(eBook PDF) Understanding Business

11th Edition by William Nickels

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The Platinum Experience

WALKTHROUGH
Understanding Business has long been the MARKET LEADER. We’ve listened to
you and your students and that’s helped us offer you:

Resources that were developed based directly on your feedback—all geared to

make the most of your time and to help students succeed in this course. All the
supplemental resources for Understanding Business are carefully reviewed by Bill,
Jim, and Susan to ensure cohesion with the text.

Technology that leads the way and is consistently being updated to keep up with
you and your students. Connect Business offers students a truly interactive and
adaptive study arena. Interactive Presentations, Interactive Applications, SmartBook,
and LearnSmart are designed to engage students and have been proven to increase
grades by a full letter.

Support that is always available to help you in planning your course, working with
technology, and meeting the needs of you and your students.

KEEPING UP WITH WHAT’S NEW

Users of Understanding Business have always appreciated the currency of the material
and the large number of examples from companies of all sizes and industries (e.g., service,
manufacturing, nonprofit, and profit) in the United States and around the world. A glance
at the Chapter Notes will show you that almost all of them are from 2013 or 2014. Accord-
ingly, this edition features the latest business practices and other developments affecting
business including:
• U.S. economic status post-financial crisis and recession
• Growing income inequality
• Gross output (GO)
• Core inflation
• Trans-Pacific Partnership
• Types of social commerce
• JOBS Act of 2012
• Crowdinvesting vs. crowdfunding
• Big data
• Nanomanufacturing
• Generation Z
• Alpha Generation
• Affordable Care Act (Obamacare)
• Ethnographic segmentation
• Mobile/social/on-demand marketing
• Bitcoin and other cryptocurrencies
• Net neutrality
• Internet of Things (IoT)
• And much, much more

vii
RESULTS-DRIVEN TECHNOLOGY FOR STUDENTS
Across the country, instructors and students continue to raise an important question: How can introduction to business
courses further support students throughout the learning process to shape future business leaders? While there is no
one solution, we see the impact of new learning technologies and innovative study tools that not only fully engage
students in course material but also inform instructors of the students’ skill and comprehension levels.
Interactive learning tools, including those offered through McGraw-Hill Connect, are being implemented to increase
teaching effectiveness and learning efficiency in thousands of colleges and universities. By facilitating a stronger connec-
tion with the course and incorporating the latest technologies—such as McGraw-Hill LearnSmart, an adaptive learning
program—these tools enable students to succeed in their college careers, which will ultimately increase the percentage of
students completing their postsecondary degrees and create the business leaders of the future.

Connect Grade Distribution Student Pass Rate

McGraw-Hill Con-
Without
nect is the leading A LearnSmart
online assignment 19.3% A
30.5%
and assessment solution that connects students
with the tools and resources they need to achieve B
38.6% B
success while providing instructors with tools to
33.5%
quickly pick content and assignments according
to the learning objectives they want to emphasize. C
C
28.0%
Connect improves student learning and 22.6%
retention by adapting to the individual student, With
LearnSmart
reinforcing concepts with engaging presenta-
Without With
tions and activities that prepare students for LearnSmart LearnSmart
class, help them master concepts, and review
for exams. You can learn more about what is in 58% more As 25% more students
with LearnSmart passed with LearnSmart
Connect on the next page.

SmartBook Achieve
A revolution in reading Fueled by
LearnSmart, SmartBook Achieve is the
first and only adaptive reading experi-
ence available today. SmartBook per-
sonalizes content for each student in a
continuously adapting reading experi-
ence. Reading is no longer a passive
and linear experience, but an engaging
and dynamic one where students are
more likely to master and retain impor-
tant concepts, coming to class better
prepared.

viii
 Leveraging a continuously adaptive learning path, the program adjusts to each stu-
dent individually as he or she progresses through the program, creating just-in-time learn-
ing experiences by presenting interactive content that is tailored to each student’s needs.
This model is proven to accelerate learning and strengthen memory recall. A convenient
time-management feature and turnkey reports for instructors also ensure student’s stay
on track.

Interactive Presentations
Aid for Visual Learners These visual pre-
sentations within Connect are designed to rein-
force learning by offering a visual presentation
of the learning objectives highlighted in every
chapter of the text. Interactive presentations are
engaging, online, professional presentations (fully
Section 508 compliant) covering the same core
concepts directly from the chapter, while offer-
ing additional examples and graphics. Interactive
Presentations teach students learning objectives in
a multimedia format, bringing the course and the
book to life. Interactive Presentations are a great
prep tool for students—when the students are bet-
ter prepared, they are more engaged and better
able to participate in class.

Interactive Applications
A higher level of learning These exercises
require students to APPLY what they have learned
in a real-world scenario. These online exercises
will help students assess their understanding of the
concepts.

Click and Drag exercises allow students to

reinforce key models/processes by requiring stu-
dents to label key illustrations and models from
the text or build a process, and then demonstrate
application-level knowledge.

ix
 Video cases give students the opportunity to
watch case videos and apply chapter concepts
to a real-world business scenario as the scenario
unfolds.

Decision generators require students to make

real business decisions based on specific real-
world scenarios and cases.

Comprehensive Cases encourage students

to read a case and answer open-ended discussion
questions to demonstrate writing and critical-
thinking skills.

Manager’s Hotseat (Connect Library)—

short video cases that show 15 real managers
applying their years of experience in confronting
certain management and organizational behavior
issues. Students assume the role of the manager as
they watch the video and answer multiple-choice
questions that pop up during the segment, forc-
ing them to make decisions on the spot. Students
learn from the managers’ unscripted mistakes
and successes, and then do a report critiquing the managers’ approach by defending their
reasoning.

Video Cases
Real-world assignments Industry-leading video support helps students understand
concepts and see how real companies and professionals implement business principles
in the workplace. The video cases highlight companies from a broad range of industries,
sizes, and geographic locations, giving students a perspective from a variety of businesses.

x
Media-Rich E-Book
Connect provides students with a cost-saving alternative to the traditional textbook.
A seamless integration of a media-rich e-book features the following:
• A web-optimized e-book, allowing for anytime, anywhere online access to the
textbook.
• Our iSee It! animated video explanations of the most often confused topics can be
accessed within this e-book.
• Highlighting and note-taking capabilities.
PLATINUM EXPERIENCE STUDENT-FRIENDLY
FEATURES
Learning Objectives Everything in the text and supplements package ties back to
the chapter learning objectives. The learning objectives listed throughout the chapter help
students preview what they should know after reading the chapter. Chapter summaries
test students’ knowledge by asking ques-
tions related to the learning objectives. The
Test Bank, Instructor’s Manual, PowerPoints,
Online Course, and Connect are all organized
according to the learning objectives.
Getting to Know Business Professionals
Every chapter in the text opens with the pro-
file of a business professional whose career
relates closely to the material in the chapter.
These business professionals work for a vari-
ety of businesses from small businesses and
nonprofit organizations to large corporations.
These career profiles are an engaging way to
open the chapter and to introduce students to a
variety of business career paths.
Name That Company Every text chapter opens with a Name That
Company challenge. The answer for the challenge can be found somewhere
in the chapter.
www.rickshawbags.com
Sustainability’s in the Bag
When it comes to sustainable
products, making sure an item is
environmentally sound is just
the first step. After all, the word
“sustainability” implies that
something will last for a long
time. A shoddy product that
needs to be replaced often
takes a hefty toll on resources,
which can cancel out the envi-
ronmental benefits of even the
greenest production methods.
That’s why Rickshaw
Bagworks in San Francisco
makes sustainable accessories
designed to last for the long
term. For instance, at first the com-
pany began producing bags using upholstery mill to create its own
expensive Italian wool herring-
bone tweed. Although the fabric
fabric, Rickshaw Performance
Tweed. Made from recycled plas-
was beautiful and environmentally tic bottles, this synthetic fabric
friendly, the prototypes wore out
in a manner of weeks. So
ended up being stronger and
more eco-friendly while still look-
Rickshaw teamed up with an ing gorgeous as a handbag.
Seeking Sustainability boxes highlight corporate
responsibility and help students understand the various
ways business activities affect the environment.
A
Getting to know Tony Hsieh
11
lthough online shopping day of interviews went, if our shuttle
sites are becoming the driver wasn’t treated well, then we won’t
dominant force in the hire that person.” The examination
Tony Hsieh
retail world, they often doesn’t end once the person lands the
Human Resource
fall short of their brick-
and-mortar rivals in terms of customer
service. At the online shoe vendor Zap-
job. Regardless of their position, new
hires must spend their first month help-
ing customers in the call center. If they • CEO of Zappos
efficient
Created an offbeat but
pos, however, a unique company culture can’t thrive, they’re gone.
Management: ensures customers don’t have to sacri-
fice quality service for convenience.
When Tony Hsieh joined Zappos as
A long with creating open and acces-
sible work environments, Hsieh also tries
to break down as many barriers between
•
workplace
rs to wow
CEO, he wanted to change the corporate employees and management as possi-
• Empo wers staffe
work environment for the better. After sell- ble. Zappos executives are affectionately
Finding and Keeping the ing his first company to Microsoft for a referred to as “monkeys,” and the best customers
whopping $265 million, Hsieh didn’t want view from the company’s 10-story Vegas
a job in a gray, cubicle-filled office. “For high-rise is reserved for the call center www.zappos.com
Best Employees me, I didn’t want to be part of a company workers. In fact, Hsieh puts so much faith
where I dreaded going into the office,” in his staff that in 2014 he announced @zappos
said Hsieh. To set Zappos apart from
other online retailers, he wanted his ser-
vice representatives to wow customers
with their energy and expertise. To do that
Zappos would be eliminating most of its
traditional managers, corporate titles,
and hierarchy entirely. Instead, the com-
pany will be replacing its standard
Hsieh needed upbeat employees who chain of command with a “hol-
Learning Objectives
were motivated by the love of their work.
He gave his call center staffers remark-
able freedom, allowing them to talk to
customers for hours at a time or send
acracy.” This new company
structure splits employees into
overlapping but mostly self-
ruling “circles” that allow
flowers and thank-you notes on the com- them to have a greater
AFTER YOU HAVE READ AND STUDIED THIS CHAPTER, YOU SHOULD BE ABLE TO pany’s dime. voice in how the
Not only does this strategy do won- company is run.
LO 11-1 Explain the importance of human resource management, and ders for customer satisfaction, it also Although time will tell
describe current issues in managing human resources. keeps employee morale sky high. In whether or not this
LO 11-2 Illustrate the effects of legislation on human resource
management.
LO 11-3 Summarize the five steps in human resource planning.
order to succeed at this job, Zappos’s
service reps must be creative, energetic,
generous, and understanding. But this
commitment to excellence doesn’t end
radical system works, Tony
Hsieh’s commitment to an
offbeat but efficient workplace
has already grown Zappos into
with the company’s spirited call center a $2 billion company. If anybody
LO 11-4 Describe methods that companies use to recruit new employees,
and explain some of the issues that make recruitment challenging.
LO 11-5 Outline the six steps in selecting employees.
employees. When candidates for depart-
ments like marketing or management
reach the interview stage, Hsieh starts
testing them before they even set foot in
can pull off such an unorthodox
office structure, it’s Hsieh.
In this chapter, you’ll learn
how businesses that succeed like
LO 11-6 Illustrate employee training and development methods. the company’s Las Vegas headquarters. Zappos recruit, manage, and make
“A lot of our job candidates are from out the most of their employees.
LO 11-7 Trace the six steps in appraising employee performance. of town, and we’ll pick them up from the
airport in a Zappos shuttle, give them a Sources: Jena McGregor, “Zappos Says Goodbye to
LO 11-8 Summarize the objectives of employee compensation programs, Bosses,” The Washington Post, January 3, 2014; Edward
tour, and then they’ll spend the rest of Lewine, “Tony Hsieh’s Office: Welcome to the Rain
and evaluate pay systems and fringe benefits.
LO 11-9 Demonstrate how managers use scheduling plans to adapt to
workers’ needs.
the day interviewing,” said Hsieh. “At the
end of the day of interviews, the
recruiter will circle back to the shuttle
driver and ask how he or she was
Forest,” The New York Times, December 28, 2013; Max
Nisen, “Tony Hsieh’s Brilliant Strategy for Hiring Kind
People,” Business Insider, November 22, 2013; Kim Bhasin,
“Tony Hsieh: Here’s Why I Don’t Want My Employees to
Work From Home,” Business Insider, March 6, 2013; and
Adam Bryant, “On a Scale of 1 to 10, How Weird Are You?”
LO 11-10 Describe how employees can move through a company: treated. It doesn’t matter how well the The New York Times, January 9, 2010.
promotion, reassignment, termination, and retirement.
298 299
nic23165_ch11_298-331.indd 298 11/4/14 10:44 AM nic23165_ch11_298-331.indd 299 11/4/14 10:44 AM
name that company
This Swiss-based company has many foreign subsidiaries including Jenny
Craig (weight management), Ralston Purina, Chef America (maker of Hot
Pockets), and Dreyer’s Ice Cream in the United States, as well as Perrier in
France. The company employs over 328,000 people and has operations in
almost every country in the world. Name that company. (Find the answer in
the chapter.)
seeking sustainability
y
Rickshaw employees and
to help retain
ex
executives abide by the compa- Use LearnSmart ned. Access test prep
ny
ny’s “three Fs” of sustainable
de
design: form, function and foot-
what you have lear nect course
pr
print. Not only must a product your instructor's Con mart, or go to • What are the advanta
advantages
ges to a firm of using licensing as a method of
m
make as small a carbon footprint to check out LearnSe.com for help. entry in global markets? What are the disadvantages?
as possible, it must also serve a learnsmartadvantag • What services are usually provided by an export-trading company?
lo
long-term practical function and
lo
look great doing it. That’s why • What is the key difference between a joint venture and a strategic
Ri
Rickshaw’s messenger bags are alliance?
de
designed in a way that ensures
• What makes a company a multinational corporation?
ev
every piece of fabric cut by the
company makes it into the bag.
The company’s dedication to
sustainability is even incorpo-
rated in its name, which means
“human powered vehicle” in
Japanese. Do you think more com-
Test Prep Questions help students understand and
panies should be as dedicated to
sustainability as Rickshaw?
retain the material in the chapters. These questions stop
Sources: Mark Dwight, “How to Build a
Sustainable Business,” Inc., November 2013; and
them at important points in the chapter to assess what
nic23165_ch03_060-091.indd 72 9/26/14 2:32 PM
http://blog.rickshawbags.com/the-rickshaw-story/,
accessed February 2014.
they’ve learned before they continue reading and help them
prep for exams.
nic23165_ch03_060-091.indd 62 9/26/14 2:31 PM
xi
 www.yaofamilywines.com

sspotlight on small business

From Setting Picks to Picking Grapes
Although Americans love to watch
sports, professional athletes often
receive criticism for collecting
enormous paychecks. After all,
some sports stars make more
money in a single season than
many educators or nurses would
see in a lifetime. But matters can
change drastically for athletes
once their playing days end.
Suddenly skills that you’ve spent
your entire life honing are obso-
lete, often leading to confusion
over what to do next.
When faced with this problem,
the groundbreaking former NBA
center Yao Ming opted to use his
resources to start a business.
Although this is a common post-
retirement tactic for many ath-
letes, Yao didn’t unveil a line of
Spotlight on Small Business boxes feature how the
concepts in the chapter relate to small businesses.
athletic wear or open a chain of
sports bars. Instead, he estab-
lished a high-end winery in
California’s famous Napa Valley.
Although many wealthy Chinese
celebrities have bought vine-
yards, Yao has set himself apart
by building a brand from scratch
rreaching beyond our borders
rather than investing in an exist-
ing operation. A national hero in McDonald’s: Over 100 Cultures Served
China, Yao Family Wines uses the
name recognition of its seven- For decades McDonald’s
and-half-foot founder to appeal to has been the undisputed
the nation’s growing consumer king of global food fran-
class. Yao’s wines are intention- chising. With more than
ally expensive: the cheapest vin- 34,000 restaurants in over
tage goes for about $87 while the 118 countries, Mickey D’s
priciest bottle, Yao Ming Family serves more than 69 mil-
lion customers every day.
Reserve, lists for more than
So how did McDonald’s
$1,000. With premium brands still
become such a global
a rarity in China, Yao could end powerhouse? It certainly
up being just as influential in the didn’t get there through
Chinese business world as he hamburgers alone. Since
was on the basketball court. it first began expanding
overseas, McDonald’s has
Sources: Jason Chow, “Yao Ming’s Napa Winery
Stoops to Conquer China’s Middle Class,” The been careful to include
Wall Street Journal, September 5, 2013; and regional tastes on its menus along
Michelle FlorCruz, “Yao Ming’s Wine Company
Sets Sights on China’s Growing Middle Class,” with the usual Big Mac and
International Business Times, September 6, 2013. French fries. For instance, in
Thailand patrons can order the
Samurai Burger, a pork-patty
sandwich marinated in teriyaki
sauce and topped with mayon-
naise and a pickle. If fish is more
your taste, try the Ebi Filet-o
shrimp sandwich from Japan.
McDonald’s is also careful to
adapt its menus to local customs
and culture. In Israel, all meat
served in the chain’s restaurants is
100 percent kosher beef. The com-
pany also closes many of its restau-
rants on the Sabbath and religious
holidays. McDonald’s pays respect
www.mcdonalds.com
to religious sentiments in India as
well by not including any beef or
pork on its menu. For more exam-
ples, go to www.mcdonalds.com
and explore the various
McDonald’s international franchises
websites. Notice how the company
blends the culture of each country
into the restaurant’s image.
McDonald’s main global market
concern as of late has been Asia.
So far McDonald’s strategy seems
to be working. In Shanghai the
company’s Hamburger University
attracts top-level college graduates
to be trained for management posi-
tions. Only about eight out of every
1,000 applicants makes it into the
program, an acceptance
rate even lower than
Harvard’s! McDonald’s is
reaching out further in Asia
and in 2014 opened its first
store in Vietnam. The
Vietnamese location in Ho
Chi Minh City is the coun-
try’s very first drive-thru
restaurant. Bringing
McDonald’s to Vietnam is a
dream come true for Henry
Nguyen, founder of Good
Day Hospitality, who has
been wanting to introduce
the brand to Vietnam for
over a decade. Nguyen brought in
20 top McDonald’s employees
from Australia to help aid in the
opening while also sending pro-
spective Vietnamese employees to
Queensland to learn the ropes in a
real-life restaurant setting. In the
end, one can only hope that
McDonald’s remains dedicated to
quality as it continues adapting and
expanding into the global market.
Sources: Erin Smith, “Some McSkills to Share,”
The Warwick Daily News, February 4, 2014; Kate
Taylor, “New Year, New Expansion: McDonald’s to
Open First Restaurant in Vietnam,” Entrepreneur,
December 23, 2013; Vivian Giang, “McDonald’s
Hamburger University: Step inside the Most
Exclusive School in the World,” Business Insider,
April 7, 2012; and McDonald’s, www.mcdonalds
.com, accessed February 2014.

www.medicaltourism.com

making ethical decisionss Reaching Beyond Our Borders boxes focus on

Making Your Operation Your Vacation
The Affordable Care Act (ACA)
may bring some relief to astro-
nomical insurance costs. But as
premiums continue to rise at
home, overseas in countries like
Thailand, Colombia, and India,
health care is not only affordable,
it’s also high quality. For instance,
in the United States it would cost
Patrick Follett, an avid skier, at
least $65,000 for his hip replace-
ment surgery. Unlike some
Americans, Follett had medical
insurance and would have part of
the procedure covered. However,
nic23165_ch03_060-091.indd 74
it would have still cost him at least
$10,000 out-of-pocket. Follett, like
1.6 million other Americans,
started looking for treatment else-
where. In March of 2012, he
underwent surgery in Mexico and
was back on the California ski
slopes in March of 2013. His total
bill: $10,000, all of which was cov-
ered by his company.
Right now, few American com-
panies include medical tourism in
their health care plans, but some
of the larger companies like
Aetna and WellPoint are working
with companies to include inter-
national coverage. It’s even
global issues surrounding business.
expected to become a booming
industry with worldwide annual
growth estimated between 20
and 30 percent. Would it be ethi-
cal to force patients to travel
thousands of miles and be sepa-
rated from friends and family in a
time of crisis in order to save
money?
Sources: Medical Tourism Association, “Medical
Tourism Sample Surgery Cost Chart,” www
.medicaltourismassociation.com/en/for-patients.
html, accessed March 2014; Kevin Gray, “Medical
Tourism: Overseas and Under the Knife,” Men’s
Journal, November 2013; and Elisabeth Rosenthal
“The Growing Popularity of Having Surgery
9/26/14 2:32 PM nic23165_ch03_060-091.indd 70 9/26/14 2:31 PM
Overseas,” The New York Times, August 6, 2013.

Making Ethical Decisions boxes offer students eth-

ical dilemmas to consider.

PLATINUM EXPERIENCE INSTRUCTOR RESOURCES

Connect offers instructors autogradable material in an effort to facilitate learning and to
save time.

Student Progress Tracking

Connect Insight is a powerful data

analytics tool that allows instructors
nic23165_ch03_060-091.indd 85 9/26/14 2:32 PM
to leverage aggregated information
about their courses and students to
provide a more personalized teach-
ing and learning experience.

xii
Connect’s Instructor Library
Connect’s Instructor Library serves as a one-stop, secure site for essential course materi-
als, allowing you to save prep time before class. The instructor site resources found in the
library include:
• Instructor’s Manual
• PowerPoint Presentations
• Test Bank/EZ Test
• Monthly Bonus Activities
• Videos
• Video Guide
• Connect Instructor’s Manual

Instructor’s Manual: The authors have carefully reviewed all resources provided in
the Instructor’s Manual to ensure cohesion with the text. It includes everything an instruc-
tor needs to prepare a lecture, including lecture outlines, discussion questions, and teaching
notes. More than 900 PowerPoint slides offer material from the text, as well as expanded
coverage to supplement discussion.

PowerPoint Presentations: More than 900 PowerPoint slides offer material from the
text, as well as expanded coverage to supplement discussion.

Test Bank and EZ Test Online: The Test Bank and Computerized Test Bank offer
over 8,000 multiple-choice, true/false, short answer, essay, and application questions.
ISBN: 0077474376

Monthly Bonus Activities: Monthly Bonus Activities contain a variety of tools to

help freshen your classes: (1) links to interesting new videos; (2) abstracts of recent articles
with accompanying critical-thinking questions to spark class discussion (sample answers
included); and (3) a PowerPoint file that integrates these elements in an easy-to-use pack-
age. If you’re a current adopter of the text, then we are already sending you the Monthly
Bonus Activities. If you are not receiving them and would like to, please contact your
McGraw-Hill Sales Representative.

Videos: Chapter-specific videos are provided to complement each chapter of the text.
Eleven of the 20 videos have been updated to include interesting companies that students
will identify with such as SXSW, Sonic, and Whole Foods.

Video Guide: The Video Guide offers additional detailed teaching notes to accompany
the chapter videos, and provides essay-style and multiple-choice questions.

Connect Instructor’s Manual: This Instructor’s Manual offers instructors what

they need to set up Connect for their courses. It explains everything from how to get
started to suggestions of what to assign and ideas about assigning credit. This tool was
developed by instructors who have used and continue to use Connect successfully in
their course.

xiii
 PLATINUM EXPERIENCE TEACHING OPTIONS
AND SOLUTIONS
Blackboard Partnership
McGraw-Hill Education and Blackboard have teamed up to simplify your life. Now
you and your students can access Connect and Create right from within your Black-
board course—all with one single sign-on. The grade books are seamless, so when a
student completes an integrated Connect assignment, the grade for that assignment
automatically (and instantly) feeds your Blackboard grade center. Learn more at
www.domorenow.com.

Create
Instructors can now tailor their teaching resources to match the way they teach! With
McGraw-Hill Create, www.mcgrawhillcreate.com, instructors can easily rearrange
chapters, combine material from other content sources, and quickly
upload and integrate their own content, like course syllabi or teaching
notes. Find the right content in Create by searching through thousands of
leading McGraw-Hill textbooks. Arrange the material to fit your teach-
ing style. Order a Create book and receive a complimentary print review copy in three to
five business days or a complimentary electronic review copy via e-mail within one hour.
Go to www.mcgrawhillcreate.com today and register.

Tegrity Campus
Tegrity makes class time available 24/7 by automatically capturing every lecture in a
searchable format for students to review when they study and complete assignments.
With a simple one-click start-and-stop process, you capture all computer screens and
corresponding audio. Students can replay any part of any class with easy-to-use
browser-based viewing on a PC or Mac. Educators know that the more students
® can see, hear, and experience class resources, the better they learn. In fact, studies
prove it. With patented Tegrity “search anything” technology, students instantly
recall key class moments for replay online or on iPods and mobile devices. Instructors
can help turn all their students’ study time into learning moments immediately supported
by their lecture. To learn more about Tegrity, watch a two-minute Flash demo at http://
tegritycampus.mhhe.com.

McGraw-Hill Campus
McGraw-Hill Campus is a new one-stop teaching and learning experience available to
users of any learning management system. This institutional service allows faculty and
students to enjoy single sign-on (SSO) access to all McGraw-Hill Higher Education
materials, including the award-winning McGraw-Hill Connect platform, from
directly within the institution’s website. With McGraw-Hill Campus, faculty
receive instant access to teaching materials (e.g., eTextbooks, test banks, Power
Point slides, animations, learning objects, etc.), allowing them to browse,
search, and use any instructor ancillary content in our vast library at no additional cost to
instructor or students.

xiv
COURSE DESIGN AND DELIVERY
In addition, students enjoy SSO access to a variety of free content (e.g., quizzes, flash
cards, narrated presentations, etc.) and subscription-based products (e.g., McGraw-Hill
Connect). With McGraw-Hill Campus enabled, faculty and students will never need
to create another account to access McGraw-Hill products and services. Learn more at
www.mhcampus.com.

Assurance of Learning Ready

Many educational institutions today focus on the notion of assurance of learning, an
important element of some accreditation standards. Understanding Business is designed
specifically to support instructors’ assurance of learning initiatives with a simple yet pow-
erful solution. Each test bank question for Understanding Business maps to a specific
chapter learning objective listed in the text. Instructors can use our test bank software, EZ
Test and EZ Test Online, to easily query for learning objectives that directly relate to the
learning outcomes for their course. Instructors can then use the reporting features of EZ
Test to aggregate student results in similar fashion, making the collection and presenta-
tion of assurance of learning data simple and easy.

AACSB Tagging
McGraw-Hill Education is a proud corporate member of AACSB International. Under-
standing the importance and value of AACSB accreditation, Understanding Business
recognizes the curricula guidelines detailed in the AACSB standards for business accred-
itation by connecting selected questions in the text and the test bank to the six general
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 ACKNOWLEDGMENTS
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 Prologue P-1
BRIEF CONTENTS

PART 1
Business Trends: Cultivating a Business in Diverse, Global
Environments 2
1 Taking Risks and Making Profits within the Dynamic Business Environment 2
2 Understanding Economics and How It Affects Business 28
3 Doing Business in Global Markets 60
4 Demanding Ethical and Socially Responsible Behavior 92

PART 2
Business Ownership: Starting a Small Business 118
5 How to Form a Business 118
6 Entrepreneurship and Starting a Small Business 150

PART 3
Business Management: Empowering Employees to Satisfy
Customers 184
7 Management and Leadership 184
8 Structuring Organizations for Today’s Challenges 210
9 Production and Operations Management 240

PART 4
Management of Human Resources: Motivating Employees to Produce
Quality Goods and Services 268
10 Motivating Employees 268
11 Human Resource Management: Finding and Keeping the Best Employees 298
12 Dealing with Union and Employee–Management Issues 332

PART 5
Marketing: Developing and Implementing Customer-Oriented
Marketing Plans 360
13 Marketing: Helping Buyers Buy 360
14 Developing and Pricing Goods and Services 388
15 Distributing Products 416
16 Using Effective Promotions 446

PART 6
Managing Financial Resources 472
17 Understanding Accounting and Financial Information 472
18 Financial Management 502
19 Using Securities Markets for Financing and Investing Opportunities 530
20 Money, Financial Institutions, and the Federal Reserve 564

Bonus Chapters
Bonus Chapter A: Working within the Legal Environment A
Bonus Chapter B: Using Technology to Manage Information B
Bonus Chapter C: Managing Risk C
Bonus Chapter D: Managing Personal Finances D

Epilogue E

xxii
Prologue: Getting Ready for This Course and Your Progress in Service Industries 20
Career P-1 Your Future in Business 22
Top 10 Reasons to Read This Introduction P-1 Summary 22
Learning the Skills You Need to Succeed Today Key Terms 24
and Tomorrow P-2 Critical Thinking 24
Using This Course to Prepare for Your Career P-3 Developing Workplace Skills 25

Assessing Your Skills and Personality P-4
Using Professional Business Strategies Right Now P-4
Learning to Behave Like a Professional P-5
Doing Your Best in College P-7
Study Hints P-7
Test-Taking Hints P-9
Time Management Hints P-10
Making the Most of the Resources for This
Course P-11
Getting the Most from This Text P-12
PART 1
Business Trends: Cultivating a Business in
Diverse, Global Environments 2
CHAPTER 1 Making Ethical Decisions: How Corruption Harms
Taking Risks and Making Profits within the
Dynamic Business Environment 2
Getting to Know: Sammy Hagar, Entrepreneur and
Rock Star 3
Entrepreneurship and Wealth Building 4
Revenues, Profits, and Losses 4
Matching Risk with Profit 5
Standard of Living and Quality of Life 5
Responding to the Various Business Stakeholders 6
Using Business Principles in Nonprofit
Organizations 7
Entrepreneurship versus Working for Others 8
Opportunities for Entrepreneurs 8 Understanding Socialism 41
Spotlight on Small Business: How a Food Truck
Helped Rebuild a Storm-Struck Community 9
The Importance of Entrepreneurs to the Creation of
Wealth 9
The Business Environment 11
The Economic and Legal Environment 11
Making Ethical Decisions: Ethics Begins with You 14
The Technological Environment 14
Reaching Beyond Our Borders: Connecting
Companies with Global Freelancers 15
The Competitive Environment 16
The Social Environment 17
The Global Environment 18
Adapting to Change: Gourmet Airport Eateries
Take Flight 19
The Evolution of U.S. Business 20
Progress in the Agricultural and Manufacturing
Industries 20
CONTENTS
Taking It to the Net 25
Video Case: Thomas Lennon 26
Notes 27
Photo Credits 27
CHAPTER 2
Understanding Economics and How It Affects
Business 28
Getting to Know: Matt Flannery, Co-Founder and
CEO of Kiva.org 29
How Economic Conditions Affect Businesses 30
What Is Economics? 30
The Secret to Creating a Wealthy Economy 32
Adam Smith and the Creation of Wealth 32
How Businesses Benefit the Community 33
the Economy 34
Understanding Free-Market Capitalism 34
The Foundations of Capitalism 35
How Free Markets Work 36
How Prices Are Determined 37
The Economic Concept of Supply 37
The Economic Concept of Demand 37
The Equilibrium Point, or Market Price 37
Competition within Free Markets 38
Spotlight on Small Business: Bugs Bug Orange
Farmers and Drive Prices Up 39
Benefits and Limitations of Free Markets 40
The Benefits of Socialism 41
The Negative Consequences of Socialism 41
Understanding Communism 42
The Trend Toward Mixed Economies 42
Reaching Beyond Our Borders: Economic
Expansion in Africa 44
Understanding the U.S. Economic System 44
Key Economic Indicators 44
Productivity in the United States 48
Productivity in the Service Sector 48
The Business Cycle 49
Stabilizing the Economy through Fiscal Policy 49
Fiscal Policy in Action during an Economic Crisis 51
Using Monetary Policy to Keep the Economy
Growing 51
Summary 52
Key Terms 54
Critical Thinking 54

xxiii
xxiv CONTENTS
Developing Workplace Skills 55
Taking It to the Net 56
Video Case: Opportunities International 56
Notes 57
Photo Credits 58
CHAPTER 3 Getting to Know: Patty Stonesifer, CEO of
Doing Business in Global Markets 60
Getting to Know: Leila Janah, Founder and CEO
of Samasource 61
The Dynamic Global Market 62
Why Trade with Other Nations? 63
The Theories of Comparative and Absolute
Advantage 64
Getting Involved in Global Trade 64
Importing Goods and Services 65
Exporting Goods and Services 65
Measuring Global Trade 66
Strategies for Reaching Global Markets 67
Licensing 68
Exporting 68
Franchising 69
Contract Manufacturing 69
Reaching Beyond Our Borders: McDonald’s: Over
100 Cultures Served 70
International Joint Ventures and Strategic
Alliances 70
Foreign Direct Investment 71
Forces Affecting Trading in Global Markets 73
Sociocultural Forces 73
Spotlight on Small Business: From Setting Picks to
Picking Grapes 74
Economic and Financial Forces 74
Legal and Regulatory Forces 76
Physical and Environmental Forces 77
Trade Protectionism 77
The World Trade Organization 79
Common Markets 79
The North American and Central American Free
Trade Agreements 80
The Future of Global Trade 81
The Challenge of Offshore Outsourcing
Globalization and Your Future 84
Making Ethical Decisions: Making Your Operation
Your Vacation 85
Summary 85
Key Terms 87
Critical Thinking 87
Developing Workplace Skills 87
Taking It to the Net 88
Video Case: Electra Bicycle Company 88
Notes 89
Photo Credits 91
CHAPTER 4
Demanding Ethical and Socially Responsible
Behavior 92
Martha’s Table 93
Ethics Is More Than Legality 94
Making Ethical Decisions: Bernie Madoff’s Ponzi
Scheme 95
Ethical Standards Are Fundamental 96
Ethics Begins with Each of Us 96
Spotlight on Small Business: Turning Ex-Convicts
into Entrepreneurs 97
Managing Businesses Ethically and
Responsibly 98
Setting Corporate Ethical Standards 100
Corporate Social Responsibility 102
Responsibility to Customers 104
Responsibility to Investors 105
Responsibility to Employees 106
Responsibility to Society and the Environment 107
Social Auditing 108
Seeking Sustainability: Sustainability’s in the Bag 109
International Ethics and Social Responsibility 110
Reaching Beyond Our Borders: Going by a
Different Standard 112
Summary 113
Key Terms 114
Critical Thinking 115
Developing Workplace Skills 115
Taking It to the Net 115
Video Case: Warby Parker/VisionSpring 116
Notes 117
Photo Credits 117
PART 2
Business Ownership: Starting a Small
83 Business 118
CHAPTER 5
How to Form a Business 118
Getting to Know: Anne Beiler, Founder of Auntie
Anne’s 119
Basic Forms of Business Ownership 120
Sole Proprietorships 121
Advantages of Sole Proprietorships 121
Disadvantages of Sole Proprietorships 121
Another random document with
no related content on Scribd:
from 943 to 954, had been killed at Stonehaven. Malcolm II, his son,
held the sceptre from 1005 to 1034.
It is well to stop awhile at Glamis Castle, not that it was the
scene of the murder of Duncan, but it has plenty of fascinating lore of
its own, besides having Macbeth as a tenant.
It was at Glamis Castle, in 1745, that Bonnie Prince Charlie slept
on one night, to be succeeded on the next by the Duke of
Cumberland, who occupied the very same room. The housekeeper
conducts the visitor over the historic and antique portion of the
castle, and the place is well worth seeing, for it makes the past seem
very real. Moreover, though such sight-seeing does not supply facts,
in place of Shakespeare’s creation, it helps to the enjoyment of the
truth personified. We may delight in facts, for they are necessary; but
truth is more. Whatever the facts concerning the historical Macbeth,
they were long ago “stranded on the shore of the oblivious years.”
They were, but the truth was, and is, and is to come. Human nature
is the one thing that changes not, and that eternal element
Shakespeare pictured.
We were visiting Dunkeld, in company with a party of pretty
maidens and rosy-cheeked Scottish youth from Dundee, seeing its
cathedral, ruins, waterfalls, and modern products, when we first
realized that we were in the land of Macbeth. Immediately, all the
useful and statistical data, gathered up on that August day, and even
the fact that Dunkeld, now having fewer than a thousand people,
was once a bishopric, seemed to fade into insignificance compared
with the value and importance of the imaginary—the world outside of
history and of science. We looked southward to see Birnam wood,
whose trees and branches were to move to Dunsinane in the
Scotland hills and fulfil the sinister prophecy of the witches.
Later on, we found comrades for a walk to Dunsinane Hill, which
is only twelve miles northwest of Dundee. All who have read
Shakespeare know that this was the scene of the closing tragedy in
the play of “Macbeth.” We pass red-roofed cottages, and the ruins of
an old feudal stronghold. It is a square tower, having walls of
immense thickness, with the deep, well-like dungeon, cut into the
rock, down which the keeper lowers for you a lighted candle. In place
of the old arched floors, which added strength and solidity to the
tower walls, there are platforms reached by stairways. Ascending to
the top of the tower and emerging by a doorway to the bartizan on
the outside, we have a most magnificent view of the wide-spreading
valley of the Tay, with its manifold tokens of a rich civilization, lying
like a panorama at our feet. One of these is Kinaird Castle, which
belonged to a family which, having taken the wrong side in the
uprising of 1715, had their lands forfeited.
Leaving this mass of stone behind us, we pass on to the upland
moors, and after three or four miles see the two bold hills, the King’s
Seat and Dunsinane. As we proceed, we find several old stones
which, not being rolling, have gathered on their faces a rich crop of
the moss of legend. The southern face of Dunsinane Hill is sheer
and steep, but the view from the top is magnificent. Here on the
summit we can barely trace the foundations of the second castle of
Macbeth, which he built after leaving Glamis and to which he retired.
Here he lived in the hope of finding security, the witches having
predicted that he would never be conquered until “Birnam wood
came to Dunsinane.” Thinking to make assurance doubly sure, he
compelled the nobles and their retainers to build new fortifications for
him. Men and oxen were so roughly impressed in the work that he
made enemies of old friends and rupture soon occurred between him
and Macduff.
After his father’s murder, Malcolm fled to England, whence a
powerful army was sent to invade Scotland. The Scots joined the
standard of the young prince and the army marched northward
unopposed and encamped twelve miles away, at Birnam, under the
shelter of a forest, which then covered the hill, but is now no more.
The soldiers, each one having cut down a branch of a tree,—
probably not with any knowledge of the witch’s prophecy, but to
conceal their numbers,—made a moving mass of green. Macbeth,
looking out from the battlements of his castle, beheld what seemed
to him a vast forest in motion across the plain to overwhelm him with
destruction.
 Whatever was really true in the matter, tradition has adopted the
element of poetical justice so often illustrated by the great
Shakespeare, though some reports are that Macbeth escaped from
two battles with his life and kept up a guerilla warfare in the north,
until killed in a conflict in Aberdeenshire. In another Scottish town,
we were shown a school which stands on the site of the old castle of
the Macduffs, the Thanes or Earls of Fife.

A TYPICAL SCOTTISH STREET: HIGH STREET, DUMFRIES

The touch of genius has made the name of Macbeth immortal.
He is known wherever the English language is read or spoken. How
different is the fate of those humbler folk, who lie in the ooze of the
past, unrecalled by poet or dramatist! In not a few places in
Scotland, one meets the pathetic sight of old tombs and graveyards
that are, in some instances, hardly visible for the greenery that
covers them. Here “the rude forefathers of the hamlet sleep,” but
even the hamlet is gone, the church is in ruins, and the descendants
of those who once lived and loved and died are now on various
continents. They have found other homes, and most of them,
children of the new lands, only vaguely remember, or most probably
are ignorant of, the place in which their forefathers dwelt and whence
their parents or grandparents came.
Occasionally one meets an old man or woman in the great cities,
like Glasgow or Dundee, who will tell of the joys remembered or
glories passed away, naming the village, perhaps in the glens or on
the carses, which one cannot find on the map, or may discover only
by consulting some old gazetteer in the libraries.
To me, an American, these white-haired old folks I saluted on the
moors and in the glens, recalled the words of our own Holmes, and
especially that stanza which President Lincoln thought the most
pathetic in the English language:—

“The mossy marbles rest

On the lips that he has prest
In their bloom;
And the names he loved to hear
Have been carved for many a year
On the tomb.”

Yet who—unless a Mark Twain, who could drop a tear over

Father Adam’s grave—will weep over the long departed Picts? More
often, while reading the books, rather than when rambling among the
country folk in Scotland, do we hear of these shadowy figures, who
live in ethnology rather than in local tradition.
For example, what became of the “Picts,” who figure so largely in
ancient writings, before Pictland became Scotland? Old legends
represent King Kenneth II, who died in 995, as having “exterminated”
the Picts, who had slain his father. Thus these aborigines sank, in
popular tradition, to mere mythology. A Pict now seems but as a
nixie, a brownie, or some sort of mythical, even fairy folk, hardly
human, to whom great feats, including even the building of Glasgow
Cathedral, are attributed. In 1814, Sir Walter Scott met a dwarfish
traveller in the Orkneys, whom the natives regarded as a “Pecht” or
Pict. So says Andrew Lang. The Picts have been so swallowed up in
oblivion that they are like “the ten lost tribes of Israel”—who never
were “lost” in any sense but that of absence of records, and from a
genealogical point of view. I have met intelligent persons who
thought “the dead cities of the Zuyder Zee”—so denominated by
Henri Havard—were as Pompeii and only waiting to be excavated
and come to resurrection in museums!
The Picts of Scotland are exactly where the ancient Ebisu or
Ainu of Japan are—in the veins of the people now called the
Japanese. The descendants of the Picts to-day talk Scotch, or
English, either of the American or British variety. It is no more
fashionable in Scotland to trace one’s lineage to Pictish forebears,
than in Japan to the Ainu or Ebisu, from whom millions of Japanese
are descended. Who wants to be descended from common savages,
when gods, kings, nobles, and chiefs are as plentiful as herring or
blackberries?
 CHAPTER X
STIRLING: CASTLE, TOWN, AND TOWERS

To ride in fast express trains from town to town, across the

Strathmore, or Great Valley, containing the central plain of Scotland,
on which lies almost every one of its large cities and industrial
centres, makes one thrill when contrasting the present with the past.
Our comrade, Quandril, so fresh on Scottish soil that she had hardly
got the ship’s motion out of her head, was completely daft, when
speeding from Edinburgh to Stirling. So much history, visualized and
made real, acted like a fierce stimulant. The cannonade of fresh
impressions, at every moment, added still further to her delightful
brain disturbance.
Here are two entries from her journal:—
“I am delighted with Scotland. As I realize that I am on Scottish
ground, I can scarcely understand the indifference of the people,
who walk about as if it were nothing remarkable.... Such a sight as
met our astonished vision! Never had our New World eyes seen
anything like this ancient city.”
In riding about in the suburbs, Quandril gathered some wild
poppies. She noticed that every place had its title—Lanark Villa,
Rose Villa, Breezy Brae, etc. In several places, a sign was up
announcing that “this land may be ‘fued.’” The person who rented the
land, using it, without receiving a title in fee simple, was a “feuar.”
How different the Scottish landscape, with its myriad chimneys,
from the feudal days, when this French invention was unknown!
When Scotland had a Robin Hood, in the person of Rob Roy, this
feature was rare. In picturing the long-armed and famous cowboy,
cattle-dealer, friend of the poor, and enemy of the rich, Sir Walter
Scott has told of the desolate character of the tract of country
stretching from the Clyde to the Grampians. One may recall how the
young English horsewoman, whose feelings are described during the
tedious ride toward the adventurous mountain-land, found a willow
wand before the door, as an emblem that the place was tabooed. At
one town we were told of a relic—the coulter of a plough—kept in
commemoration of the event, which may remind us of the story of
the cicerone, who showed the sword with which Balaam smote his
ass. Being told by the tourist that Balaam did not actually smite, but
only desired a sword that he might smite with it, he received the
answer, “Well, that’s the sword he wanted.” This outdid even our own
P. T. Barnum’s story of the club that (might have) killed Captain
Cook. Since at twenty smaller places had the authentic club been
exhibited, Barnum’s show could not be without it, and keep up its
reputation.
To the focus of Scottish history, Stirling, we hied during several of
our journeyings in Scotland. As with Niagara, at the first vision one
may not have grasped the full glory, but a second or third view
deepened one’s impression. There are others, however, who in
imagination, after having read Scott’s “Lady of the Lake” have
pictured to their minds “Stirling’s towers” and were not in the least
disappointed, when beholding for the first time the reality in stone. A
great rock, like that in Edinburgh, rises sheer from the plain. The
tourist sees one of those natural fortresses, around which, first a
church, then a fair, then a village, then a town, and finally, a famous
city have had their evolution. One needs but little power of the
historic imagination to go back to the days before the streets,
avenues, and imposing buildings of to-day existed, and think of
steel-clad knights and long trains of men with claymore and target.
The castle, built on a precipitous rock, overlooks one of those low,
flat, alluvial plains, which the Scots call a carse.
Stirling, which had several names, in different forms, beside the
Gaelic “Struithla,” was also known as “Snowdon,” as those may
remember who have read Scott.
If there be one place north of the Tweed, where, at a single
glance, one may view and comprehend the chief river system of
Scotland, Stirling is that place. From this point one notes the main
streams, the affluents, and the gathering of the waters, which make
the Clyde, the Forth, and the Tay. He can then realize how great and
how important in the political and economic history of Scotland has
been that great central valley, which stretches from the North Sea to
the waters of the Atlantic Ocean.
Stirling touches Scottish history very early. It was so strong, in
1304, that at its most famous siege, by Edward I, pretty much all the
besieging implements and heavy siege machinery had to be brought
from the Tower of London. At last, one engine, called “the Wolf,” was
so terribly destructive that, by filling up the ditch with stones and
rubbish, the English rushed over and fought their way into the keep.
The castle was taken and for ten years it remained in the possession
of the Southrons. In fact, it was to maintain the English grip upon this
stronghold that Edward II assembled that mighty army for invasion,
which was so signally defeated by the Bruce at Bannockburn.

STIRLING CASTLE, FROM THE KING’S KNOT

 When one thinks of that decisive battle, which turned the face of
Scotland for hundreds of years to France, for her art and culture,
instead of to her nearer southern neighbor, England, he is apt to
muse upon the different results had Edward succeeded. Possibly an
early union of Scotland and England and fusion of the two peoples
might have been the result and the ensuing story have been best for
civilization and humanity; but certainly Scotland’s history would not
have been either so interesting or so inspiring.
After the death of the Bruce, Stirling Castle was captured, in
succession, by Edward Balliol and for King David. When the House
of Stuart had evolved from a family of Norman barons, emigrants
from Shropshire to improve their fortunes, and, acting as stewards in
the new land, had reached royalty, Stirling Castle became the king’s
dwelling-place. For centuries afterward, it was their favorite
residence and the place of coronation of the Scottish kings. Here
James II and James V were born and here James VI of Scotland and
I of England was baptized.
It was James III who added so largely to its architecture and built
the Parliament House. It is in an inventory of the effects of this
slaughtered king that the first mention of the thistle as the national
emblem of Scotland occurs. Later this device appears on the coins
of the realm, but not until James VI is found the motto, “Nemo me
impune lacessit.”
As we entered through the gateway and walked up through the
battlemented Inner Way, we almost imagined we heard the din of
clashing swords echoing the past. The palace, built by James V, in
the form of a quadrangle, is in the southwestern part and is profusely
decorated. Yet when ornamentation and structure are compared, two
opposing systems appear to be at work. One seems to swear at the
other. The critic had better not look too closely when near, if he
wishes to enjoy harmony, for in this case, most decidedly, does
distance lend enchantment to the view. Seen from afar, the
ornaments appear rich and graceful, but when close at hand they
become grotesque. Corbels and brackets are especially suggestive
of agonizing exertion and the general effect is that of a nightmare. At
a distance, these melt into harmonious proportions, but they lose
their charm when we are close at hand. Here are hideous mixtures
of human and brute life. Many of the leering faces are simply idiotic
and the contortions of the bodies clustered together are horrible. As
has been well said, “the wildest and least becoming of the classic
legends are here embodied, without any attempts to realize beauty
of form.”
What terrible paradox, or love of the ugly, must have dominated
the taste of the sculptor, in the same age that reared some of the
glorious abbeys of Scotland! The King’s Room, which had an oaken
ceiling, with richly decorated beams, and in each partition a
magnificently carved head,—the fame of which had gone all over
Europe,—was abolished in 1777, when the roof, from its weight,
threatened to fall in.
The Douglas Room recalls, to the student of Scottish history,
some of the bloody episodes of feudalism, when, for example, a
powerful baron like William, Earl of Douglas, set at defiance the
authority of both king and law. James II, in 1452, invited the
insurgent to meet him in Stirling Castle. The earl came only after
receiving under the royal protection a safe-conduct,—which proved
that there was a lack of loyalty and much bad blood. The king first
used words of persuasion, but failing in this, he drew the dagger to
break the bonds of the confederate nobles.
Thus a Stuart king showed himself a traitor by becoming
assassin, setting a doubly bad example, which his descendants
followed only too often. They seemed to have kept the taint of their
ancestor in their blood, until the people of England had perforce to
behead one and drive out the other. The original Chapel Royal,
erected in 1594 by that Stuart who became the first English king with
the name of James, is now a storeroom and armory. It completes the
series of apartments which the tourist cares to enter and examine.
It is not the interior architecture of Stirling Castle that repays the
cultivated visitor, but rather the view from the battlements, over the
glorious and eloquent landscape of mid-Scotland. A small opening in
the parapet wall of the garden, termed the “Lady’s Lookout,”
furnishes for us our best point of view. Westward are the Highland
Mountains and between us and them lies the Vale of Menteith.
Farther toward the setting sun, robed in its azure hue, rises Ben
Lomond which mirrors itself in the loch of the same name, while Ben
Venue, Ben A’in, Ben Ledi, and the cone of Ben Voirlich, followed in
succession, the chain ending with the humbler summit of Uam-var.
All of these we saw in imagination, long ago, when, while reading
Scott, they rose in mind before us to “sentinel enchanted land.” North
and east are the Ochil Hills and the windings of the Forth, while
southward are the Campsie Hills. From the town at our feet the
turnpike road draws the eye along to the ruins of Cambuskenneth
Abbey, while reared aloft is the Wallace Monument and within view
are the Abbey Craig and the Bridge of Alan.
As we look at the old cannon, now serving for ornaments and
mementoes, we ask, Who, when this castle of Stirling was built,
could have conceived the power of artillery in our century? Scott
tells, in his picturesque way, of a cannon ball shot against a party of
rebels on their way to Edinburgh; but to-day one need only mount a
fifteen-inch rifled cannon or a sixteen-inch mortar on these ramparts,
to tumble down the whole structure by mere concussion and recoil.
Yet in the old days of catapults and smooth-bore cannon, it was quite
possible for “gray Stirling, Bulwark of the North,” to command the
point between the Highlands and the Lowlands. By stationing a party
at the Ford of Frew, near Aberfoyle, the main passage from the
mountain district was completely closed. Thus it was true that the
Forth on which Stirling Castle was situated “bridled the wild
Highlander.”
It is said that the merry King James V (1512–42) put on various
disguises, in order to ramble incognito about his realm to see that
justice was regularly administered—and also to indulge in gallantry.
Sir Walter Scott, in “The Lady of the Lake,” pictures him as the
Knight of Snowdon, who meets and kills Roderick Dhu and rewards
Ellen Douglas and Malcolm Graham.
On such occasions, the king took his name from Ballingeich, a
place near the castle. It is said that the two comic songs, “The
Gaberlunzie Man” and “The Jolly Beggar” were founded on the
success of this monarch’s amorous adventures when travelling in the
disguise of a beggar.
Around the castle is an excellent path, called “the Back Walk,”
furnished by a citizen long ago, and a stone seat has been erected
to accommodate the aged and infirm who resort to this spot. The
guide in the castle points out many another spot, around which
romantic or historical associations cluster, though as a rule these are
more interesting to a native than to a foreign tourist.
Looking at the Grey Friars’ Church, built in 1494 by James IV
and added to by Archbishop Beaton, uncle of the cardinal, we find a
type of architecture peculiar to Scotland; that is, of the later pointed
Gothic. Though contemporary with the depressed, or perpendicular,
style of architecture in England, this edifice might appear a century
older than it is. The later forms of English Gothic architecture,
however, were never adopted in Scotland, for the Scots preferred to
follow the taste of their friends in France rather than that of their
enemies in England. Here King James I of Great Britain was
crowned, John Knox preaching the coronation sermon. It was this
same James, “the wisest fool in Christendom,” under whose reign
the Bible was again translated,—then a “revised,” but now, for
centuries, the “accepted” version,—and to whom the translators
dedicated that presentation address which to Americans is positively
disgusting in its fulsome laudation.
From the fact that the nobles and gentry, on the estates adjoining
provincial towns, had their winter residence in the city also, we find
to-day, on either side of the Main Street of Stirling, what were once
ancient mansions. These are now tenanted by humbler occupants.
They show turrets and the crow-step gables, like those we meet with
so frequently in Holland. The man who reared one of these dwellings
foresaw the mutability of all things earthly and even in time the
probable fall of his house. He seemed to read that law of Providence
which raises the beggar from the dunghill and depresses the kings
from their high seats to the level of common folks—as was sung long
ago by the Virgin Mary and which under the old Manchu dynasty of
China was enacted into a law. In the Central Empire every
generation of the Imperial family stepped down one degree lower,
until, in the ninth generation, they were able to claim the status and
honors of the commoner.
In modern English, the quaint inscription on the Stirling mansion
would read:—

“Here I forbear my names or arms to fix,

Lest I or mine should sell these stones or sticks.”

Discovering, as we do, many evidences of French taste and

importation, not only at Stirling, but throughout Scotland, besides
noting so many points of contact between Scottish and French
history, we can hardly wonder why Scottish people feel so much at
home in the United States and why Americans and Scotchmen get
along so well together. American taste in dress and household
matters is certainly not English, nor were our ideas on the subjects of
art and decoration inherited from our British ancestors. Our historic
record and vocabulary, with the tendency of Americans to-day to go
to Paris rather than London for their garments, the cultivation of their
tastes, and for many of their ideas, show that the United States, like
Scotland, has been mightily influenced by French taste. We, Scots
and Yankees, are alike debtors to the land in which feudalism,
chivalry, and Gothic art, and not a few canons of taste and things of
beauty, reached their highest development.
 CHAPTER XI
OBAN AND GLENCOE—CHAPTERS IN
HISTORY

Oban is the heart’s delight for a tourist, provided he does not

arrive when the hotels are overcrowded. If one can get a room upon
the high ridge overlooking the shining waters, he will have a view
that is inspiring.
One can reach Oban either by the Caledonian Railway, by way
of Stirling and Callander, or on the water through the Crinan Canal.
This is an artificial highway, nine miles long, which was cut to avoid
the much longer passage of seventy miles round the Mull of Cantyre,
when going from Glasgow to Inverness. This shorter canal was
excavated toward the end of the eighteenth century, but its life has
not been without those accidents which we, from digging the
Panama Canal, have learned are inevitable. In 1859, after a heavy
rain, one of the three reservoirs which supply the canal, the highest
being eight hundred feet above the canal, burst. The torrent of water
rushing down the mountain-slope washed away part of the bank and
filled the canal with earth and stones for upwards of a mile.
Nevertheless, both the Crinan and Caledonian Canals pay well, and
from the surplus earnings are kept in good order.
At Oban, sheltered and with a delightful climate, we look out
upon the pretty little island of Kerrera, an old fortress of the
MacDougalls, which now serves for use as well as beauty. It not only
screens the town from the Atlantic gales, but virtually converts the
bay into a land-locked harbor.
Instead of the little village and fishing-station, which Dr. Johnson
looked upon in 1773, Oban is now a bustling town, which is very
lively and crowded in summer, withal the paradise of the tourist and
shopper. Here any pater familias, with loose change in his pocket,
when travelling with his wife and daughters, is apt to be, on entering
one of those splendid shops, as wax in their loving hands. Silks,
plaids, gay woollens, delightful things of all sorts in dry goods—
which ladies especially can so well appreciate—are here in luxurious
abundance, and at prices that do not seem to soar too high. As for
tartans, one can study in color and pattern not only a whole
encyclopædia of the heraldry of the clans, but may be shown
combinations of checks and stripes, wrought into tartans never
known in dream, use, or history, by any Highland clan. Nevertheless
these unhistorical and expensive plaids are delightful to look at and
will make “cunning” sashes and “lovely” dress goods.
Not the least of our pleasant memories of Oban are associated
with those wonderful products of the loom. Whether coming from the
splendid machinery of the great mills, built with the aid of capital and
thus reaching the highest perfection of craftsmanship joined to the
last refinement of invention and experiment, or simply the handwork
of the crofters in the distant isles, these tartans show a wonderful
evolution of national art. From many women and girls on the islands
far out at sea, without much of human society and whose dumb
friends are but dogs, cattle, and sheep, come reminders of their
industry and taste that are touching to both one’s imagination and
sympathies. Let us hope that not too much of the profits of this
cottage industry goes into the hands of those who control the trade.
Let the worker be the first partaker of the fruits of his toil.
In going up by water through Scotland’s great glen and canal, at
our leisure, we shall stop at the places worth seeing. Moreover, the
twenty-eight locks forming “Neptune’s Staircase” will enable us to
alternate pedestrianism with life on deck. First, after a ride of an hour
and a half, we come to the town called Ballaculish. It has an
imposing situation at the entrance of Loch Leven, and is not far away
from the wild glen, which has left, in its name and associations, such
a black spot on the page of Scotland’s annals during the reign of
William III.
 With our Boston and Buffalo friends, we chatted over British
politics in the past, reopening leaves of history, as we steamed to
Ballaculish, or progressed on our way on wheels to Glencoe. Except
shops and hotels, and the old slate quarries, by which the roofs of
the world are covered,—since the quarries send many million roofing
slates abroad every year,—there is little to see in this town on the
loch.
Next day we mounted the top of the stage-coach, which was
equipped with plenty of seats and was geared to fine horses, and
started for our ride into the upper and lower valleys of Glencoe,
which form a ravine about eight miles long. Accompanying us was
the mountain stream called the Cona, that is, “the dark Cona” of
Ossian’s poems, while the scarred sides of the hills show the beds of
numerous mountain torrents. These, in springtime, must display an
impressive activity. Halfway up the glen, the stream forms a little
loch. Toward Invercoe, the landscape acquires a softer beauty. Lord
Strathcona of Canada had not yet, in 1900, purchased the heritage
of the Macdonalds of Glencoe, or built his stately mansion. Yet the
wild glen is well worth seeing, either by starting from the
northeastern base or by coming up from Ballaculish. We spent a
half-hour in “Ossian’s Cave.”
All natural associations, however, whether weird or beautiful, and
even the Cave of Ossian faded into insignificance compared with the
thrilling story of the terrible massacre of February 13, 1690, when six
score soldiers, most of them of Campbell’s clan, who had a personal
spite against the Macdonalds, lived for twelve days in the glen, in
order to become all the more successful murderers in the end. After
receiving the hospitality of the villagers, they began early in the
morning, before daylight, the massacre of men, women, and
children. The work of butchery was finished by fire and the flocks
and herds were driven off.
From childhood we had heard this story. Who that has lived in
Schenectady, New York, which suffered a like fate with Glencoe,
during “King William’s War,” or who has studied, without family
prejudice, the episode of Jacob Leisler, the people’s champion on
Manhattan, but has heard of the many horrors for which William was
blamed and unjustly condemned?
What was the share of King William III in this Glencoe
transaction? The subject has been discussed in pamphlets and
books. Turning to Macaulay, the Whig historian,—since
historiography, as with Grote, for example, is often political
pamphletism,—who found his greatest hero in the Dutch Deliverer,
we are told that His Majesty knew of the Macdonalds only as a
rebellious clan who had rejected his conciliatory offers. The
Government had, in good season, fixed the day for rebellion to
cease, and in signing the order for their extirpation, His Majesty
merely meant that the existence of the clan as a predatory gang
should be broken up. Indeed, their stronghold had long been called
“a den of thieves.” William did not know that the certificates of loyalty
to the throne, made in correct form by MacIan, the chief of the
Macdonalds at Glencoe, had been delayed for a week after the date
of possible pardon, and that this certificate had been suppressed so
that when he signed the order of attack, he was ignorant of the
situation. It is not for us to give judgment in the case.
On the second visit our travel mate, Frances, on seeing the dark
glen, felt like a child entering into a haunted chamber, almost
expecting the ghosts of the Macdonalds to rise up and call for
justice.
Nevertheless, while twice visiting Glencoe, and still again and
more, when in Ireland, in 1913, I wondered why no complete life of
William III, King of England and Stadholder of the Dutch Republic,
and one of England’s best rulers, had ever been written. Pamphlets,
sketches, materials to serve, biographical chapters there are, but no
work at once scholarly and exhaustive. There is abundant material
for such a biography, and if written with historical accuracy and
literary charm, it would be not only a great contribution to literature,
but would serve to allay prejudices that still rankle. Such a work, so
greatly needed, would help to solve some of those terrible problems
generated by age-long misrule and misunderstanding, that have
made Ireland the weakest spot in the British Empire and a reproach
to English government. It may even be true to assert that the political
condition of Ireland in 1913 was one of the potent causes
precipitating war in Europe. Personally, I believe, from having
studied the life of King William, from documents in Holland and
England, that he is not responsible for one half of the cruelties with
which the Irish Nationalists, mostly of alien form of faith, charge him.
Nor does he deserve the censure and reproach which so many
Scottish writers and prejudiced Englishmen have heaped upon him.
Nor could he possibly have been the “sour” Calvinist of popular
tradition. From his reign the Free Churchmen date their freedom.
It is not at all creditable that such a hiatus exists in the library of
English biography, for the fame of William is as surely and as
constantly increasing as is that of William Pitt, Millard Fillmore, and
Abraham Lincoln. In 1914 a new statue of this royal statesman was
reared and dedicated in one of the towns of England. It was this
champion of representative government who, with sword and pen,
curbed in Louis XIV of France that same spirit of ambition which was
manifested by Philip II and has been shown by William of Germany.
The Stadtholder of Holland saved Europe to the principles of Magna
Charta and of constitutional government.
Just before our first visit to Scotland, Quandril had been reading
Scott’s story of “Aunt Margaret’s Mirror,” the scenes of which
romance are laid in Lady Stair’s house and “close.” Since that time
Marjorie Bowen has put in fiction some of the salient incidents of the
king’s life, and thus brought him to the notice of many tens of
thousands of readers to whom he had been previously but a name.
The novel entitled “The Master of Stair” treats of the Glencoe
incident, with great detail and with wonderful vividness and great
literary power. The title of the book is identical with that of the title of
Sir James Dalrymple, first Viscount of Stair, who must bear the
blame of the odious transaction, for he was undoubtedly the principal
adviser of the king, and was perhaps personally responsible for the
treachery and cruelty which accompanied the deed. It was he who
urged this method of extirpation as an effective way of repressing
rebellion in the Highlands. In spite of his great services to the State,
this stain upon his name cannot be effaced. He is buried in the
church of St. Giles in Edinburgh.
 As for Claverhouse, or “Claver’se,” as the common folks
pronounce his name,—the “Bonnie Dundee” of Scott’s rollicking
cavalry song,—he still bears with many the Gaelic name given him,
which means “Dark John of the Battles.” How highly King William
appreciated the military abilities of one whom he had known in the
Belgic Netherlands as a soldier of fortune in the Dutch army, and
who is said to have there, on one occasion, saved William’s life, is
shown, when on hearing the news of the death, at Killiecrankie, of
his friend, Claverhouse, the Viscount of Dundee, who had become
his enemy, he remarked, “Dundee is slain. He would otherwise have
been here to tell the news himself.”
At Drumclog, near Loudon Hill, where the Covenanters obtained
a temporary victory over Claverhouse, a stone has been erected to
commemorate the triumph. For many years an annual sermon, on
the 1st of June, was preached on the field. Perhaps this may even
yet be the case, but, under the shadow of the great world-war of the
twentieth century, it is probable that these local anniversaries suffer,
are ignored, or their celebrations are postponed to a happier time.
Happily for Scotland’s people, they have the gift of song, which
lightens many labors. Even on the days we visited Glencoe’s dark
ravine, we heard, toward the end of the afternoon, sounds of melody
from the toilers in the grain-fields. It came like a burst of sunshine
after a dark and cloudy day.
This inborn love of music among the Highlanders was shown
when the women reaped the grain and the men bound up the
sheaves. The strokes of the sickle were timed by the modulations of
the harvest song, by which all their voices were united. The sight and
sound recalled the line in Campbell’s poem, “The Soldier’s Dream,”
committed to memory in boyhood:—

“I heard my own mountain goats bleating aloft,

And knew the sweet strain that the corn reapers sung.”
 “They accompany in the Highlands every action, which can be
done in equal time, with an appropriate strain, which has, they say,
not much meaning, but the effects are regularity and cheerfulness,”
writes the historian of Scottish music. The ancient song, by which the
rowers of galleys were animated, may be supposed to have been of
this metrical kind and synchronous. There is an oar song still used
by the Hebridians, and we all recall the boat song in “The Lady of the
Lake,” which begins:—

“Hail to the chief who in triumph advances.”

Finely, in “Marmion,” is the story of rhythmic motion joined to

song to lighten labor, told by Fitz-Eustace, the squire, concerning the
lost battle, on which Scott comments, with an American reference:—

“Such have I heard, in Scottish land,

Rise from the busy harvest band,
When falls before the mountaineer,
On lowland plains, the ripened ear.
Now one shrill voice the notes prolong,
Now a wild chorus swells the song;
Oft have I listened, and stood still,
As it came softened up the hill,
And deemed it the lament of men
Who languished for their native glen;
And thought, how sad would be such sound,
On Susquehanna’s swampy ground,
Kentucky’s wood-encumbered brake,
Or wild Ontario’s boundless lake;
Where heart-sick exiles, in the strain,
Recalled fair Scotland’s hills again!”

Yet it is not in secular music only that the Scots excel. They have
also a rich treasury of devotion and praise, though for centuries the