The B usiness Environment

The Business Environment

HollowayBUA-101/EMCC

GOODS and SERVICES

• Goods -- Tangible products such as computers, food, clothing, cars and appliances.

• Services -- Intangible products (that can’t be held in your hand) like education, healthcare, insurance, recreation and travel.

• Successfully filling a market need means you could make money for yourself and provide jobs for others.

Entrepreneurship and

Wealth Building

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Terms you need to know…

BUSINESS and ENTREPRENEURSHIP

Entrepreneurship and

Wealth Building

• Business -- Any activity that seeks to provide goods and services to others while operating at a profit.

• Entrepreneur -- A person who risks time and money to start and manage a business.

• Success in business is often based on the strategy of finding a need and filling it.

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Terms you need to know…

REVENUE, PROFIT AND LOSS

Revenues, Profits

and Losses

• Revenue -- The total amount of money a business takes in during a given period by selling goods and services.

• Profit -- The amount of money a business earns above and beyond what it spends for salaries and other expenses.

• Loss -- Occurs when a business’s expenses are more than its revenues.

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Terms you need to know…

RISK

Matching Risk with Profit

• Risk -- The chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

• Not all businesses make the same amount of profit.

• Businesses take risks, but with great risks could come great profit.

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Terms you need to know…

What about Taxes?

HOW is TAX MONEY USED?

Businesses Add to the Standard of Living and Quality

of Life

Taxes are used to provide:•Hospitals•Schools•Libraries•Playgrounds•Roads•Fire Protection•Police Protection•Environmental Programs•Support for People in Need

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What the heck are taxes for?

Taxes: Are they Good or Bad???

STAKEHOLDERS

Responding to the Various Business

Stakeholders

• Stakeholders -- All the people who stand to gain or lose by the policies and activities of a business and whose concerns the businesses need to address.

• Who are Stakeholders?- Customers- Employees- Stockholders- Suppliers- Dealers

- Community Members- Media- Elected Officials- Bankers- Environmentalists

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THE UPS and DOWNS of ENTREPRENEURSHIP

Entrepreneurship Versus Working for

Others

The UPSThe freedom to succeed.Make your own decisions.High possibility of wealth.Hire your own staff.

The DOWNSThe freedom to fail.No paid vacations.No health insurance.No daycare.

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WHO TAKES the ENTREPRENEURIAL CHALLENGE?

Opportunities for Entrepreneurs

• Millions of people have started businesses and succeeded.

• The number of Hispanic-owned businesses in the U.S. has grown dramatically.

• Women now own one-third of all businesses.

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FIVE FACTORS of PRODUCTION

The Importance of Entrepreneurs to the Creation

of Wealth

1. Land2. Labor3. Capital4. Entrepreneurship5. Knowledge

• Entrepreneurs use what they’ve learned to grow their businesses and increase wealth.

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WHAT is theBUSINESS ENVIRONMENT?

The Business Environment

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Global Environment• Economic and Legal Environment• Technological Environment• Competitive Environment• Social Environment

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GOVERNMENT’S ROLE in BUSINESS

The BusinessEnvironment

Government can promote business by…1.Minimizing spending and keeping taxes and

regulations to a minimum.2.Allowing private ownership of businesses.3.Minimizing interference with the free exchange of

goods and services.4.Passing laws that enable businesspeople to write

enforceable contracts.5.Establishing a currency that’s tradable in world

markets.6.Minimizing corruption.

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IMPORTANT CHANGES to the GLOBAL ENVIRONMENT

The Global Environment

1. Growth of global competition.

2. Increase of free trade among nations.

3. Development of efficient distribution systems.

4. Advances in communication systems.

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INCREASING COSTS of the GLOBAL ENVIRONMENT

The Global Environment

• Wars, like those in Iraq and Afghanistan, cost billions of dollars.

• Tax money is diverted.

• Cost of security goes up.

• Cost of insurance goes up.

LG7

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Critical Thinking• Let’s start a restaurant here in Bangor…

o Who are our stakeholders?o How can we benefit our community (aside from just

providing jobs and tax revenue)?o Who are your suppliers? How will you create good

relationships with them?o Is there any conflict between our desire to be as

profitable as possible and our desire to pay employees a livable wage?

o Which environmental factors may have the biggest impact on our business? How? Why?

Choose a Business… any business!

• Walk in like you own the place… and look around.

• Answer the questions as they regard that business.

• Take a few notes and bring’em to our next meeting.

Thanks!