Management Chapter 1 Find Information Small Town Other Than Those Mentioned That Has Fought Walmart

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Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

1. Why does Swatch want to stop selling watch components?

2. Why is the Swiss government reluctant to allow Swatch to stop supplying components to its

competitors?

3. Based on the large share of the watch movements and components industry that Swatch controls,

which competitive environment do you think it operates in: pure competition, monopolistic

competition, oligopoly, or monopoly?

An oligopoly exists when there are very few businesses selling a product. When there is one business

GOING GREEN—Luxury Automakers Embracing Eco-Friendly Interior

Consumers of luxury cars prefer natural wood interiors rather than plastic or fiberglass. Automakers are

turning to wood from reclaimed logs and bamboo. Using these woods allows luxury car makers to

1. Why might eco-friendly wood interior appeal to luxury car buyers?

Instead of using wood from old-growth forests and other vulnerable areas, using wood from reclaimed

logs and bamboo allows luxury car makers to differentiate themselves from competitors and appeal to

the eco-conscious consumer.

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

2. What impact could using these plant-based materials have on the reputations of luxury automakers?

3. What are some benefits in using plant-based materials besides appealing to the luxury car buyer?

By using sustainable products the car makers are also preserving old-growth forests and other vulnerable

areas. Also, the materials are lighter than traditional materials. Lighter cars are more fuel-efficient, which

saves consumers money on gasoline.

S U P P L E M E N T A L L E C T U R E

Walmart Supercenters

Walmart Supercenters have opened in more than 3,000 locations throughout the United States since their

inception in 1988. These outlets offer a retail format that can have major economic and quality of life

impacts on a community. Customer satisfaction, a primary goal of Walmart, is achieved through convenience

(one-stop shopping) and low prices. Walmart usually manages to out-compete other generalists, such as

Kmart and Target, through effective marketing and aggressive expansion policies. Target has shifted its focus

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

The effect of a Walmart Supercenter on the local economy is not limited to increased sales tax revenues and

business. It also can have negative effects on local retail operations (sometimes referred to as “Mom & Pop”

stores) that cannot offer the same low prices and variety as Walmart. Supercenters have driven Walmart to

become one of the largest corporations in America. In addition, Walmart is currently the highest volume

There have been success stories of small towns preventing construction of Walmart Supercenters. For

example, residents of the small town of Old Saybrook, Connecticut, were able to fight off a Walmart

Supercenter. To do so, the citizens had to raise sufficient money to hire professional help and legal counsel,

organize protests, circulate petitions, and raise awareness of the issue. They were able to convince three

local political bodies to block the multinational corporation and have since established a website to help

other small communities to follow their successful methods.

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

So what effect does Walmart have on smaller towns and smaller companies? In a study of competition and

retail structure published in the Journal of Marketing (1999), authors Miller, Reardon, and McCorkle explored

the relation of “superstores,” such as Walmart and Kmart, to saturation (measured as number of stores per

Sources:

2010); Anthony Bianco and Wendy Zellner, “Is Walmart Too Powerful?” Business Week, October 6, 2003, pp.

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

1. Do you feel the entry of a Walmart Supercenter in a small trade area (<200,000 population) is positive

or negative for the quality of life in that area? Defend your answer after taking a positive or negative

position.

2. Which members of a community might typically oppose a Walmart Supercenter? What are their

objections? How can Walmart answer these complaints?

Members most likely to object include owners of mom and pop stores, environmentalists and other

special interest groups, and local citizens who fear the stores will have a negative impact on their

3. Find information on a small town (other than those mentioned) that has fought Walmart. Give a brief

description of the history and tell why you believe the town won or lost.

Student answers will vary.

C O N T R O V E R S I A L I S S U E

Knowing Business versus Knowing the Business

Some people might argue about whether a quarterback or a wide receiver is more important to a football

team. The rational answer is that both are important, and a football team would be handicapped if deprived

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

The phrase “knowing business” refers to an accumulated knowledge of basic procedures and attitudes that

have proved useful in running any kind of business. A person who knows business understands accounting,

the handling of personnel, marketing, cash flow, inventory control, and effective decision making.

The phrase “knowing the business” refers to an accumulated knowledge of a particular field such as the

automotive industry, oil, journalism, professional sports, processed foods, textiles, and transportation, to

1. What does “knowing business” mean?

2. How does “knowing the business” differ from “knowing business?”

3. How can a manager utilize these two types of knowledge to be a success?

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

S O Y O U W A N T A J O B I N T H E B U S I N E S S W O R L D

Why is it important to seriously consider what kind of job you want to have, and how do you help keep it

once you have been hired?

C H E C K Y O U R P R O G R E S S

1. What is the fundamental goal of business? Do all organizations share this goal?

2. Name the forms a product may take and give some examples of each.

3. Who are the main participants of business? What are the main activities? What other factors have an

impact on the conduct of business in the United States?

4. What are four types of economic systems? Can you provide an example of a country using each type?

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Instructor’s Manual – Chapter 1

5. Explain the terms supply, demand, equilibrium price, and competition. How do these forces interact in

the American economy?

Supply is the quantity of goods or services that businesses are willing to sell at different prices at a

specific time, while demand is the quantity of products and services that consumers are willing to buy at

6. List the four types of competitive environments and provide an example of a product of each

environment.

7. List and define the various measures governments may use to gauge the state of their economies. If

unemployment is high, will the growth of GDP be great or small?

8. Why are fluctuations in the economy harmful?

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Instructor’s Manual – Chapter 1

9. How did the Industrial Revolution influence the growth of the American economy? Why do we apply

the term service economy to the United States today?

10. Explain the federal government’s role in the American economy.

The U.S. economic system operates as modified capitalism because business is regulated to a certain

G E T I N V O L V E D

1. Discuss the economic changes occurring in Russia and Eastern European countries, which once

operated as communist economic systems. Why are these changes occurring? What do you think the

result will be?

Russia and eastern European countries have turned away from communism and toward economic

systems governed by supply and demand rather than by central planning. Before the Soviet Union fell,

the economy was stagnant and there was serious political unrest. After the Soviet Union fell, many of the

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Instructor’s Manual – Chapter 1

2. Why is it important for the government to measure the economy? What kinds of actions might it take

to control the economy’s growth?

3. Is the American economy currently expanding or contracting? Defend your answer with the latest

statistics on GDP, inflation, unemployment, productivity, and so on. How is the federal government

responding?

Many students will probably say the economy is in a period of economic contraction since we are still

very much in the recovery period from the most recent recession. However, unemployment has begun to

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Business

Instructor’s Manual – Chapter 1

B U I L D Y O U R S K I L L S

B U I L D Y O U R B U S I N E S S P L A N

I think the best way to get the students excited about developing their business plans is to facilitate lively

class discussions. Ask the students for the pros and cons of using an established product/business for their

Prices

of WagWumps

Equilibrium Price

Supply Curve

Demand Curve

Quantity of WagWumps

(in thousands)

Equilibrium Price = $22.99

Ferrell / Hirt / Ferrell:

Business

Instructor’s Manual – Chapter 1

Encourage students to share their experiences of businesses they attempted, were successful in starting, or

have desires to start. It may be a painting service, an eBay service provider, or a lawn care service. Push the

Suggestions for Group Formation

If this is a first year course, it probably makes sense to assign students to groups since they do not know each

other. An ideal group size is 4 or 5 students. From the Appendix at the end of Chapter 1, you can see that

the first assignment is to develop their business proposals. If you are on a 15 week semester, this should be

due around the fourth week of the semester. At that point you will not have covered the marketing

chapters, but the idea of the business proposal is just to get the groups to start thinking about what is ahead

Ferrell / Hirt / Ferrell:

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Instructor’s Manual – Chapter 1

S E E F O R Y O U R S E L F V I D E O C A S E:

R E D B O X S U C C E E D S B Y I D E N T I F Y I N G M A R K E T N E E D

Case Overview

Redbox is one of the top video rental firms in the United States, but its road to success has not been easy.

Redbox started out by identifying a need. It recognized that consumers could not often find the movies they

1. Why are consumers so willing to rent from Redbox?

2. How was Redbox able to overcome some of its earliest challenges?

3. What are some recommendations for ways that Redbox can maintain its high market share?

Students might have some different answers, but Redbox should definitely maintain its consumer

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Business

Instructor’s Manual – Chapter 1

T E A M E X E R C I S E

Major economic systems, including capitalism, socialism, and communism, as well as mixed economies, were

T E R M P A P E R O R P R O J E C T T O P I C S

These topics may be assigned as individual or collaborative projects:

1. The Life and Influence of Karl Marx

3. How Railroad Transportation in the 1800s Affected the American Economy

5. Advantages and Disadvantages of Small Business Entrepreneurship

G U E S T S P E A K E R S U G G E S T I O N S

1. A representative from the Small Business Administration or Small Business Development Center or a

3. A professor or representative of a campus international association to speak on differences in American

T E A C H I N G S U G G E S T I O N S

2. The lecture is generally followed by class discussion of Key Terms and Definitions, Check Your Progress,

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Instructor’s Manual – Chapter 1

3. Supplemental lecture material follows the Lecture Outline and Notes. One supplemental lecture is

4. Additional material is provided in the textbook and in the boxed texts. Also, discussion questions are

5. A quiz is provided for each chapter. This quiz may be used as a practice quiz or as an in-class quiz. As an

6. Instructors also have a variety of options in giving in-class and out-of-class assignments. The following are

some possibilities:

a. Instructors may assign a brief “writing to learn” exercise in which students summarize their thoughts

or write answers. This may be a short in-class exercise in which students write answers to one or all

b. A list of suggestions for guest speakers is provided for the chapter. The instructor may arrange for a

speaker, although some instructors give class members or teams the responsibility of arranging for

c. Some students are not test wise. One suggestion that may help students prepare for tests is to have

each student develop one test question (multiple-choice, true/false, completion, etc.) based on the

d. Term paper or project topics may be assigned to be completed over a long period of time. An option

to a written term paper is to have a short oral presentation on the term paper or project topics.