8/21/2022

TECH 4090
Introduction To Technology
An Introduction Into The Foundations of Business

Welcome
Phil daCosta MBA
Contact: Message on BrightSpace
Or
Email: dacosta@julc.cn

Introduction
Book opens with a brief
look at the growth of
entrepreneurship and
innovation in China

• As the course unfolds, you’ll develop an understanding

of the foundations of business and will be able to
appreciate, and apply many of the principles covered
• Syllabus has been posted
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Ren Zhengfei Jack Ma
Founder of Huawei Technologies Founder and director of Alibaba Group

Wang Chuanfu Ma Huateng
The founder of automobile giant BYD (Build  Founder, Chairman and CEO, 
Your Dreams) grew up as part of a family of  Tencent Holdings Tencent is the 
poor farmers. The company BYD, has now  developer of many recognizable 
gone on to become one of the leading  products such as Tencent QQ, 
automobile manufacturers in the world. WeChat, and PUBG, 
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Introduction

The course is a
comprehensive
overview of business

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Some of Our Topics:

1. Overview of Business 2. Understanding Business

Environment Ethics & Social Responsibility

3. Entrepreneurship, New 4. Managing & Organizing

Ventures, Business Ownership The Business

Some of Our Topics:

5. Operations Management & 6. Human Resource

Quality Management & Leadership

7. Marketing Processes &

Consumer Behaviour 8. Financial Management

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Introduction
The course itself, is a comprehensive overview of business
We’ll be covering the major areas of business

1. Overview of business environment

2. Understanding Business Ethics & Social Responsibility
3. Entrepreneurship, New Ventures, Business Ownership
4. Managing & Organizing The Business
5. Operations Management & Quality
6. Human Resource Management & Leadership
7. Marketing Processes & Consumer Behaviour
8. Financial Management

Our Agenda Today:

Three main goals today
1. Overview of course schedule and marking
scheme
2. Set up Teams
3. Team Exercise
4. Chapter One: The Business Environment

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Marking Scheme: Student Evaluation

• Group Work (3 Gp Assgnmnts – 10% ea) 30%

• 2 Quizzes 15%
• Mid-Term Exam 25%
• Final Exam 30%

Course
Schedule

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Setting Up Teams
Step 1.
Form into Teams of 5 members
Students not in a Team will be assigned to a Team
Step 2.
• Introduce yourself to the Team
• Choose a Team name
• Choose a Team slogan
• Choose a Team leader
Give Group Information to Candice by end of class:
1. Name of Team
2. Team Members
3. Team Leader
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Teams Introduction
Each Team Leader stand up

When asked:
Give us your Team name
and Team Slogan

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Team Exercise
Give two examples of external conditions
(eg. technological, economic, social, political,
international etc.)
that can affect a business in an industry
and indicate how these affects may occur
Choose one of these industries to consider:
1. Airline 6. Education
2. Automotive: 7. Restaurant
3. Computer & Technology 8. Clothing
4. Hotel / Travel 9. Agriculture
5. Media & Social Media 10.Healthcare
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Team Exercise
Two members from each team stand up
(Team leader plus one other member)

Randomly, the teams represented by the

standing students will be asked to share
their thoughts on external conditions that
can affect a business

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Agenda Item 3:
Chapter One
This first chapter dives right into the world of
business, explaining
• what business is,
• what its main goals and functions are, and
• how the external environments of business
affect the success and failure of any
organization.

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Our Text
Business Essentials
Twelfth Edition
Chapter 1
The U.S. Business
Environment

The Business
Environment

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Introduction

• China has moved away from a solely centrally

planned economy towards a free market economy
termed “socialist market economy.”

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The Concept of Business and Profit

• Businesses produce most of the goods and services
we consume.
• They employ most working people.
• They create most new innovations and provide a
vast range of opportunities for new businesses.

• Business
– organization that provides goods or services to
earn profits
• Profits
– difference between a business’s revenues and
its expenses

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The External Environment of Business

• the external environment plays a major
role in determining the success or failure of
any organization.

• External Environment
– everything outside an organization’s
boundaries that might affect it
– Managers must, have a complete and
accurate understanding of their
environment and then strive to operate
and compete within it.

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The External Environments of

Business (1 of 2)
1. Domestic Business Environment - the
environment in which a firm conducts operations
and derives revenues
2. Global Business Environment - international
forces that affect a business and includes
international trade agreements, international
economic conditions, and political unrest
3. Technological Environment - ways by which
firms create value for their constituent

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The External Environments of

Business (2 of 2)
4. Political-Legal Environment - the relationship
between business and government
5. Sociocultural Environment - includes the
customs, mores, values, and demographic
characteristics of the society and determines the
business standards that a society is likely to
value and accept
6. The Economic Environment - includes
relevant conditions that exist in the economic
system in which a company operates

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Economic Systems
• Economic system
– system for allocating resources among
individuals and organizations
– A basic difference between economic
systems is the way in which a system
manages its factors of production, the
resources that a country’s businesses use to
produce goods and services.
– Economists focus on five factors of
production:

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Five Factors of Production (1 of 2)

1. Labor includes the physical and intellectual

contributions people make while engaged in
economic production and is also called human
resources.
2. Capital is the term used to describe the financial
resources needed to operate a business.
3. An Entrepreneur is a person who accepts the
risks and opportunities entailed in creating and
operating a new business venture.

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Five Factors of Production (2 of 2)

4. Physical resources - tangible things that
organizations use to conduct their business and
include natural resources and raw materials
5. Information resources - data and other
information used by businesses and include
market forecasts, the specialized knowledge of
people, and economic data

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Types of Economic Systems

• Planned Economy
Example: North Korea
• Market Economy
Examples: Canada, United States, Japan, UK
• Mixed Economy
Examples: Sweden, Norway, China, and also
those that are listed as ‘Market economies” like
the US, UK, France, etc…

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Types of Economic Systems (1 of 3)

• Planned Economy
– economy that relies on a centralized
government to control all or most factors of
production and to make all or most production
and allocation decisions

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Types of Economic Systems (2 of 3)

• Market economy
– individual producers and consumers
control production and allocation by
creating combinations of supply and
demand
• Market economies rely on capitalism and
free enterprise to create an environment
in which producers and consumers are
free to sell and buy what they choose.

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Types of Economic Systems (3 of 3)

• Mixed market economy
– features characteristics of both planned
and market economies
• Privatization
– adopting economic mechanisms that allow
more free-market conditions to operate and
in the process converting government
enterprises into privately owned companies

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Types of Economic Systems

• Mixed market economy
In reality, most countries rely on some form of
mixed market economy that features characteristics
of both planned and market economies

Even the U.S. economy restricts certain

activities. Some products can’t be sold legally,
others can be sold only to people of a certain
age, advertising must be truthful, and so forth

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Demand and Supply in a Market

Economy
• Demand
– the willingness and ability of buyers to
purchase a product (a good or a service)
• Supply
– the willingness and ability of producers to offer
a good or service for sale

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Demand and Supply in a Market

Economy
• The law of demand:
Buyers will purchase
(demand) more of a
product as its price
drops and less of a
product as its price
increases.

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Demand and Supply in a Market

Economy
• The law of supply:
Producers will offer
(supply) more of a
product for sale as
its price rises and
less of a product as
its price drops.

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Demand and Supply in a Market

Economy
• A Demand and Supply Schedule is an
assessment of the relationships among different
levels of demand and supply at different price levels.
• A Demand Curve is a graph showing how many
units of a product will be demanded (bought) at
different prices.
• A Supply Curve is a graph showing how many
units of a product will be supplied (offered for sale)
at different prices.

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Demand and Supply (1 of 2)

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Equilibrium Price
Established by market forces

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Poor weather conditions

cause a reduction in the
orange crop in Hainan
A decrease in supply will
cause the equilibrium price
to rise:
quantity demanded will
decrease.
To determine what happens
to equilibrium price and
equilibrium quantity when
both the supply and demand
curves shift, you must know in
which direction each of the
curves shifts and the extent to
which each curve shifts.

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Simple Demand / Supply Analysis

When using the supply and demand framework to
think about how an event will affect the equilibrium
price and quantity, proceed through four steps:
1. Draw a demand and supply model representing
the situation before the economic event took
place.
2. Decide whether the economic event being
analyzed affects demand or supply.

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Simple Demand / Supply Analysis

3. Decide whether the effect on demand or supply
causes the curve to shift to the right or to the left,
and sketch the new demand or supply curve on the
diagram.
4. Identify the new equilibrium and then compare the
original equilibrium price and quantity to the new
equilibrium price and quantity.

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1. Cold weather in Hainan province and other

growing areas, cause a poor orange crop. How
does this affect the price of orange juice in China

2. What will be
the affect if
consumers
demand the
same quantity
as before?

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Private Enterprise and Competition

in a Market Economy (1 of 3)
To function well a Market Economy requires:

• Private Enterprise System

• Freedom of Choice,
• Possibility of Profits,
• Competition (increases efficiency of
enterprise and allows consumers to
have choices)

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Private Enterprise and Competition

in a Market Economy (2 of 3)
1. Private enterprise system
– one that allows individuals to pursue their own
interests with minimal government restriction
– ownership of the resources used to create
wealth is in the hands of individuals
2. Freedom of choice
– you can sell your labor to any employer you
choose

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Private Enterprise and Competition

in a Market Economy (3 of 3)
3. Profits
– the possibiliity of profits leads some people to
abandon the security of working for someone
else and assume the risks of entrepreneurship
4. Competition
– occurs when two or more businesses vie for
the same resources or customers. Encourages
efficiency and innovation and also ensures
wider choices in the marketplace for
consumers

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Degrees of Competition (1 of 5)
Four degrees of competition within a market:
1 Perfect Competition
Many Competitors
2 Monopolistic Competition
Many Competitors
3 Oligopoly
Few Competitors
4 Monopoly
No Competitors

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Degrees of Competition (1 of 5)
Four degrees of competition within a market:

Table 1.1 Degrees of Competition

1 2 3 4

Perfect Monopolistic
Characteristic Competition Competition Oligopoly Monopoly
Example Local farmer Stationery store Steel industry Public utility

Number of competitors Many Many, but fewer Few None

than in perfect
competition
Ease of entry into Relatively Fairly easy Difficult Regulated by
industry easy government

Similarity of goods or Identical Similar Can be similar or No directly

services offered by different competing
competing firms goods or services
Level of control over None Some Some Considerable
price by individual firms

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Degrees of Competition (2 of 5)
For perfect competition to exist, two conditions
must prevail:
1. all firms in an industry must be small, and
2. the number of firms in the industry must be large

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Perfect Competition
1. The products of each firm
are so similar that buyers
view them as identical to
those of other firms.
2. Both buyers and sellers
know the prices that others
are paying and receiving in
the marketplace.
3. Because each firm is small,
it is easy for firms to enter or
leave the market.
4. Going prices are set exclusively by supply and
demand and accepted by both sellers and buyers.
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Degrees of Competition (3 of 5)
• Monopolistic Competition
– market or industry
characterized by
numerous buyers and
relatively numerous
sellers

Differentiating
strategies include
brand names, design
or styling, and
advertising.
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Degrees of Competition (4 of 5)
• Oligopoly
– market or industry
characterized by a
handful of
(generally large)
sellers with the
power to influence
the prices of their
products

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Degrees of Competition (5 of 5)
• Monopoly
– market or industry in which
there is only one producer
that can therefore set the
prices of its products
• Natural Monopoly
– industry in which one
company can most
efficiently supply all
needed goods or services.
Example, Power supply

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Monopolies and Government

Regulations

In the United States, laws, such as the

Sherman Antitrust Act (1890) and the Clayton
Act (1914), forbid many monopolies and
regulate prices charged by natural monopolies
- industries in which one company can most
efficiently supply all needed goods or services
(eg. Power Companies)

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Economic Indicators
Knowing how the economy is doing is helpful to all
of the players in an economy:
- Policy Makers
- Businesses
- Consumers

• Economic indicators
– statistics that show whether an economic
system is strengthening, weakening, or
remaining stable
– help assess the performance of an economy

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Macro Economic Indicators

• Business Cycle
• Aggregate Output
• Gross Domestic Product (GDP)
• Gross National Product
• Purchasing Power Parity
• Standard of Living
• Productivity
• Fiscal Tools and Measurements

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Economic Growth, Aggregate

Output, and Standard of Living (1 of 2)
• Business cycle
– the pattern of short-term ups and downs (or expansions
and contractions) in an economy over time
• Aggregate output
– the total quantity of goods and services produced by an
economic system during a given period
– primary measure of growth in the business cycle

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Economic Growth, Aggregate

Output, and Standard of Living (2 of 2)
• Standard of living
– the total quantity
and quality of
goods and
services that
people can
purchase with the
currency used in
their economic
system

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Gross Domestic Product

• Gross domestic product (GDP)
– refers to the total value of all goods and
services produced within a given period
by a national economy through domestic
factors of production
– measure of aggregate output

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Gross Domestic Product

Table 1.2 U.S. GDP and GDP per Capita

2015 2015 GDP: Real 2015 GDP per

GDP Growth Rate (%) Capita:
($ Purchasing Power
Trillion) Parity
$17.95 2.4% $55,800

GDP (gross domestic product)

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Gross Domestic Product (2 of 3)

Measuring GDP (gross domestic product)
allows you to measure the productivity within
a country.
It allows you to see productivity trends over
various periods of time

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Gross Domestic Product

• Nominal GDP
– gross domestic product (GDP) measured
in current dollars or with all components
valued at current prices

• Real GDP
– GDP has been adjusted to account for
changes in currency values and price
changes.

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Gross Domestic Product (Nominal & Real)

Example: A single product economy: apples

Nominal GDP Sales in Real GDP

Year Sales Cost
Growth Year 1 $ Growth
1 $1,000 0.50 $1,000
2 $1,200 20.00% 0.55 $1,091 9.09%
3 $1,500 25.00% 0.63 $1,190 9.13%
4 $1,600 6.67% 0.64 $1,250 5.00%

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Gross Domestic Product (Nominal & Real)

Nominal GDP
Nominal $2,000
Year Sales
GDP
$1,500
1 $1,000
$1,000
2 $1,200 20.00%
$500
3 $1,500 25.00%
4 $1,600 6.67% $0
1 2 3 4

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Gross Domestic Product (Nominal & Real)

Nominal GDP Sales in Real GDP
Year Sales Cost
Growth Year 1 $ Growth
1 $1,000 0.50 $1,000
2 $1,200 20.00% 0.55 $1,091 9.09%
3 $1,500 25.00% 0.63 $1,190 9.13%
4 $1,600 6.67% 0.64 $1,250 5.00%

Nominal & Real GDP

$2,000
$1,500
$1,000
$500
$0 Real GDP
1 2 3 4
Sales Sales in Year 1 $

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Purchasing Power Parity

– the principle that exchange rates are set so
that the prices of similar products in different
countries are about the same
Big Mac Index
Example:
Exchange rate:
USD CNY
$1 ¥ 6.8
Big MAC price
in US: $ 4
Big MAC price in China
should be: ¥ 27.20
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Gross National Product

• Gross national product (GNP)
– refers to the total value of all goods and
services produced by a national economy
within a given period regardless of where the
factors of production are located

Difference between GDP and GNP?

The profits earned by a General Motors
Factory in Brazil are included in U.S. GNP—
but not in GDP—because its output is not
produced domestically (that is, in the United
States).

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Other National Measures

• Productivity
– measure of economic growth that
compares how much a system produces
with the resources needed to produce it.

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Other National Measures

• Balance of trade
– the economic value of all the products
that a country exports minus the
economic value of its imported products
– Positive or negative balance
• National Debt
– the amount of money the government
owes its creditors

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Other National Measures: Economic

Stability
• Stability
– condition in which the amount of money
available in an economic system and the
quantity of goods and services produced
in it are growing at about the same rate
– A chief goal of an economic system,
stability can be threatened by certain
factors

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Other National Measures: Economic

Stability
• Inflation
– occurs when widespread price increases occur
throughout an economic system
– Instability results when the amount of money
injected into an economy exceeds the increase in
actual output, so people have more money to spend
but the same quantity of products available to buy.
– As supply and demand principles tell us, as people
compete with one another to buy available products,
prices go up.
– purchasing power for many people declines.
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Other National Measures: Economic

Stability
• Unemployment
– the level of joblessness among people
actively seeking work in an economic
system
• Recession
– a period during which aggregate output,
as measured by GDP, declines
• Depression
– a prolonged and deep recession
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Managing the Economy

• Fiscal Policies
– policies used by a government regarding how it
collects and spends revenue
– Tax rates
– Fiscal policy is a collective term for the taxing
and spending actions of governments.
• Monetary Policies
– policies used by a government to control the
size of its money supply
– monetary policies are managed by the central
bank and aim to keep the inflation levels under
control
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Managing the Economy

• Stabilization Policy
– Governments use Fiscal and Monetary
Policy to stabilize the economy
– government economic policy intended to
smooth out fluctuations in output and
unemployment and to stabilize prices

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