salary (average/good/excellent)

Upper Job Salary (average/good/excellent)

2. CAREER JOB OPPORTUNITIES (circle one)

Growing Field (yes/no)

Requires Trade School/Associate Degree/Bachelor’s Degree (yes/no)

Best Size Company For Career Job (small/middle size/large)

3. SMALL BUSINESS OWNERSHIP OPPORTUNITIES (circle one)

Requires Up Front Investment (small investment/medium size investment/large invest-ment)

Potential Franchise Has A Good Business Model (yes/no)

Competition From Other Franchise Owners Will Be (non existent/some competition/ very competitive)

4. POTENTIAL RETURN ON THE SMALL BUSINESS PURCHASE (circle one)

Provides Purchase of Additional Locations (yes/no)

Has Name Recognition (yes/no)

Has A Good Support System (yes/no)

5. If you could, would pursuing your ideal career be worth the investment? (yes/no)

6. Are you willing to make the investment (more schooling) and work for moderate pay to get the knowledge and experience to make this investment pay off? (yes/no)

7. If you could invest in your own business, would you and could you obtain the necessary finances to make this happen? (yes/no)

8. Is the risk of the unknown in the business environment worth the pursuit of your own time, money, and family adjustment to own your own business? (yes/no)

9. Given the two choices, what direction would you rather pursue?


BONUS CASES

BONUS CASE 1-1

Dual-Career Planning

Carey Moler is a 32-year-old account executive for a communications company. She is married to Mitchell Moler, a lawyer. Carey and Mitchell did not make any definite plans about how to juggle their careers and family life until Carey reached age 30. Then they decided to have a baby, and career planning took on a whole new dimension. A company named Catalyst talked to 815 dual-career couples and found that most of them, like the Molers, had not made any long-range career decisions regarding family life-style.

From the business perspective, such dual-career families create real concerns. There are problems with relocation, with child care, and so on that affect recruiting, productivity, morale, and promotion poli-cies.

For a couple such as the Molers, having both career and family responsibilities is exhausting. But that is just one problem. If Carey is moving up in her firm, what happens if Mitchell gets a terrific job of-fer a thousand miles away? What if Carey gets such an offer? Who is going to care for the baby? What happens if the baby becomes ill? How do they plan their vacations when there are three schedules to bal-ance? Who will do the housework?

Dual careers require careful planning and discussion, and those plans need to be reviewed over time. A couple who decide at age 22 to do certain things may change their minds at 30. Whether or not to have children, where to locate, how to manage the household—all such issues and more can become ma-jor problems if not carefully planned.

The same is true for corporations. They, too, must plan for dual-career families. They must give attention to job sharing, flextime, paternity leave policies, transfer policies, nepotism rules (i.e., rules about hiring family members), and more.

DISCUSSION QUESTIONS FOR BONUS CASE 1-1

1. What are some of the issues you can see developing because of dual-career families? How is this affecting children in such families?

2. What kind of corporate policies need changing to adapt to these new realities?

3. What are the advantages of dual careers? Disadvantages? What can newlywed couples do to min-imize the problems of dual careers? How can a couple achieve the advantages?

ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 1-1

1. What are some of the issues you can see developing because of dual-career families? How is this affecting children in such families?

Many issues are raised in this case. They may cause some discussion in class, especially with older students in night classes. But dual career families raise other issues, such as “What happens when one of them gets promoted and wants to move?”


If one were to quit to stay home with the children, which one should it be? Many of these ques-tions should be answered before a couple gets married and before having any children. But not all ques-tions involve children. This case could prove to be quite interesting in class.

2. What kind of corporate policies need changing to adapt to these new realities?

Some answers are provided in the case. Students may want to brainstorm other answers, includ-ing transferring health care, vacation scheduling, moving allowances, and more.

3. What are the advantages of dual careers? Disadvantages? What can newlywed couples do to minimize the problems of dual careers? How can a couple achieve the advantages?

The great advantage of dual careers is more money for living. The disadvantages include the need for child care, which can result in more childhood illness, more aggressive behavior, and so on. Students, if they are old enough to be affected, will have lots of input on this one.


BONUS CASE 1-2

Dealing with Changing Family Structures

Economic and social changes have had a dramatic impact on the nature of the family. It used to be that a “typical” family was one with a mother, father, and two kids. Only 11% of all families now fit that description! In 1970, 40% of the families consisted of a husband, a wife, and children. Today, about 28% match that description. To show you how significant that change is, let’s look at another figure. Since 1970, there has been an increase in “families” of 22 million, but a decrease of over 1 million in married-couple families with children. The number of single-person households has increased by about 9 million since 1970 and now accounts for 23% of all households.

Today, couples with no children are the largest group of American households (30%). These are mostly older couples (two of three are over 50). About 4% of American households consist of unmarried couples living together. If we were to add up all those people who live alone with those married couples without children (including those who live together without being married), we find that 57% of all households fall into a category that might be called new-style family.

Think what that means when communities are trying to get more money for schools. Some 57% of the voters have no children in school and could resist the increase. Think also, of how many schools are closing because of declining enrollments. Family changes are affecting all kinds of institutions in so-ciety.

Think also of the economic potential of two-income families with no children. These young urban professionals are stereotyped as driving fancy sports cars, living in elaborately decorated apartments, and enjoying the good life. There is some truth in that image. On the other hand, such couples tend to work long hours and seem to have no time for starting a family.

The tensions of having two-income families plus the social changes that have happened over the last 25 years or so have led to divorce and the phenomenon called the single-parent family. The number of households headed by a woman with one or more children has doubled since 1970. There are about 6 million such families, and most of them live in poverty. Another 800,000 single-parent households are headed by a man. These are the statistics. What do they mean for business?

DISCUSSION QUESTIONS FOR SUPPLEMENTAL CASE 1-2

1. What effects have the changes in family structure had on businesses thus far? Think of the prod-ucts that have been designed for couples with no children and for individuals living alone. Think also of the working woman phenomenon. What does that mean in the long run for businesses?

2. Couples are having fewer and fewer children, and are beginning to have children later. What ef-fect will these changes have on schools and businesses?

3. What is the significance of the fact that two of three of the married couples with no children at home are over 50? What market opportunities does that create?

4. What is the relationship between the breakup of the family and poverty in the United States?

ANSWERS TO DISCUSSION QUESTIONS FOR SUPPLEMENTAL CASE 1-2

1. What effects have the changes in family structure had on businesses thus far?


Many new products such as meals for one have been designed for individuals and couples. Apart-ments are often smaller to accommodate smaller families, and many have amenities such as weight rooms, swimming pools, and game rooms. Businesses have added more flextime, part-time jobs, and day care centers.

2. Couples are having fewer and fewer children, and are beginning to have children later. What ef-fect will these changes have on schools and businesses?

Young couples often have lots of money when they are both working and spend it on cars, clothes, apartments, travel, and other such items. The name given such people in the 1980s was “Yup-pies” for young urban professionals. These children of the “baby boom” era (after World War II) had fewer children than their parents and spent more money on them. Their children, the Generation X, are now entering the workforce and spending their incomes.

3. What is the significance of the fact that two of three of the married couples with no children at home are over 50? What market opportunities does that create?

It may be more difficult to get school tax referendums passed, but businesses may benefit because these couples tend to have much discretionary income. No children at home may also increase the desire for condominiums and smaller homes.

4. What is the relationship between the breakup of the family and poverty in the United States?

The majority of those living in poverty are in single-parent families. Many are young women who have never married; others are divorced individuals with children who are not receiving support from the father. It is important to follow family trends because they will indicate much about the strength of the economy and the future of business. Strong family units are good for the economy and society.

(SUGGESTION: An interesting extension of this case would be to have your students research the most current values for the figures given in this case. A good starting point is the U.S. Census site (www.census.gov.).



BONUS CASE 1-3

The World’s Largest Charity

Bill Gates is the wealthiest person in the world. According to Forbes magazine, his net worth is $50 billion. Microsoft’s 2007 earnings were over $50 billion. But at age 50 Bill Gates earned respect in a new way. Along with his wife Melinda, the chairman of Microsoft became the greatest philanthropist in history. Melinda, a former Microsoft colleague, has a bachelor’s degree in computer science and econom-ics and a masters in business from Duke University. Bill dropped out of Harvard at the end of his sopho-more year to run Microsoft.

In its short eight-year existence, the Bill and Melinda Gates Foundation has already helped save at least 700,000 lives in poor countries through its investments in vaccinations. In the U.S., its library project has brought computers and Internet access to 11,000 libraries. The fund sponsored the biggest pri-vately funded scholarship program in history, sending over 9,000 high-achieving minority students to col-lege. It is the largest foundation in the world, with an endowment of $35 billion. Each year the Gates Foundation spends almost the same amount as the World Health Organization (WHO.) In 2006 the Foun-dation made grants of over $1.5 billion.

In 1993, advisers gave Bill Gates a copy of the 1993 World Bank Development report. The docu-ment explained how many millions of people in poor countries die from diseases that already have cures. Then it listed the most cost-effective methods of prevention those deaths, from immunization to AIDS prevention to nutrition. The document reads like a blueprint for the Gates Foundation.

The Gates run the Seattle-based foundation like a business. They are fluent in the science of pub-lic health, and both use the language of business to describe their philanthropic work. “There is no better return on investment that saving the life of a newborn,” said Melinda.

The foundation has been able to instill a rare level of accountability from its grantees. In India, the Foundation runs an HIV AIDS-prevention program, headed by Ashok Alexander. Alexander calls the program’s clinics “franchises.” In 2005, Alexander cut off funding to three nongovernmental organiza-tions because they did not meet agreed-upon milestones. “People are not used to being terminated for nonperformance,” says Alexander.

In June 2006, Bill Gates announced that he was stepping down from full-time duties at Microsoft, giving up his role as chief software architect, to devote more attention to the Gates Foundation.

Gates did not keep his title of top philanthropist for long. In that same month, Warren Buffett an-nounced that he planned to give away his stake in Berkshire-Hathaway, the company he founded, worth more than $44 billion. Buffett will divide the gift over five foundations, but the largest amount will go to the Gates Foundation. Buffett’s donation exceeds the amounts given by the great philanthropists of the past. Andrew Carnegie’s giving totaled about $380 million—$7.6 billion in today’s dollars. Based on the Berkshire stock price on the day the gift was announced, Buffett’s gifts would be worth $37 billion. Be-cause the donation is in the form of Berkshire stock shares given over time, the total donation could grow in value as the company grows.

According to Buffett, he always intended to have his wife oversee his charitable giving when he died. But after she died in 2004, he saw an opportunity to invest in “an existing well-respected foundation run buy two ungodly bright people.” He changed plans and started giving away his fortune in 2006.

Buffett credits his late wife Susan for his change in priority. “We agreed with Andrew Carnegie, who said that huge fortunes that flow in large part from society should in large part be returned to soci-ety,” said Buffett.


The gift more than doubled the size of the Gates Foundation. “We are awed by our friend Warren Buffett’s decision to use his fortune to address the world’s most challenging inequities,” Bill and Melinda Gates said in a statement. “As we move forward with the work, we do so with a profound sense of re-sponsibility. Working with Warren and with our partners around the world, we have a tremendous oppor-tunity to make a positive difference in people’s lives.” v


1. How do Bill and Melinda Gates use basic business principles to run the Gates Foundation?

2. Since the Foundation does not earn a profit, how should its success be judged?

3. Most philanthropists are wealthy individuals who begin their charitable work late in life after years of building an enterprise. Why do you think Gates started so early in his life?

4. Why do you think Buffett chose the Gates Foundation for his record-breaking donation?


1. How do Bill and Melinda Gates use basic business principles to run the Gates Foundation?

They use business principles such as return on investment, responsibility, and accountability. Running a philanthropic enterprise is much the same as running a business. You have the same kind of goals, the same need for good workers, the same need to measure performance, and the same need to fire incompetent workers.

2. Since the foundation does not earn a profit, how should its success be judged?

Performance measures will differ by the goals established. One goal may be to provide medicine for a certain number of people. Another might be to develop a vaccine for malaria within 6 months. Each goal calls for a different measure of success. One measure may be simply to raise the public’s interest in an issue—such as poor schools, or poverty in the United States.

3. Most philanthropists are wealthy individuals who begin their charitable work late in life after years of building an enterprise. Why do you think Gates started so early in his life?

Gates was encouraged to do so by other entrepreneurs. Bill and Melinda have a passion for cer-tain causes, and are willing and able to back their wants with the finances necessary. Gates did not leave his business until it was running smoothly and people were in place to keep it going. In fact, new people may add new innovations and help the company to grow, creating more wealth for the Gates family, and more donations to worthy causes.

4. Why do you think Buffett chose the Gates Foundation for his record-breaking donation?

The Gates Foundation is run like a business, with clear mission, strategies, and controls. This ap-peals to a businessperson like Buffett. Also, the donation is so huge, most charities do not have the infra-structure to absorb it. The Gates Foundation already has a large global network in place.


BONUS CASE 1-4

Cirque du Soleil: No Clowning Around (Video Case)

(NOTE: This case can be used with the Video on DVD for this chapter.)

Several themes were introduced in this first chapter, including the importance of entrepreneurship to the success of the overall economy, the need for entrepreneurs to take risks (and the greater the risk, the higher the profit may be), and the dynamic business environment and the challenges it presents. Few or-ganizations in today’s society are more indicative of the new challenges than Cirque Du Soleil (sounds like “Serk due Solay”).

In the first place, Guy Laliberte took a huge risk by challenging the established circus tradition. The elaborate shows are expensive to start, and the talent must be the best in the world. But the risk paid off tremendously with sales of almost a billion dollars a year. Cirque du Soleil creates thousands of new jobs and contributes greatly to the communities it serves. It does this not only through the taxes it pays, but through community outreach programs as well. Because of the entertainment value, Cirque contrib-utes to both the standard of living (through the taxes it pays) and the quality of life (the fun it provides for citizens of all ages).

Like all organizations, Cirque du Soleil has many stakeholders. They include the owners, the em-ployees, and the local community. The organization is especially focused on the stakeholder group called customers. It wants to put on the best show possible, and that means providing the best talent in the best locations. To reach as many people as possible, many of the shows go on the road. You can even watch some of the shows on TV.

The business environment presents many challenges to Cirque du Soleil, as it does for all busi-nesses. The economic and legal environment of the United States greatly supports entrepreneurs like Lal-iberte.

The technological environment in the United States is also supportive of new business ventures. No circus in the past came close to the elaborate technological devices used by Cirque du Soleil. The stage for one of the Cirque productions in Las Vegas, for example, is a huge pool that delights the audi-ence with its ability to change from a place where the actors can seem to walk on water to one where they can dive from many feet above the pool.

The social environment is also conducive to new businesses. The diversity of the U.S. population has contributed greatly to the ability of the circus to find diverse acts and to recruit such acts from all over the world. The ability of the organization to adapt to many cultures is shown by its success in various cities throughout the world.

Of course, success is likely to breed competition, and Cirque has its share. Even traditional cir-cuses are tending to offer more exciting programs that reflect what Cirque has been doing for years. Com-petition is good for business. It prompts all businesses to offer the best products possible.

One of the best things about this video is that is allows you to see part of Cirque du Soleil in ac-tion. If you have never seen the show, search it out—if only on TV. It is exciting and fun, and it shows that entrepreneurship is alive and well and providing wonderful new services. And the result is profits for the owners and a better quality of life for us.


1. What lessons can you take from Guy Laliberte about how to be a successful entrepreneur?


2. What are some of the challenges and opportunities you see for Cirque du Soleil in today’s dy-namic business environment?

3. How would you compare the excitement and fun of working for a new entrepreneurial venture like Cirque du Soleil with working for a large, traditional business? What are the risks? The re-wards? The challenges?


1. What lessons can you take from Guy Laliberte about how to be a successful entrepreneur?

New forms of entertainment include iPods, video games, smart phones, iPhones, and more. No one knows more about this than students do. What forms of entertainment occupy them the most? Do they IM? Use Google? Buy online? What effect has such entertainment had on traditional forms of recre-ation for students?

2. What are some of the challenges and opportunities you see for Cirque du Soleil in today’s dy-namic business environment?

The answers to this question are specific to your area. They may include population growth or de-cline, business growth or failure, and more.

3. How would you compare the excitement and fun of working for a new entrepreneurial venture like Cirque du Soleil with working for a large, traditional business? What are the risks? The re-wards? The challenges?

It would be great fun working for Cirque du Soleil, but usually it would mean lots of travel and the risks that go along with travel. Relationships would be hard to maintain. The challenges are many, in-cluding the need to stay competitive with other acts. Students should have a good time imagining working for Cirque vs. working for local businesses.

iii Sources: Diane Brady and Christopher Palmeri, “America’s Growing Pet Economy,” Business Week, July 30, 2007; “Pet Spending at All-Time High, USA Today, December 1, 2004; Cheryl Cole, “Pet Care Spending Last to Be Hit in Recession,” Birmingham Post, August 28, 2002. iv The Internet is a dynamic, changing information source. Web links noted in this manual were checked at the time of publication, but content may change over time. Please review the website before recommending it to your stu-dents.

v Sources: Amanda Ripley, “Time Persons of the Year: From Riches to Rags,” Time, December 26, 2005-January 2, 2006, pp. 72-88; Liv Grossman, “Bill Gates: Giving it Away in Style,” Time, April 18, 2005; Steven Levy, “Bill Gates Goes Part Time at Microsoft,” Newsweek, June 17, 2006; Yuki Noguchi, “Gates Foundation to Get Bulk of Buffett’s Fortune,” The Washington Post, June 26, 2006; Carol J. Loomis, “Warren Buffett Gives Away his For-tune,” Fortune, June 25, 2006; and information from www.gatesfoundation.org.


http://www.gatesfoundation.org/

ENDNOTES


dias1 im ch01 final1

Documents

bonus internet exercises1

lecture notes1

video notes1

lecture outline

video features cirque

olc test bank business

lecture links1

video case1