11 14 13 Chapter 1 Notes Taking Risks and Making Profits within the Dynamic Business Environment Business any activity that seeks to provide goods and services to others while Goods tangible products such as computers food clothing cars and appliances Services intangible products such as education health care insurance recreation operating at a profit and travel and tourism Entrepreneur person who risks time and money to start and manage a business Revenue the total amount of money a business takes in during a given period by selling goods and services Profit the amount of money a business earns above and beyond what it spends for salaries and other expenses needed to run the operation Loss occurs when a business s expenses are more than its revenues Risk the chance an entrepreneur takes of losing time and money on a business that may not prove profitable the money they have Standard of living refers to the amount of goods and services people can buy with Quality of life refers to the general well being of a society in terms of its political freedom natural environment education health care safety amount of leisure and rewards that add to the satisfaction and joy that other goods and services provide Stakeholders all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address o Customers employees stockholders suppliers dealers bankers people in the surrounding community the media environmentalists and elected government leaders Outsourcing contracting with other companies often in other counties to do some or all the functions of a firm Nonprofit organizations organization whose goals do not include making a personal profit for its owners or organizers Social entrepreneurs people who use business principles to start and manage not for profits and help address social issues Two ways to succeed in business o Rise through the ranks of large companies o Become an entrepreneur Factors of production o Land natural resources o Labor workers o Capital machines tools buildings whatever is used to produce the goods Doesn t always include money o Entrepreneurship o Knowledge Business environment o The economic and legal environment Freedom of ownership Contract laws Elimination of corruption Tradable currency Minimum taxes and regulation o The technological environment Information technology Databases Bar codes The internet o The competitive environment Customer service Stakeholder recognition Employee service Concern for the environment o The social environment Diversity Demographic changes Family changes o The global business environment Surrounding all 4 Economic and Legal Environment Promoting entrepreneurship allow private ownership of business Governments in developing companies should minimize interference with the free exchange of goods and services The government can further lessen the risks of entrepreneurship by passing laws that enable business people to write enforceable contracts Uniform commercial code regulates business agreements like contracts and warranties so that firms know they can rely on one another o Countries that don t have laws like this have much higher risks of starting a business Government can establish a currency that s tradable in world markets Government can help minimize corruption in business and in its own ranks Technological Environment Efficiency producing goods and services using the least amount of resources Productivity the amount of output you generate given the amount of input Reason for high unemployment workers are so productive that fewer are needed E commerce buying and selling of goods over the internet o Business to consumer transaction o Business to business transaction Database electronic storage file Identity theft obtaining of individuals personal information for illegal purposes Competitive Environment Business s are customer driven NOT management driven Empowerment allowing workers to make other decisions essential to producing high quality goods and services Social Environment Demography statistical study of the human population with regard to its size density and other characteristics such as race gender and income Increase in older citizens creates a lot of business opportunity Global Environment Challenges growth of global competition and increase of free trade among nations Wars and threats of terrorism draw billions of dollars from the economy Climate change movement of the temperature of the planet up or down over time o Greening saving energy and producing products that cause less harm to the environment
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