Summary of Understanding Business
Index Latest
Chapter 1 .................................................................................. 2
Managing within the Dynamic Business Environment ............................... 2
Chapter 2 .................................................................................. 6
How Economics Affect Business: The Creating and Distribution of Wealth ....... 6
Chapter 3 ................................................................................. 11
Competing in Global Markets.......................................................... 11
Chapter 4 ................................................................................. 17
Demanding Ethical and Socially Responsible Behavior ............................. 17
Chapter 5 ................................................................................. 25
Choosing a Form of Business Ownership ............................................. 25
Chapter 6 ................................................................................. 31
Entrepreneurship and Starting a Small Business .................................... 31
Chapter 7 ................................................................................. 36
Management and Leadership .......................................................... 36
Chapter 8 ................................................................................. 42
Structuring Organizations for Today’s Challenges.................................. 42
Chapter 9 ................................................................................. 50
Producing World-Class Goods and Services .......................................... 50
Chapter 10................................................................................ 55
Motivating Employees .................................................................. 55
Chapter 11................................................................................ 61
Human Resource Management: Finding and Keeping the Best Employees ...... 61
Chapter 12................................................................................ 69
Dealing with Employee-Management Issues and Relationships ................... 69
Chapter 13................................................................................ 72
Marketing: Building Costumers and Stakeholders Relationships ................. 72
Chapter 14................................................................................ 77
Developing and Pricing Products and Services ...................................... 77
Chapter 15................................................................................ 84
Distributing Products Quickly and Efficiently ....................................... 84
Chapter 16................................................................................ 89
Using Effective Promotions ............................................................ 89
Chapter 17................................................................................ 92
Understanding Financial Information and Accounting ............................. 92
Chapter 18...............................................................................101
Financial Management.................................................................101
Chapter 20...............................................................................109
Securities Markets: Financing and Investing Opportunities ......................109
Chapter 21...............................................................................115
Foundations of Information Systems in Business ..................................115
-1-
,Chapter 1
Managing within the Dynamic Business Environment
Business Any activity that seeks to provide goods and
services to others while operating at a profit.
Profit The amount of money a business earns above
and beyond what it spends for salaries and
other expenses.
Goods Tangible products such as computers, food,
clothing, cars and appliances.
Services Intangible products (i.e. products that can’t
be held in your hand) such as education,
health care, insurance, recreation, travel and
tourism.
Entrepreneur A person who risks time and money to start
and manage a business.
Revenue The total amount of money a business takes in
during a given period by selling goods and
services.
Loss When a business’s expenses are more than its
revenues.
Risk The chance an entrepreneur takes of losing
time and money on a business that may not
prove profitable.
Standard of living The amount of goods and services people can
buy with the money they have.
Quality of life The general well-being of a society in terms
of political freedom, a clean natural
environment, education, health care, safety,
free time, and everything else that leads to
satisfaction and joy.
-2-
,Effectiveness Doing the right thing in the right way.
Efficiency Producing items using the least amount of
resources.
Productivity The amount of output you generate given the
amount of input (i.e. hours worked).
Stakeholders All the people who stand to gain or lose by
the policies and activities of a business.
Outsourcing Contracting with other companies (often in
other countries) to do some or all of the
functions of a firm, like its production or
accounting tasks (opposite: Insourcing)
Nonprofit organization An organization whose goals do not include
making a personal profit for its owners or
organizers.
Factors of production The resources used to create wealth:
land, labor, capital, entrepreneurship,
and knowledge.
Of these, the most important are entrepreneurship and knowledge (managed
information) because with them land, labor, and capital are not much of use.
The Business Environment
Business environment The surrounding factors that either help or
hinder the development of businesses.
1. The economic and legal environment
2. The technological environment
3. The competitive environment
4. The social environment
5. The global business environment
-3-
, The economic and legal environment
Government can lessen the risk of starting businesses and thus increase
entrepreneurship and wealth. For example, a government can keep taxes and
regulations to a minimum. One way for government to actively promote
entrepreneurship is to allow private ownership of businesses.
The government can lessen the risk of entrepreneurship by passing laws that
enable businesspeople to write contracts that are enforceable in court.
The government can also establish a currency that’s tradable in world markets.
The technological environment
Technology Everything from phones and copiers to
computer, medical imaging devices, personal
digital assistants, and the various software
programs that make business processes more
efficient and productive.
Productivity Is the amount of output you generate given
the amount of input.
E-Commerce The buying and selling of goods over the
internet.
Database An electronic storage file where information
is kept; one use of databases is to store vast
amount of information about consumers.
The Competitive Environment
However simply making a high-quality product isn’t enough to allow a company
to stay competitive in world markets. Companies now have to offer both high-
quality products and outstanding service at competitive prices.
Business is becoming costumer-driven, not management-driven as in the past.
This means that costumers’ wants and needs must come first.
Traditional Business World-Class Business
Costumer satisfaction Delighting the costumer
Costumer orientation Costumer and stakeholder orientation
Profit orientation Profit and social orientation
Reactive Ethics Proactive ethics
Product orientation Quality and Service orientation
Managerial Focus Costumer Focus
Empowerment Giving frontline workers the responsibility,
authority, and freedom to respond quickly to
customer needs.
-4-
Index Latest
Chapter 1 .................................................................................. 2
Managing within the Dynamic Business Environment ............................... 2
Chapter 2 .................................................................................. 6
How Economics Affect Business: The Creating and Distribution of Wealth ....... 6
Chapter 3 ................................................................................. 11
Competing in Global Markets.......................................................... 11
Chapter 4 ................................................................................. 17
Demanding Ethical and Socially Responsible Behavior ............................. 17
Chapter 5 ................................................................................. 25
Choosing a Form of Business Ownership ............................................. 25
Chapter 6 ................................................................................. 31
Entrepreneurship and Starting a Small Business .................................... 31
Chapter 7 ................................................................................. 36
Management and Leadership .......................................................... 36
Chapter 8 ................................................................................. 42
Structuring Organizations for Today’s Challenges.................................. 42
Chapter 9 ................................................................................. 50
Producing World-Class Goods and Services .......................................... 50
Chapter 10................................................................................ 55
Motivating Employees .................................................................. 55
Chapter 11................................................................................ 61
Human Resource Management: Finding and Keeping the Best Employees ...... 61
Chapter 12................................................................................ 69
Dealing with Employee-Management Issues and Relationships ................... 69
Chapter 13................................................................................ 72
Marketing: Building Costumers and Stakeholders Relationships ................. 72
Chapter 14................................................................................ 77
Developing and Pricing Products and Services ...................................... 77
Chapter 15................................................................................ 84
Distributing Products Quickly and Efficiently ....................................... 84
Chapter 16................................................................................ 89
Using Effective Promotions ............................................................ 89
Chapter 17................................................................................ 92
Understanding Financial Information and Accounting ............................. 92
Chapter 18...............................................................................101
Financial Management.................................................................101
Chapter 20...............................................................................109
Securities Markets: Financing and Investing Opportunities ......................109
Chapter 21...............................................................................115
Foundations of Information Systems in Business ..................................115
-1-
,Chapter 1
Managing within the Dynamic Business Environment
Business Any activity that seeks to provide goods and
services to others while operating at a profit.
Profit The amount of money a business earns above
and beyond what it spends for salaries and
other expenses.
Goods Tangible products such as computers, food,
clothing, cars and appliances.
Services Intangible products (i.e. products that can’t
be held in your hand) such as education,
health care, insurance, recreation, travel and
tourism.
Entrepreneur A person who risks time and money to start
and manage a business.
Revenue The total amount of money a business takes in
during a given period by selling goods and
services.
Loss When a business’s expenses are more than its
revenues.
Risk The chance an entrepreneur takes of losing
time and money on a business that may not
prove profitable.
Standard of living The amount of goods and services people can
buy with the money they have.
Quality of life The general well-being of a society in terms
of political freedom, a clean natural
environment, education, health care, safety,
free time, and everything else that leads to
satisfaction and joy.
-2-
,Effectiveness Doing the right thing in the right way.
Efficiency Producing items using the least amount of
resources.
Productivity The amount of output you generate given the
amount of input (i.e. hours worked).
Stakeholders All the people who stand to gain or lose by
the policies and activities of a business.
Outsourcing Contracting with other companies (often in
other countries) to do some or all of the
functions of a firm, like its production or
accounting tasks (opposite: Insourcing)
Nonprofit organization An organization whose goals do not include
making a personal profit for its owners or
organizers.
Factors of production The resources used to create wealth:
land, labor, capital, entrepreneurship,
and knowledge.
Of these, the most important are entrepreneurship and knowledge (managed
information) because with them land, labor, and capital are not much of use.
The Business Environment
Business environment The surrounding factors that either help or
hinder the development of businesses.
1. The economic and legal environment
2. The technological environment
3. The competitive environment
4. The social environment
5. The global business environment
-3-
, The economic and legal environment
Government can lessen the risk of starting businesses and thus increase
entrepreneurship and wealth. For example, a government can keep taxes and
regulations to a minimum. One way for government to actively promote
entrepreneurship is to allow private ownership of businesses.
The government can lessen the risk of entrepreneurship by passing laws that
enable businesspeople to write contracts that are enforceable in court.
The government can also establish a currency that’s tradable in world markets.
The technological environment
Technology Everything from phones and copiers to
computer, medical imaging devices, personal
digital assistants, and the various software
programs that make business processes more
efficient and productive.
Productivity Is the amount of output you generate given
the amount of input.
E-Commerce The buying and selling of goods over the
internet.
Database An electronic storage file where information
is kept; one use of databases is to store vast
amount of information about consumers.
The Competitive Environment
However simply making a high-quality product isn’t enough to allow a company
to stay competitive in world markets. Companies now have to offer both high-
quality products and outstanding service at competitive prices.
Business is becoming costumer-driven, not management-driven as in the past.
This means that costumers’ wants and needs must come first.
Traditional Business World-Class Business
Costumer satisfaction Delighting the costumer
Costumer orientation Costumer and stakeholder orientation
Profit orientation Profit and social orientation
Reactive Ethics Proactive ethics
Product orientation Quality and Service orientation
Managerial Focus Costumer Focus
Empowerment Giving frontline workers the responsibility,
authority, and freedom to respond quickly to
customer needs.
-4-
