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Date Created: 01/22/16
Introduction to Business Chapter 1 Business Any profit seeking organization that provides good and services designed to satisfy the customers’ need Adding value to satisfy customers every company in the chain where a products passes through adds values for the next costumers and for the ultimate costumer Revenue money that a company brings in through the sale of goods and services o Price that the product it is sold for Profit money left over after all the costs involved in doing business have been deducted from the revenue o Symbol of pi= R-C Competitive advantage some aspect of a product or company that makes it more appealing to its target o Example: Nike, Apple Two types of business o Good producing business companies that create a value by making “things”, most of which are tangible o Service business Barrier to entry Any resource or capability a company must have before it can start competing in a given market o Difficult to get into that business Multiple environment o Important things that a business person has to be aware of Stakeholders internal and external groups affected by a company’s decisions and activities o Example employers, owner of company, manager o Chair holder owner of acuity and firm Disruptive technologies those that fundamentally change the nature of an industry, can be powerful enough to create or destroy entire companies o Example: Kodak Functional areas o Research and development conceiving and designing new products (R&D) o Informational technology (IT) systems that promote communication and information usage through the company or that allow companies to offer new services to their customers o Manufacturing, production or operations area where the company makes whatever it makes or does whatever it does Marketing o Everything that is evolved from knowing what the consumer wants to (research on the consumer) and getting it to the consumer, production is not marketing o Is involved with logistic, advertising, branding (logos), distribution channel (sell it online, website) Finance and accouting o Reports to the CFO o Ensuring that the company has the funds it needs to operate o Monitoring and controlling how those funds are spent o Drafting reports for company management and outside audience such as investor and government regulators Human resources responsible for recruiting, hiring, developing and supporting employees Economics Economy study of how society uses it resources to produce and distribute goods and services o Sum of all the economic activity within a given region Natural resources Macro economy big, looks at the overall big picture, inflation Micro small, looks at the individual, firm, industry economy does not grow at a consistent pace Factor of production inputs, capital and labor things that are used in production to produce outputs o capital physical inputs, money o labor human efforts o Technology how you organize capital (can also be consider a factor) China is a capitalist country even though they call themselves communist Chart o Quantity x axis o Price y axis o Higher price the item has a low demand o Shift in curve (goes up) is an increase in demand Demand can increase due to good economy in the society, trend and popularity of the product, consumer think price is going to go up in the future Normal good income increase you consume more of something Inferior good income decreases o Equilibrium system at rest point where the two lines meet o Supply curve goes down increase in supply (supply increases it’s decreasing) Cost of input going down can cause this o One curve will move and another one will not demand goes up supply stays the same, supply changes demand stays the same o Equilibrium price goes down, quantity goes up o Increase in equilibrium price goes up decrease in quantity of demand Macroeconomics o Growth domestic product over a period of time (Chart) Straight line potential GDP Deflation prices are falling Inflation price rise GDP grows about 3% per year, population grow is 1% per capita 2% o The hill of economy Peak of the business side economy activities are good Recession two or more quarter of negative GDP grow Trough Recovery Expansion economy is going up Fiscal policy economic policy implemented by the president (head of the executive branch) and congress (legislative branch) o Government spending (road, infrastructure, education, health care) o Taxes o Relates to macroeconomics Monetary policy control by the federal reserve, they control price level and stable economic growth ** o FED funds rate o Low interest rate stimulate the economy Fed have been trying to do this for years Taylor Rule’s equation o Pi inflation, is equal to 2% o Greek letter alpha and beta positive coefficients o If inflation is greater than target they are going to raise what the equation equals to o Output grater than potential slows things down o Output less than potential they are going to speed thing up o Agro demand can be affected by stock market crashes consumers stop spending money Market structure o Monopoly o Perfect competition many buyers and sellers, reentry and exit, homogeneous products (same products are being produced), zero profit o Monopolistic competition close to perfect competition but there are differences o Oligopoly a firm, BMW
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