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Business Administration Notes: Chapter 1 Sections 1-6

by: Chase Siegfried

Business Administration Notes: Chapter 1 Sections 1-6 BSAD 180

Marketplace > University of Wisconsin - Eau Claire > Business Administration > BSAD 180 > Business Administration Notes Chapter 1 Sections 1 6
Chase Siegfried
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About this Document

These notes cover what is described in all of Chapter 1.
Business Administration
Professor Mark Alfuth
Class Notes




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This 10 page Class Notes was uploaded by Chase Siegfried on Thursday September 8, 2016. The Class Notes belongs to BSAD 180 at University of Wisconsin - Eau Claire taught by Professor Mark Alfuth in Fall 2016. Since its upload, it has received 28 views. For similar materials see Business Administration in Business Administration at University of Wisconsin - Eau Claire.

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Date Created: 09/08/16
Business Administration Notes: Chapter 1 Business Now! (change is the only constant) Learning objectives:  1-1: Define business and discuss the role of business in the economy  1-2: Explain the evolution of modern business  1-3: Discuss the role of nonprofit organizations in the economy  1-4: Outline the core factors of production and how they affect the economy  1-5: Describe today’s business environment and discuss each key dimension  1-6: Explain how current business trends might affect your career choices Section 1: Business Now, Moving at Breakneck Speed Vocabulary Notes: Value: The relationship between the price of a good or a service and the benefits that it offers its customers. Business: Any organization or activity that provides goods and services in an effort to earn a profit. Profit: Financial reward that comes from starting and running a business. Loss: When a company doesn’t earn enough profit to cover their expenses. Entrepreneur: People who risk their time, money, and other resources to start and manage a business. Standard of living: The quantity and quality of goods and services available to a population Quality of life: The overall sense of well-being experienced by either an individual or a group In-text Notes: has identified some trends that are likely to shape the world’s economies as we know it. Trends are listed below:  Instant Skills: Predicts that hundreds of millions of “consumers will care less about what they have or buy and more about what they can do or create”. Basically any service that eliminates time and learning barriers will thrive.  Fast-Laning: Fast-Laning talks about trying to find ways to eliminate the dreadful experience of waiting in line. Some companies are starting to invest in creative ways speed up the waiting experience for loyal customers without upsetting their other customers. One example is an amusement park who released an app that allows attendees to “pay the free Helix Game while waiting in line for the attraction. Every 15 minutes, the player with the highest score got a pass to skip the line”. Creative and entertaining.  Branded Governments: Most people believe that the government alone cannot solve todays problems. On top of that, most people want businesses to get more involved. Because of this, a new trend has been created for current and potential businesses, which many have already begun pursuing. An example would be a company called Easy Taxi, who partnered up with Dettol to offer Nigerian cab drivers lessons on how to diagnose and prevent the disease, in the hopes of that those cab drivers will pass that knowledge onto their passengers.  Sympathetic Pricing: “Do brands really know our pain?” This is a question consumers are asking about the brands they buy from today. In response, companies are expressing their sympathy for us by via imaginative discounts that “demonstrate compassion or alleviate customer pain”.  Robolove: The main benefit of robots is that they can save time and money. But do we really like robots? predicts that many of us will look forward to our first experience with robots. Profit alone provides a powerful incentive for people of all backgrounds to launch their own enterprise. As entrepreneurs gain wealth, they create a ripple effect that enriches everyone around them. Example: If you own a successful business, you’re more than likely to spend your profits on other local businesses and clubs. In addition, the government will collect your taxes and the people you hire will gain income. Section 2: The History of Business Putting it all in Context Vocabulary Notes: There are no vocab words In-text Notes: Most business historians divide the history of American business into five distinct eras, which overlap during the periods of transistors.  The industrial Revolution: Technological advances fueled a period of rapid industrialization in America from the mid-1700’s to the mid-1800’s. As mass production took hold, huge factories replaced well skilled artisan workshops. The large factories hired semiskilled workers who specialized in a limited number of tasks. The result, large increase in production while large decrease in ownership and pride.  The Entrepreneurship Era: At the end of the second half of the industrial revolution era, very titanic sized industries came about. Although these behemoth corporations created tremendous profits that resulted in a higher standard of living, they also forced out competition, manipulated prices, exploited workers, and decimated the government. Towards the end of the era, the government regained its lost power and enforced new laws to regulate business and protect consumers and workers, creating more balance in the economy.  The production Era: Taking place in the 1900’s, the production era was a time in history where businesses focused on further refining the production process and creating greater efficiencies. Jobs became more specialized, increasing productivity and lowering costs and prices. With managers focusing more on efficiency, customers became an afterthought. This era was also the birthplace of “hard selling” where aggressive persuasion led to customers being pressured into giving away their cash to these businesses.  The Marketing Era: After WWII, power shifted away from producers and towards consumers. Businesses began developing brands, or distinctive identities, to help consumers understand the differences among various products. The marketing concept emerged: a consumer focus that permeates successful companies in every department, at every level.  The Relationship Era: Building on the marketing concept, today, leading-edge firms look beyond each immediate transaction with a customer and aim to build long-lasting relationships. Cultivating current customers is more profitable than finding new ones. One key tool is technology. Section 3: Nonprofits and the Economy, The Business of Doing Good Vocabulary Notes: Nonprofits: Business-like establishments that employ people and produce goods and services with the fundamental goal contributing to the community rather than generating financial gain. In-text Notes: Nonprofit organizations play a critical role in our economy because they work hand- in-hand with other businesses to improve the quality of live in our society. Examples include improving health, human resources, education, art, religion, and culture. All- in-all, nonprofit organizations are like businesses in every way except that they don’t consider profit as one of their primary goals. Nonprofit organizations can draw additional investment. Section 4: Factors of Production: The Basic Building Blocks Vocabulary Notes: Factors of Production: Four fundamental elements-natural resources, capital, human resources, and entrepreneurship- that businesses need to achieve their objective. In-text Notes: Both businesses and nonprofits rely on factors of production-four fundamental resources- to achieve their objection.  Natural Resources: Includes all inputs that offer value in their natural stare, such as land, fresh water, wind, and mineral deposits. Basically they’re resources that cannot be created. Natural resources tend to rise in value with high demand, low supply, or both.  Capital: This category includes machines, tools, buildings, information, and technology. Basically everything that humans can manufacture. Money is NOT a capital resource, but a tool to acquire, maintain, and upgrade their capital.  Human Resources: This factor includes the physical, intellectual, and creative contributions of everyone who works within an economy. Some experts consider knowledge its own category.  Entrepreneurship: Entrepreneurs are people who take the risk of launching and operating their own businesses, largely in response to the profit incentive. They tend to see opportunities where others don’t, and they use their own resources to capitalize on that potential. Entrepreneurs can also kick-start an economy, creating a tidal wave of opportunity by harnessing the other factors of production. Key ingredient to a successful entrepreneur is economic freedom: freedom of choice (whom to hire, for instance, or what to produce), freedom from excess regulation, and freedom from too much taxation. Protection from corruption and unfair competition is another entrepreneurial “must”. Section 5: The Business Environment: The Context for Success Vocabulary Notes: Business Environment: The setting in which business operates. The five key components are: economic environment, competitive environment, technological environment, social environment, and global environment. Speed-to-market: The rate at which a new product moves from conception to commercialization. Business technology: Any tools - especially computers, telecommunications, and other digital products - that businesses can use to become more efficient and effective. World Wide Web: The service that allows computer users to easily access and share information on the internet in the form of text, graphics, video, apps, and animation. E-commerce: Business transactions conducted online, typically via the internet. Demographics: The measurable characteristics of a population. Demographic factors include population size and density, as well as specific traits such as age, gender, and race. Free Trade: An international economic and political movement designed to help goods and services flow more freely across international boundaries. General Agreement on Tariffs and Trade (GATT): An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide. In-text Notes: 1-5a: The Economic Environment: In basic terms, the economic environment is the rise and fall of the economy. There are certain active steps that the government can take in order to reduce the risk of starting and running a business. The result: free flourish. One government policy that supports business is the relatively low federal tax rate, both for individuals and businesses. Other branches of the government, such as the Federal Trade Commission, actively promote fair competitive practices, which help give every enterprise a chance to succeed. Another key element of the U.S. economic environment is legislation that supports enforceable contracts. An example is if you buy 5,000 paper bags for 5 cents a bag. The firm producing the bags cannot raise their prices to 8 cents a bag the day before delivery. That would lead to lots of lawsuits. Corruption also affects the economic environment. A low level of corruption and bribery dramatically reduces the risks of running a business by ensuring that everyone plays by the same rules. 1-5b: The Competitive Environment: Leading edge companies have focused their attention more and more on customer satisfaction with respect to increased global competition. Getting current customers to buy more of your product is a lot less expensive than convincing potential customers to try your product for the first time. In addition, if you transform your current customers into loyal advocates-vocal promoters of your product or service- they’ll get those new customers for you more effectively than any advertising or discount program. Customer satisfaction comes in large part from delivering unsurpassed value. The best way to measure value is the size of the gap between product benefits and price. A product has value when its benefits to the customer are equal to or greater than the price that the customer pays. The key to value is quality: products that are expensive, but have long life spans will be chosen over those that are cheaper with short life spans. Leading edge vs Bleeding edge: Bleeding edge companies are companies that launch products that fail because they were too far ahead of their market. An example is a grocery store that offered online shopping. This grocery store ended up bankrupt because customers weren’t ready to dump traditional grocery shopping with online shopping. Leading edge companies are the opposite. They produce products just as the market becomes ready to embrace them. 1-5c: The Workforce Advantage: Research has suggested that investing in worker satisfaction yields tangible, bottom-line results. Increased worker satisfaction, such as having a kick ass boss or an incredible incentives program, leads to higher levels of employee engagement because employees start to not only like what they do, they start to care about what they do. Nothing says high production levels like passionate employees. 1-5d: The Technological Environment: This environment is all about business technology. Business technology (as stated in one of the vocabulary words listed above) includes any tools that businesses can use to become more efficient and effective. In today’s world, business technology refers to computers, telecommunications, and other digital tools. Never fall behind on business technology, for it can be a quick death to your business. You can use business technology to not only increase production levels, but sales levels as well. Increased technology can create a more seamless flow of goods and services. All in all, companies that welcome change and manage it well will clearly succeed over others. 1-5e: The Social Environment: The social environment embodies the values, attitudes, customs, and beliefs shared by groups of people. It also covers demographics (Demographics include population size, age, race, gender, and more). Some of the social trends that have the strongest impact on American businesses are:  Diversity  Aging population  Rising worker expectations  Ethics and social responsibility Diversity: Change in diversity can become a major role in a business’s profits because it gives businesses an opportunity to expand their market. Growing diversity also affects the workforce. A diverse staff can yield a powerful competitive advantage in terms of both innovation and ability to reach a broad customer base. True diversity doesn’t just reflect race, it portrays gender, age, religion, and nationality. Aging populations: As life spans increase and birthrates decrease, the American population is rapidly aging. But it’s not just us; countries such as England, China, and Japan are following the same trends. The rapidly aging population brings opportunities and threats for business. Example would be a company that cater to old people. That company will clearly strive with the oncoming old people. Another example are creative companies that can focus on products that serve old people, such as books. A threat, however, would be the dramatic decrease of potential job seeking individuals. Companies will need to compete even more to sway as many talented people as possible their way. Rising worker expectations: New workers are entering the workforce with higher expectations for their employers in terms of salary, job responsibility, and flexibility. Ethics and social responsibility: Due to recent ethical meltdowns, workers, consumers, and the government, are beginning to hold businesses to a much higher standard. 1-5f: The Global Environment: Because of increased technology, businesses have begun moving to other individual economies around the world, resulting in cost effective and efficient changes. An example would be wanting to manufacture goods in China rather than the U.S. because hourly wage in China is only about $3.50 per hour compared to the U.S., which is about $19.50 per hour. In addition to production moving overseas, jobs have started to migrate overseas. This has resulted because of the General Agreement on Tariffs and Trade (GATT). This has allowed a reduction in trade restrictions, allowing goods to move more freely than ever across international boundaries. A Multi-Pronged Threat: In the past decade alone, war, terrorism, disease, and natural disasters have taken a horrific toll in human lives across the globe. The economic toll has been devastating as well, affecting businesses around the world. With nationalism on the rise, and growing religious and ethical tensions around the world, the global economy may continue to suffer collateral damage. Section 1-6: Business and You: Making it Personal Vocabulary Notes: There are none. In-text Notes: Basically, if you want to have the most positive effect on the economy, pursue what you love. You might not have the fattest pay check, but it does boost your chances of both financial and personal success.


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