Download Slide 1

The Fundamentals of Business
and Economics
Chapter 1
1-1
©2007 Prentice Hall
Chapter 1 Objectives
After studying this chapter, you will be able to:
• Define what a business is and identify four vital
social and economic contributions that
businesses make.
• Differentiate between goods-producing and
service businesses, and list five factors
contributing to the increase in the number of
service businesses.
• Differentiate between a free-market system and
a planned system.
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©2007 Prentice Hall
Chapter 1 Objectives, cont.
• Explain how supply and demand interact to
affect price.
• Discuss the four major economic roles of the
U.S. government.
• Explain how a free-market system monitors its
economic performance.
• Identify five challenges you will face as a
business professional in the coming years.
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©2007 Prentice Hall
How this Course Will Help Your
Career
• Understand what it takes to be an
entrepreneur
• Learn the lingo
• Develop soft skills
• Learn about career opportunities
• Understand the role business plays in society
• See the business world through the eyes of a
business rather than a consumer
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©2007 Prentice Hall
What is Business?
For-Profit
Non-Profit
Money Motive
Social Service
Ethical Conduct
Efficiency
Effectiveness
Social Responsibility
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©2007 Prentice Hall
Web 2.0
• Definition
• Activities:
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Blogging
Podcasting
Wikis
Newsfeeds
Tagging
Virtual Worlds
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Types of Business
Goods Producing
Business
Service Business
Capital Intensive
Labor Intensive
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Why is the Service Sector
Growing?
• More disposable income.
• Changing demographic patterns and
lifestyle trends.
• Support complex goods and new
technology.
• Professional advice.
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Economics
Economics
Micro
Macro
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Factors of Production
Natural
Resources
Human
Resources
Capital
Entreprene
urship
Knowledge
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Economic System
Scarce
Resources
Human
Resources
Capital
Entrepreneurs
Knowledge
Natural
Resources
Factors of Production
Goods
Services
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©2007 Prentice Hall
Types of Economic Systems
Free-Market
System
Capitalism
Planned
System
Mixed
Capitalism
Socialism
Communism
Privatization
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©2007 Prentice Hall
Supply and Demand
$35
$30
D
Not enough
demand
Right price
makes supply &
demand equal
Price
E
$25
$20
S
Not enough
supply
$15
10
$10
15
20
25
30
Pairs of blue jeans (quantity)
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©2007 Prentice Hall
Free-Market Competition
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Competitive Advantage
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Price
Speed
Quality
Service
Innovation
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Role of the Government
• Foster competition
• Regulate and Deregulate
industries
• Protect Stakeholder and
Stockholder’s rights
• Contribute to economic stability
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Economic Indicators
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Interest Rates
Unemployment Rates
Housing Data
Industrial Productivity
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Inflation vs. Deflation
Inflation
Purchasing Power
Deflation
Consumer Price
Index (CPI)
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Producer Price Index (PPI)
• Gross Domestic Product
(GDP)
• Gross National Product (GNP)
• Globalization
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Challenges of Globalization
• Products and Services
• Managing Small Business
(Entrepreneurship)
• Globalization and Workforce Diversity
• Ethics and Social Responsibility
• Technology and Electronic Commerce
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©2007 Prentice Hall