Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-46
PPT 1-27
Government’s Role in Business
GOVERNMENT’S ROLE
in BUSINESS
1-27
LO 1-3
Government can promote business by…
1. Minimizing spending and keeping taxes and
regulations to a minimum.
2. Allowing private ownership of businesses.
3. Minimizing interference with the free exchange of
goods and services.
4. Passing laws that enable businesspeople to write
enforceable contracts.
5. Establishing a currency that’s tradable in world
markets.
6. Minimizing corruption.
PPT 1-28
Corruption Worldwide
Source: Transparency International, October 2014.
CORRUPTION WORLDWIDE
1-28
LO 1-3
Least Corrupt
1. Denmark
2. New Zealand
3. Finland
4. Sweden
5. Norway
Most Corrupt
1. Somalia
2. North Korea
3. Afghanistan
4. Sudan
5. South Sudan
1. Transparency International conducts and publishes
the corruption studies annually.
2. The most corrupt countries on the list include So-
malia and North Korea. The least corrupt countries
are Denmark and New Zealand (tie).
3. Ask the students – What impact does corruption
have on business? Responses may include: Busi-
nesses do not flourish and capitalism and economic
independence are suppressed creating a very nega-
tive business and social environment. Most corrupt
countries tend to be developing countries.
PPT 1-29
Ethics Begins with You
ETHICS BEGINS with YOU
1-29
The number of employees calling in sick has
reached a five-year high. 3/5 of all callers were not
even sick. Others conduct personal business at
work, play video games and check their Facebook
pages while at work.
What is the problem with this situation?
What are the alternatives?
What are the consequences of each alternative?
What path would you choose?
Is it ethical?
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-47
PPT 1-30
Benefits of Technology
BENEFITS of TECHNOLOGY
1-30
LO 1-4
• Technology — Everything from phones to copiers
and the various software programs that make
businesses more effective, efficient and productive.
• Effectiveness — Producing the desired result.
• Efficiency — Producing goods and services using the
least amount of resources.
• Productivity — The amount of output you generate
given the amount of input (example: hours you work).
Technology affects people in all industries.
PPT 1-31
Connecting Companies with Global
Freelancers
1-31
CONNECTING COMPANIES with
GLOBAL FREELANCERS
• Since the Great Recession, freelancers are more
important than ever before.
• Freelance employees don’t even have to live in
the same country as their employers.
• Elance is taking advantage of this development
with its over 8 million registrants.
PPT 1-32
E-Commerce
E-COMMERCE
1-32
LO 1-4
• E-Commerce — The buying
and selling of goods online.
– B2C: Business to Consumer
– B2B: Business to Business
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-48
PPT 1-33
Cyber Attacks on Businesses
Source: Inc., January 2014.
CYBER ATTACKS on BUSINESSES
1-33
LO 1-4
• 80% of cyber attacks involve weak passwords.
• Since 2012, there has been an 8% increase in
malware attacks with an average loss of $92,000!
• Since 2012, there has been a 125% increase in
social media phishing attacks, stealing over $1 billion
from businesses.
• 29% of security breaches are hackers pretending to
be you and resetting your passwords.
1. We keep hearing about security breaches on big
businesses, like Target and Home Depot. However,
all businesses are at risk.
2. There are many, many ways a hacker can hurt your
business. This slide focuses on the five biggest
threats to small business.
3. Ask your students: How can businesses prepare
themselves and protect their employees and cus-
tomers from such hacks?
PPT 1-34
Databases and Identity Theft
DATABASES
and IDENTITY THEFT
1-34
Photo Credit: Jack Spade
LO 1-4
• Database — An electronic
storage file for information.
• Identity Theft — The obtaining
of individuals
’
personal
information, such as Social
Security and credit card
numbers, for illegal purposes.
PPT 1-35
Protect Yourself from Identity Theft
Source: Federal Trade Commission, www.ftc.gov accessed October 2014.
PROTECT YOURSELF
from IDENTITY THEFT
1-35
LO 1-4
Follow these steps to help protect yourself:
• Protect your Social Security Number.
• Shred financial documents and items with personal
information.
• Don’t give out personal information unless you know
whom you are dealing with.
• Use strong passwords.
• Never click links in suspicious emails.
• Monitor your credit report.
1. The number of ID theft cases is rising every year.
The Federal Trade Commission estimates that 9
million people per year have their identities stolen.
2. About 39% of the victims were between the ages of
18-39 (the same age group of many students).
3. Approximately 16% of the victims had a personal
relationship with the thief.
4. Top five states for identity theft (per capita): Ari-
zona, California, Nevada, Texas, and Florida.
5. Ask the students – How often do you throw away
mail or other documents with your personal infor-
mation on it without shredding it? (It is becoming
imperative that we shred all documents with per-
sonal info and keep the sharing of private info such
as credit card, bank account info, and social secu-
rity numbers to a very limited number of people.)
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-49
PPT 1-36
Using Empowerment to Compete in
Today’s Market
USING EMPOWERMENT
to COMPETE in TODAY’S MARKET
1-36
LO 1-5
• Customers want quality products at a good price
with excellent customer service.
• Because business is more customer-driven, some
managers give frontline employees more decision-
making power.
• Empowerment — Giving frontline workers the
responsibility, authority, and freedom to respond
quickly to customer requests.
PPT 1-37
Demography
DEMOGRAPHY
1-37
LO 1-6
• Demography — The
statistical study of the
population in terms of
size, density and
characteristics like,
age, race, gender and
income.
PPT 1-38
Demography of the U.S. by Age
Source: U.S. Census Bureau, www.census.gov, accessed October 2014.
DEMOGRAPHY of the U.S. by
AGE
1-38
LO 1-6
1. This slide highlights the age of the population in
the United States.
2. Demography is the statistical study of the human
population in terms of its size, density, and other
characteristics such as age, race, gender, income,
etc.
3. The slide gives insight into the aging of the popula-
tion with 66% of the population older than 24 years
old.
4. Ask students — How will the aging of the popula-
tion impact businesses? (Businesses will need to
reexamine their approach to marketing and human
resources in order to meet the challenges facing
them. While some businesses will fail, other new
businesses will emerge creating new opportuni-
ties.)
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-50
PPT 1-39
Projected Demography of the U.S. by
Race
CURRENT DEMOGRAPHY
of the U.S. by RACE
1-39
Source: U.S. Census Bureau, www.census.gov, accessed October 2014.
LO 1-6
1. This side shows the current demography of the
U.S. based by the races respondents listed.
2. Note to the students that the numbers will not add
up to 100% exactly because of the amount of re-
spondents that listed more than one race.
PPT 1-40
Projected Demography of the U.S. by
Race in 2050
PROJECTED DEMOGRAPHY
of the U.S. by RACE in 2050
1-40
Source: U.S. Census Bureau, www.census.gov, accessed October 2014.
LO 1-6
1. This slide gives insight into the changing ethnic
landscape of the United States.
2. Legal and illegal immigrants have had a dramatic
effect on many states.
3. Many local services, such as health care and educa-
tion, are making efforts to adapt. Some changes in-
clude changing signs, brochures and websites to re-
flect this change in demographics.
4. Ask students – What changes have you noticed in
your particular city? (Answers may vary, but might
include bilingual signs in government offices and
the use of emergency room translators in local
hospitals).
PPT 1-41
U.S. Population Changes
U.S. POPULATION CHANGES
1-41
LO 1-6
• Diversity has grown from just
recruiting minority and female
workers.
• Population shifts are creating
opportunities for some and
limiting others.
• Growth of single-parent
households have encouraged
businesses to implement
programs such as family leave
and flextime.
When discussing how demographic changes experienced in
this country over the past 30 years have affected business-
es, it often helps to use the grocery store as an example.
The grocery store has evolved from a market selling pri-
marily raw materials used to produce a meal into stores that
now serve pre-made products which simply involve “heat-
ing and eating.” Why? Some would argue this change has
more to do with the two-income and single-parent house-
hold than any other environmental factor. Engaging stu-
dents in this discussion is often useful to their understand-
ing of how businesses must adapt to changing demographic
circumstances.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-51
PPT 1-42
Who Will Support Social Security?
Source:U.S.CensusBureau,www.census.gov,accessedOctober2014.
WHO WILL SUPPORT
SOCIAL SECURITY?
Number of Workers per Retiree
1-42
LO 1-6
1. The number of workers per retiree has dropped
dramatically since 1950.
2. Ask the students – What impact will the decline of
the number of workers per retiree have in the fu-
ture? (In the future government might have to raise
taxes and reduce benefits for individuals or use a
means test in an effort to prevent Social Security
payments from bankrupting the government.)
PPT 1-43
What is Diversity?
WHAT is DIVERSITY?
1-43
LO 1-6
• The U.S. Equal Employment Opportunity Commission
prohibits laws discriminating against:
– Age
– Disability
– Genetic information
– National origin
– Pregnancy
– Race
– Religion
– Sex
PPT 1-44
Important Changes to the Global Envi-
ronment
IMPORTANT CHANGES to the
GLOBAL ENVIRONMENT
1-44
LO 1-7
1. Growth of global
competition.
2. Increase of free trade
among nations.
3. Development of
efficient distribution
systems.
4. Advances in
communication
systems.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-52
PPT 1-45
Increasing Costs of the Global Envi-
ronment
INCREASING COSTS of the
GLOBAL ENVIRONMENT
1-45
LO 1-7
• Wars cost billions of dollars.
• Tax money is diverted.
• Cost of security goes up.
• Cost of insurance goes up.
Ask students — Can terrorism and an economic crisis de-
crease economic cooperation and free trade among nations?
(This question is at the same time alarming and thought
provoking. Given recent events, asking students this ques-
tion will get them thinking about how the world and events
in far away places can impact their lives.)
PPT 1-46
Gourmet Airport Eateries Take Flight
GOURMET AIRPORT EATERIES
TAKE FLIGHT
1-46
• Airport restaurants have
more regulations than
traditional spots.
• People are likely to spend
more when travelling.
• This has led to more
gourmet restaurants
popping up in airports.
PPT 1-47
Global Greening
GLOBAL GREENING
1-47
LO 1-7
• Climate Change — Movement of the temperature of
the planet up or down over time.
• Greening — Trend toward saving energy and
producing products that cause less harm to the
environment.
• Many companies like GE, Coca-Cola,
British Airways and Shell are adopting green
practices.
Links go to each company website’s green section.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-53
PPT 1-48
Test Prep
TEST PREP
1-48
• What are four ways the government can foster
entrepreneurship?
• What is the difference between effectiveness,
efficiency and productivity?
• What is empowerment?
• What are some of the major issues affecting the
economy today?
1. The government can foster entrepreneurship by:
• Allowing private ownership of business
• Passing laws that enable businesses to write
enforceable contracts
• Establishing a currency that is tradable in
world markets
• Minimizing corruption in business and in its
own ranks
2. Effectiveness means producing the desired results.
Efficiency means producing goods and services us-
ing the least amount of resources. Productivity is
the amount of output you generate given the
amount of input, such as the number of hours you
work.
3. Empowerment is allowing workers to make deci-
sions essential to producing high-quality goods and
services.
4. Technology changes, identity theft, changing de-
mographics, diversity, climate change, war, and
terrorism are several issues of concern.
PPT 1-49
The Evolution of Business
The EVOLUTION of BUSINESS
1-49
LO 1-8
Agriculture Era
Manufacturing Era
Service Era
Information-Based Era
This slide, along with the next four, gives students a sense
of perspective into the evolution of the U.S. economy.
1-50
changed the farming
industry making it more
efficient.
• This led to fewer farmers
with larger farms.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-54
PPT 1-51
The Manufacturing Era
The MANUFACTURING ERA
1-51
• As technology
improved
productivity, fewer
workers were
needed in factories.
LO 1-8
• Industrialization in the 19th and 20th
centuries moved jobs from farms to
factories.
PPT 1-52
The Service Era
The SERVICE ERA
1-52
LO 1-8
• Make up over 70% of the
U.S. economy.
• Since the mid-1980s, the
service industry generated
almost all the increases in
employment.
• More high-paying jobs in
service industries.
PPT 1-53
The Information Technology Era
The INFORMATION
TECHNOLOGY ERA
1-53
LO 1-8
• IT affects:
– Agriculture
– Industry
– Service
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-55
PPT 1-54
Test Prep
TEST PREP
1-54
• What major factor caused people to move from
farming to manufacturing and from
manufacturing to the service sector?
• What does the future look like for tomorrow’s
college graduates?
1. Efficiencies in agriculture led to the reduction in
farms and growth in industry that caused workers
to leave the farm and come to the cities. The
growth of efficiencies in production had the same
effect as in agriculture. As factories became more
efficient and technologically driven, workers mi-
grated to the service sector.
2. The information-based global revolution will alter
all sections of the economy. It will be an interesting
opportunity for college graduates.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-56
lecture
enhancers
“My grandfather once told me that there are two kinds of people: those who work
and those who take the credit. He told me to try to be in the first group; there was
less competition there.”
Indira Gandhi
“Success consists of going from failure to failure without loss of enthusiasm.”
Winston Churchill
lecture enhancer 1-1
THE WORLD’S RICHEST P EOPLE
In 2014, there were over 1,600 billionaires in the world. According to Forbes magazine, their
combined worth was $6.4 trillion.i
Rank Name Country of Age Worth
Citizenship ($ billions)
1 William Gates III United States 59 $80.8
2 Warren Buffett United States 84 73.6
3 Carlos Slim Helu and family Mexico 74 70.8
4 Amancio Ortega Spain 78 61.4
5 Larry Ellison United States 70 51.3
6 Charles Koch United States 71 41.3
7 David Koch United States 74 41.3
8 Christy Walton and family United States 59 40.6
9 Jim Walton United States 66 39.7
10 Alice Walton United States 65 38.2
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-57
lecture enhancer 1-2
NON-TRADITIONAL STUDENTS BECOME THE NORM
When people think about the average American college student, their minds often wander to im-
ages of fresh–faced teenagers hitting campus right out of high school on their parents’ dime. But in reality,
only one-third of the nation’s more than 20 million students enrolled in two– and four-year universities fit
that description.
Though it may not surprise seasoned professors, the idea of the “traditional” college student is
becoming increasingly outdated. According to recent data collected by the U.S. Department of Education,
about 40 percent of college students are older than 25. More than one-third attend classes part-time, and
almost 20 percent work full-time. Although most students attend four-year public and private universities,
approximately 40 percent are enrolled in community colleges or for-profit institutions. Enrollment of in-
ternational students has also shot up by 35 percent between 2000 and 2012. As high schools have provid-
ed fewer students over the years, universities have ramped up overseas recruiting considerably.
Despite the increase in their numbers, however, non-traditional students are likely to face more
challenges in their college tenure than typical teens and twenty-somethings. That’s because school ser-
vices are often designed to cater to young people with lots of free time rather than working folks. Some
colleges have revamped old systems or added resources to accommodate these new students. For instance,
a big increase in veteran enrollment at George Washington University found the school unable to meet the
needs of many of its ex-military undergrads. Once some of these disillusioned students began to drop out,
GWU expanded its veterans’ affairs office and hired a former Navy vice admiral to look after the school’s
more than 1,000 student veterans. Many students now receive a personalized education experience that
takes their life experience into account.ii
lecture enhancer 1-3
QUIRKY: MAKI NG INVE NTORS’ DRE AMS REALITY
Although many people can think of a great business idea, not everybody has the time or money to see
their product come into fruition. That is unless they’re lucky enough to have their idea produced by
crowd-sourcing manufacturer Quirky. The New York-based company has built a $50 million business by
turning user-submitted blueprints into marketable goods.
Each week Quirky receives more than 2,000 invention ideas from its community of approximately
500,000 members. Staffers then select the best ideas of the bunch for the Eval, a highly stage-directed
debate about the submissions that is broadcast live over the Internet. Quirky’s charismatic CEO Ben
Kaufman leads the discussion with members of his 150-strong staff until they decide on three or four
products to greenlight. So far the company’s biggest success has been the Pivot Power, a flexible power
strip that bends to fit every plug. The item’s inventor came to Quirky after finding little appreciation for
his idea elsewhere, including a NASA product development competition that only rewarded a t-shirt as
first prize. Once it hit Quirky the Pivot Power became an instant success and has sold more than 665,000
units so far.
Chapter 01 – Taking Risks and Making Profits within the Dynamic Business Environment
1-58
Some amateur inventors remain wary of Quirky since submitting a concept to the site automati-
cally grants intellectual property rights to the company. Nevertheless, Quirky needs to retain full owner-
ship of an idea if it is to develop it to the furthest extent. In fact, the creator of the Pivot Power knew noth-
ing about electrical engineering when he submitted the basic blueprint of his idea. Most Quirky designs
are fully realized by the company after what amounts to a spark of inspiration from one of its users. The
company doesn’t just shine in the R&D room and on the factory floor, though. Besides connections with a
number of major retailers, Quirky also recently entered into a partnership with General Electric. The two
companies will share patents and release products under a shared Quirky + G.E. brand.iii
lecture enhancer 1-4
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.
The young girl lost her battle with cancer, and Hale was determined to change things. She created
OneWorldHealth, the first U.S. nonprofit pharmaceutical company.
Hale identified five disease categories that she believed could benefit from an aggressive drug
development effort, but would not be profitable. Her plan was this: Find research on these diseases that
had already been conducted, but nothing had been done because the drug would not be profitable. She
would then persuade the pharmaceutical company to donate the information to her in return for tax write-
offs. Finally, she would seek funding from foundations and others to make those drugs available.
Hale got $4.7 million from the Bill and Melinda Gates Foundation for researching diseases in the
developing world. She also negotiated deals with the World Health Organization and the National Insti-
tutes of Health to do some clinical trials. Hale hopes that she can sell some drugs at a profit in order to
continue her work.
As scientists and companies heard about the organization’s efforts, many began calling to say
“We’ve got something you might be interested in.” Many scientists are also volunteering their time and
expertise. Hale doesn’t find this surprising. “Most pharmaceutical researchers got into the business be-
cause they wanted to ease suffering and save lives. Systems may be flawed, but most people want to do
the right thing,” says Hale.
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
lecture enhancer 1-5
MOBILE ENTREPRENEURS OPERATE ON THE GO
For many years, the famous phrase “location, location, location” served as one of the most unfail-
ing maxims in the business lexicon. But as the digital age has broken down borders and streamlined