BUSINESS & ETHICS

CHAPTER#1
Business in a Global Environment
Sidra Nasreem
UCP
 Chapter Objectives
1. Distinguish between business and not-for-profit
organizations and identify the factors of production.
2. Describe the private enterprise system and explain how
competition and entrepreneurship contribute to the system.
3. Identify the six eras of business and explain how the
relationship era influences contemporary business.
4. Describe how technology is changing the way businesses
operate and complete.
5. Relate the importance of quality and customer satisfaction to
efforts to create value for customers.
6. Explain how productivity affects competitiveness in the
global market.
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 Chapter Objectives
7. Describe the major trends that challenge managers’ skills for
managing and developing human resources.
8. Identify the skills that managers need to lead businesses in
the new century.
9. Discuss the importance of good business ethics and social
responsibility in business decision making.

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 What is Business?
• All profit-seeking activities and
enterprises that provide goods
and services necessary to an
economic system.
• Profits—rewards for
businesspeople who take the
risks involved to offer goods
and services to customers.
 Not-for-Profit Organizations

• Businesslike establishments that have primary

objectives other than returning profits to their owners.
• For example:
The Corporate Angel Network: A Not-for-Profit
Organization providing flights to cancer patients in
need
 Factors of Production
• Four basic inputs for effective operation:

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 The Private Enterprise System

• Economic system that rewards businesses for their

ability to perceive and serve the needs and demands of
customers.

• Competition—battle among businesses for

consumer acceptance
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Basic Rights in the Private
Enterprise System
 The Entrepreneurship Alternative

• Entrepreneur—risk taker in the private enterprise system.

• Many of the Internet companies we know today got their

start as entrepreneur ventures (and many failed).
• HotJobs.com is now a Yahoo company
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 Six Eras in the History of Business

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• Barter System The Exchange of goods as a form of currency is know as barter system
• Social Era Business through online communication, attracting people with similar goals and
interests.
• The Colonial Period
• Primarily agricultural
• Prior to 1776

• The Industrial Revolution

• Mass productions by semi-skilled workers, aided by machines.
• 1760-1850

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 • The Age of the Industrial Entrepreneur
• Advances in technology and increased demand for manufactured
goods, leading to enormous entrepreneurial opportunities.
• Late 1800s.

• The Production Era

• Emphasis on producing more goods, faster, leading to productions
innovations like assembly lines.
• Prior to 1920s

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 The Marketing Era
• Consumer orientation, seeking to understand and satisfy
needs and preferences of customer groups.
• Since 1950s
• Consumer Orientation: marketing used as a process
to determine and satisfy consumer needs
• Branding: creating an identity in consumer’s minds
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 The Relationship Era

• Benefits derived from developing extensive

relationships with individual customers,
employees, and suppliers.

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 Managing the Technology Revolution
• Technology—business applications of knowledge based on
scientific discoveries, inventions, and innovations.
• Internet—worldwide network of interconnected computers that,
within limits, lets anyone with a PC or other computing device,
send and receive images and data anywhere.
• World Wide Web—interlinked collection of graphically rich
information sources within the larger Internet.
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 From Transaction Management to
Relationship Management

• Transaction management—building and promoting

products in hopes of covering costs and earning
acceptable profits
• Relationship management—collection of activities that
build and maintain ongoing, mutually beneficial ties
between a business and its customers and other parties .
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 Strategic Alliances and Partnerships
• Businesses must form partnerships with other organizations to take full advantage
of available opportunities.
• Partnership: an affiliation of two
or more companies with the
shared goal of assisting each
other in the achievement of
common goals
• Strategic alliance: partnership
formed to create a competitive
advantage for the
businesses involved
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 Creating Value through Quality and Customer Satisfaction

• Value—customer’s perception of the balance

between the positive traits of a good or service and
its price.
• Customer satisfaction—ability of a good service
to meet or exceed a buyer’s needs and expectations.

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 Competing in a Global Market
• Companies must continually
search for both the most
efficient manufacturing sites
and the most lucrative markets
for their products.
• The world’s 10 most
valuable brands
  Top-10
trading
partners with
the U.S.

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 Productivity: Key to Global Competitiveness

• Productivity describes the relationship between the

number of units produced and the number of human and
other production inputs necessary to produce them.

Total Output (goods or services produced)

=
Productivity Input (human/natural resources, capital)

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• Gross Domestic Product
(GDP) The sum of all goods and
services produced within a
country’s boundaries.
• Nations with the highest
GDP

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 Developing and Sustaining a World-Class Workforce

• A skilled and knowledgeable workforce is an

essential resource for keeping pace with the
accelerating rate of change in today’s business
world.

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 Preparing for Changes in the
Workforce
• In the coming decades, companies will face several trends that challenge
their skills for managing and developing human resources.
• Aging of the population.
• Shrinking labor pool.
• Increasingly diverse workforce.
• The changing nature of work.
• The new employer-employee partnership .
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 How to handle the Workforce Challenges

• Outsourcing—Contracting with another business to perform tasks or functions

previously handled by internal staff members
• Offshoring—To get the products manufactured from other countries and import
them back to be sold.
• Near shoring—To get the products made from the nearest place where the value of
production factor is less.

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 Reaping the Benefits of Diversity

• Blending individuals of different ethnic backgrounds,

cultures, religions, ages, genders, and physical and
mental abilities can enrich a firm’s success.

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 Wanted: A New Type of Manager
• Companies look for managers who are intelligent, highly
motivated people with the ability to create and sustain a vision
of how an organization can succeed.
• Vision
• Critical Thinking
• Creativity
• Ability to Steer Change
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• Vision: the ability to perceive marketplace needs and what an organization
must do to satisfy them
• Critical Thinking: ability to analyze and assess information in order to
pinpoint problems or opportunities
• Creativity: capacity to develop novel solutions to perceived organizational
problems – to see better and different ways of doing business
• Ability to Steer Change: Must guide employees and organizations through the
changes brought about by technology, marketplace demands, and global
competition

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 Managing Ethics and Social Responsibility
• Business Ethics—conduct and moral values involving right and
wrong actions arising in the work environment.
• Social Responsibility—a management philosophy that highlights
the social and economic effects of managerial decisions.
• Companies enhance their image and relationship with society by
participating in social responsibility programs

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 What Makes a Company Admired?
• Solid profits?
• Stable growth?
• Safe and challenging work environment?
• Commitment to social responsibility?
• You decide!

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 VIDEOS
• https://www.youtube.com/watch?v=osLpjXBXBS0&t=13s