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Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
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lecture link 1-5
SOCIAL ENTREPRENEURSHIP: IMPROVING WORLD HEALTH WITH-
OUT PROFITS
Knowing that Victoria Hale was a pharmaceutical scientist, a friend called her, desperate. Their
13-year-old daughter had been diagnosed with a deadly form of cancer called Ewing’s sarcoma. The
daughter’s doctors were offering little hope, and the cancer was spreading fast. Could Hale help? With the
aid of a former FDA colleague, she began searching for experimental compounds that might offer any ray
of hope. They found two substances that had shown initial promise in fighting the cancer, but both were
sitting idle on laboratory shelves. No one was working to develop the compounds into drugs. The cancer
was too rare to create an attractive market for new treatments.
All organizations need money to operate. One of the major sources of money is investors who
give money to firms in order to make a profit. Those firms have to be profitable. Nonprofit organizations
usually rely on the donations from others to keep operating. Often that money comes from profit-making
companies, like Celera, who are concerned about disease prevention, but can’t stay in business unless
they make a profit. Hale has found a way to link these organizations. iv
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
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lecture link 1-6
AMERICA’S LOST DECADE
It’s no secret that the past few years have been rough on the U.S. economy. Sadly, though, the
American financial sector’s recent rockiness tells only a portion of the decade’s dire story. When looked
at as a whole, the time known by some as the “Oughts” (2000–2009) was an enormous step backward for
For all its destructive elements, the economic debacle of the 2000s has succeeded in providing
government officials, financial experts, and the public with some much-needed perspective. Due to the
magnitude of the Oughts’ financial failures, economists will be unraveling all its lessons for some time.
However, one obvious source of reform for regulators is the banking industry. Instead of monitoring indi-
vidual banks closely, regulators must now observe the banking industry as a whole to measure its overall
effect on the economy. Reforms to Federal Reserve policy are also expected, but Fed officials are still
uncertain how to implement them.v
lecture link 1-7
EDUCATION’S NEW WHITEBOARD
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
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At schools fortunate enough to have them, interactive whiteboards are a blessing for educators
struggling to engage a generation of students raised with the Internet. In the United Kingdom 70% of all
primary and secondary classrooms have interactive whiteboards, compared with just 16% in the United
States. Students in those classrooms made the equivalent of five months’ additional progress in math.
Multiple studies suggest that the devices boost attendance rates and classroom participation. At Dorches-
ter School District 2 in Summerville, South Carolina, 1,200 interactive boards have been installed in the
lecture link 1-8
PREVENTING IDENTITY THEFT
Each year, millions of Americans fall prey to identity theft. Your identity is not just your unique
DNA and fingerprints. It is also your Social Security number, credit card numbers, driver’s license num-
HOW IDENTITY IS STOLEN
Thieves often rely on hacking vulnerable computer systems to harvest information. In 2005, the
credit card processing agency CardSystems revealed that it improperly kept information on credit card
customers for research. When hackers breached the system, over 40 million customers were exposed.
In January 2009, Heartland Payment announced that the company’s card processing system had
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HOW YOU CAN PROTECT YOURSELF
SIGNS THAT YOUR IDENTITY MIGHT HAVE BEEN STOLEN
Be alert to signs that require immediate attention such as:
1. Bills that do not arrive as expected
2. Unexpected credit cards or account statements
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3. Denials of credit for no apparent reason
4. Calls or letters about purchases you did not make
WHAT TO DO IF YOUR IDENTIFY IS STOLENvii
4. File a complaint with the Federal Trade Commission, and report the fraud to the Social Security
Administration.
Below are the important telephone numbers you will need to begin rebuilding your credit:
lecture link 1-9
MAGAZINES PLEAD PRINT’S CASE
For years, print media publications have been scrambling to find suitable ways to adapt to the
digital age. In anticipation of Apple’s iPad, for example, a group of magazine publishers combined their
efforts to devise a way to migrate magazines from the paper issue to the electronic tablet. But another
group of publishers, headed by Rolling Stone founder Jann Wenner, is defending the legitimacy of their
current medium with an unprecedented joint ad campaign. Along with publishers like Conde Nast, Mere-
dith, and Time Inc., Wenner and company aim to remind readers about the “power of print.”
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
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lecture link 1-10
THE LANGUAGE OF BUSINESS
The population of the United States is becoming increasingly diverse. Today Hispanics are the
fastest-growing minority population. These consumers have significantly increased the demand for bilin-
gual salespersons and professionals throughout the economy.
Most workers in the United States 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 managers with bilingual skills because of the growing immigrant population of the United States or
because they are doing more business in foreign countries. According to Manpower Professional, the For-
tune 500 companies are asking more frequently for managers who speak Spanish, Portuguese, and Man-
darin Chinese.
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lecture link 1-11
THE HIGH DEMAND FOR GREEN DEGREES
We all know the job market has been tough on new college grads the past few years. Despite
drive and degrees, many graduates left school only to find few opportunities for the young and inexperi-
enced. In order to avoid the job crunch, currently enrolled students are beginning to seek majors that are
more likely to promise success in the job market after graduation. One such area is environmental sus-
tainability, which the Obama administration estimates will have 52% job growth through 2016. As a re-
sult, more schools are adding green majors to their curriculums, and students are filling the classes in
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lecture link 1-12
MILESTONES IN BUSINESS
190 Development of the abacus
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
lecture link 1-13
EARNING AN HONEST McPAYCHECK
McJobs, a term that refers to low-paying, advancement-free work, came into prominence in the
United States as the recession ravaged the job market. Understandably, McDonald’s didn’t appreciate the
association very much. After all, as the company’s vice president for the Boston area Robert Garcia said,
“with a McJob comes a McPaycheck.” And while unemployment continues to soar, McDonald’s did its
part to spur on growth on April 19, 2011, by hiring 50,000 people in a single day.
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
supplement their incomes. One hiring spree on the West Coast in 2010 brought in more than 60,000 ap-
plications for 13,000 positions.
critical
thinking exercises
Name: ___________________________
Date: ___________________________
critical thinking exercise 1-1
HOW MUCH PROFIT?
1. BANKING
Corporation _____________________ Percent Estimated Profit ____________
2. FOOD MANUFACTURER
Corporation _____________________ Percent Estimated Profit ____________
3. AIRLINE
Corporation _____________________ Percent Estimated Profit ____________
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4. COMPUTER COMPANY
Corporation _____________________ Percent Estimated Profit ____________
notes on critical thinking exercise 1-1
Students often have a much-exaggerated idea of the amount of profit big corporations make. This
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
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Name: ___________________________
Date: ___________________________
critical thinking exercise 1-2
JOB AND CAREER VERSUS OWNING A BUSINESS
1. CAREER SALARY OPPORTUNITIES (circle one)
2. CAREER JOB OPPORTUNITIES (circle one)
3. SMALL-BUSINESS OWNERSHIP OPPORTUNITIES (circle one)
Requires Up-Front Investment (small investment/medium-sized investment/large invest-
4. POTENTIAL RETURN ON THE SMALL-BUSINESS PURCHASE (circle one)
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 investment in your own business, would you and could you obtain the necessary fi-
nances to make this happen? (yes/no)
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
8. Is the risk of the unknown in the business environment worth the pursuit of your time, money,
and family adjustment to own your own business? (yes/no)
9. Given the two choices, what direction would you rather pursue?
Name: ___________________________
Date: ___________________________
critical thinking exercise 1-3
MAKING ETHICAL DECISIONS
Throughout the textbook, you will see a box in each chapter called Making Ethical Decisions.
You will be given a short description of a situation and then asked what you would do in that situation.
These boxes may or may not be assigned by your professor, but you will benefit greatly by reading them
and answering the questions. If they are assigned, you probably won’t be required to hand in a written
report. Your professor will probably have no real way of knowing if you read the boxes and answered the
questions. You are likely to be “on your honor.”
This is your first ethical situation in this course: You come to a Making Ethical Decisions box in
your text. What do you decide to do—read and answer the questions, or skip it and go on?
Use the questions below to help you make your decision.
1. What is the problem?
2. What are your alternatives?
3. What are the effects of each alternative? (What will happen if you choose that alternative?)
4. Which alternative will you choose? Why?
5. Is your choice ethical? (Would you want your family and professor to know of your decision?
Would you want it printed in the school paper? Is it fair to all parties involved?)
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notes on critical thinking exercise 1-3
bonus
cases
bonus case 1-1
THE WORLD’S LARGEST CHARITY
Bill Gates is one of the wealthiest people in the world. According to Forbes magazine, his net
worth is $56 billion. But at age 50, Bill Gates earned respect in a new way. Along with his wife Melinda,
the chair of Microsoft became the greatest philanthropist in history. Melinda, a former Microsoft col-
league, has a bachelor’s degree in computer science and economics and a master’s in business from Duke
University. (Bill dropped out of Harvard at the end of his sophomore year to run Microsoft.)
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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.
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.” xii
discussion questions for bonus case 1-1
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?
notes on discussion questions for bonus case 1-1
1. How do Bill and Melinda Gates use basic business principles to run the Gates Foundation?
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
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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?
bonus case 1-2
NETWORKING OUTSIDE THE NET
On the surface, people appear to network with one another now more than ever. Social media
dominate many people’s lives while smartphones ensure that everybody can get in touch with everyone
else anywhere at anytime. Nevertheless, digital interaction is no replacement for genuine human contact.
As social media become more prevalent and accessible, the information they disseminate runs the risk of
losing its value. To put it another way, Which carries more weight: a handshake or a Facebook poke?
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Networking face-to-face also means maintaining a professional image. Not only does that entail
discussion questions for bonus case 1-2
1. What can we conclude about digital interaction and human contact?
2. Why is it important to keep your Facebook account professional?
notes on discussion questions for bonus case 1-2
1. What can we conclude about digital interaction and human contact?
2 Why is it important to keep your Facebook account professional?
Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment
endnotes
i Source: “The World’s Billionaires,” Forbes, March 2011.
ii Source: Michelle R. Davis, “The Alternative: Younger Students Give Community College a Second Look,” The
2009.
xi Source: Katie Johnston Chase, “Fast-Food King Has Openings,” The Boston Globe, April 19, 2011.
