An Introduction to
Business
,Table of Contents
About the Author ................................................................................................................... 1
Acknowledgments ................................................................................................................... 2
Dedication................................................................................................................................ 5
Preface ..................................................................................................................................... 6
Chapter 1: The Foundations of Business .......................................................................... 11
Introduction .............................................................................................................................................. 14
Getting Down to Business ........................................................................................................................ 16
What Is Economics? ................................................................................................................................. 22
Perfect Competition and Supply and Demand........................................................................................ 29
Monopolistic Competition, Oligopoly, and Monopoly............................................................................ 35
Measuring the Health of the Economy ................................................................................................... 38
Government‘s Role in Managing the Economy ...................................................................................... 47
Cases and Problems .................................................................................................................................. 51
Chapter 2: Business Ethics and Social Responsibility .................................................... 56
Misgoverning Corporations: An Overview ............................................................................................. 59
The Individual Approach to Ethics ......................................................................................................... 64
Identifying Ethical Issues......................................................................................................................... 71
The Organizational Approach to Ethics .................................................................................................. 79
Corporate Social Responsibility ............................................................................................................... 84
Environmentalism..................................................................................................................................... 96
Stages of Corporate Responsibility .........................................................................................................101
Cases and Problems .................................................................................................................................106
Chapter 3: Business in a Global Environment............................................................... 113
The Globalization of Business ................................................................................................................115
Opportunities in International Business................................................................................................126
The Global Business Environment ..........................................................................................................136
Trade Controls ........................................................................................................................................148
Reducing International Trade Barriers ..................................................................................................153
Preparing for a Career in International Business..................................................................................159
Cases and Problems .................................................................................................................................162
Chapter 4: Selecting a Form of Business Ownership ................................................... 168
Factors to Consider .................................................................................................................................170
Sole Proprietorship ..................................................................................................................................173
ii
, Partnership ...............................................................................................................................................176
Corporation..............................................................................................................................................181
Other Types of Business Ownership .......................................................................................................187
Mergers and Acquisitions .......................................................................................................................195
Cases and Problems .................................................................................................................................199
Chapter 5: The Challenges of Starting a Business ....................................................... 205
What Is an Entrepreneur? ........................................................................................................................207
The Place of Small Business in the Business Landscape ........................................................................216
What Industries Are Small Businesses In? .............................................................................................222
Advantages and Disadvantages of Business Ownership ........................................................................227
Starting a Business..................................................................................................................................232
The Business Plan ...................................................................................................................................241
How to Succeed in Managing a Business................................................................................................249
Cases and Problems .................................................................................................................................256
Chapter 6: Managing for Business Success ................................................................... 262
What Do Managers Do? ..........................................................................................................................264
Planning...................................................................................................................................................266
Organizing ...............................................................................................................................................276
Directing ..................................................................................................................................................290
Controlling ..............................................................................................................................................294
Managerial Skills ....................................................................................................................................297
Cases and Problems .................................................................................................................................304
Chapter 7: Recruiting, Motivating, and Keeping Quality Employees ....................... 313
Human Resource Management ...............................................................................................................316
Developing Employees............................................................................................................................325
Motivating Employees ............................................................................................................................331
What Makes a Great Place to Work? ......................................................................................................339
Performance Appraisal ...........................................................................................................................351
Labor Unions ...........................................................................................................................................360
Cases and Problems .................................................................................................................................368
Chapter 8: Teamwork and Communications ................................................................. 374
The Team and the Organization .............................................................................................................377
Why Teamwork Works ...........................................................................................................................385
The Team and Its Members ....................................................................................................................391
The Business of Communication .............................................................................................................402
Communication Channels .......................................................................................................................408
Forms of Communication ........................................................................................................................421
Cases and Problems .................................................................................................................................431
iii
, Chapter 9: Marketing: Providing Value to Customers................................................ 438
What Is Marketing? .................................................................................................................................439
The Marketing Mix.................................................................................................................................448
Pricing a Product .....................................................................................................................................457
Placing a Product.....................................................................................................................................462
Promoting a Product ...............................................................................................................................474
The Product Life Cycle ...........................................................................................................................482
The Marketing Environment ...................................................................................................................486
Careers in Marketing...............................................................................................................................498
Cases and Problems .................................................................................................................................501
Chapter 10: Product Design and Development ............................................................. 506
What Is a Product? ..................................................................................................................................507
Where Do Product Ideas Come From? ...................................................................................................513
Identifying Business Opportunities .........................................................................................................517
Understand Your Industry ......................................................................................................................521
Forecasting Demand ...............................................................................................................................525
Breakeven Analysis.................................................................................................................................530
Product Development .............................................................................................................................534
Protecting Your Idea...............................................................................................................................540
Cases and Problems .................................................................................................................................543
Chapter 11: Operations Management in Manufacturing and Service Industries 549
Operations Management in Manufacturing ...........................................................................................550
Facility Layouts .......................................................................................................................................558
Managing the Production Process in a Manufacturing Company ........................................................562
Graphical Tools: PERT and Gantt Charts ................................................................................................567
The Technology of Goods Production .....................................................................................................571
Operations Management for Service Providers .....................................................................................574
Producing for Quality .............................................................................................................................583
Cases and Problems .................................................................................................................................590
Chapter 12: The Role of Accounting in Business .......................................................... 595
The Role of Accounting ...........................................................................................................................596
Understanding Financial Statements ......................................................................................................600
Accrual Accounting .................................................................................................................................612
Financial Statement Analysis.................................................................................................................623
Challenges Facing the Accounting Profession .......................................................................................638
Cases and Problems .................................................................................................................................644
Chapter 13: Managing Financial Resources .................................................................. 653
iv
Business
,Table of Contents
About the Author ................................................................................................................... 1
Acknowledgments ................................................................................................................... 2
Dedication................................................................................................................................ 5
Preface ..................................................................................................................................... 6
Chapter 1: The Foundations of Business .......................................................................... 11
Introduction .............................................................................................................................................. 14
Getting Down to Business ........................................................................................................................ 16
What Is Economics? ................................................................................................................................. 22
Perfect Competition and Supply and Demand........................................................................................ 29
Monopolistic Competition, Oligopoly, and Monopoly............................................................................ 35
Measuring the Health of the Economy ................................................................................................... 38
Government‘s Role in Managing the Economy ...................................................................................... 47
Cases and Problems .................................................................................................................................. 51
Chapter 2: Business Ethics and Social Responsibility .................................................... 56
Misgoverning Corporations: An Overview ............................................................................................. 59
The Individual Approach to Ethics ......................................................................................................... 64
Identifying Ethical Issues......................................................................................................................... 71
The Organizational Approach to Ethics .................................................................................................. 79
Corporate Social Responsibility ............................................................................................................... 84
Environmentalism..................................................................................................................................... 96
Stages of Corporate Responsibility .........................................................................................................101
Cases and Problems .................................................................................................................................106
Chapter 3: Business in a Global Environment............................................................... 113
The Globalization of Business ................................................................................................................115
Opportunities in International Business................................................................................................126
The Global Business Environment ..........................................................................................................136
Trade Controls ........................................................................................................................................148
Reducing International Trade Barriers ..................................................................................................153
Preparing for a Career in International Business..................................................................................159
Cases and Problems .................................................................................................................................162
Chapter 4: Selecting a Form of Business Ownership ................................................... 168
Factors to Consider .................................................................................................................................170
Sole Proprietorship ..................................................................................................................................173
ii
, Partnership ...............................................................................................................................................176
Corporation..............................................................................................................................................181
Other Types of Business Ownership .......................................................................................................187
Mergers and Acquisitions .......................................................................................................................195
Cases and Problems .................................................................................................................................199
Chapter 5: The Challenges of Starting a Business ....................................................... 205
What Is an Entrepreneur? ........................................................................................................................207
The Place of Small Business in the Business Landscape ........................................................................216
What Industries Are Small Businesses In? .............................................................................................222
Advantages and Disadvantages of Business Ownership ........................................................................227
Starting a Business..................................................................................................................................232
The Business Plan ...................................................................................................................................241
How to Succeed in Managing a Business................................................................................................249
Cases and Problems .................................................................................................................................256
Chapter 6: Managing for Business Success ................................................................... 262
What Do Managers Do? ..........................................................................................................................264
Planning...................................................................................................................................................266
Organizing ...............................................................................................................................................276
Directing ..................................................................................................................................................290
Controlling ..............................................................................................................................................294
Managerial Skills ....................................................................................................................................297
Cases and Problems .................................................................................................................................304
Chapter 7: Recruiting, Motivating, and Keeping Quality Employees ....................... 313
Human Resource Management ...............................................................................................................316
Developing Employees............................................................................................................................325
Motivating Employees ............................................................................................................................331
What Makes a Great Place to Work? ......................................................................................................339
Performance Appraisal ...........................................................................................................................351
Labor Unions ...........................................................................................................................................360
Cases and Problems .................................................................................................................................368
Chapter 8: Teamwork and Communications ................................................................. 374
The Team and the Organization .............................................................................................................377
Why Teamwork Works ...........................................................................................................................385
The Team and Its Members ....................................................................................................................391
The Business of Communication .............................................................................................................402
Communication Channels .......................................................................................................................408
Forms of Communication ........................................................................................................................421
Cases and Problems .................................................................................................................................431
iii
, Chapter 9: Marketing: Providing Value to Customers................................................ 438
What Is Marketing? .................................................................................................................................439
The Marketing Mix.................................................................................................................................448
Pricing a Product .....................................................................................................................................457
Placing a Product.....................................................................................................................................462
Promoting a Product ...............................................................................................................................474
The Product Life Cycle ...........................................................................................................................482
The Marketing Environment ...................................................................................................................486
Careers in Marketing...............................................................................................................................498
Cases and Problems .................................................................................................................................501
Chapter 10: Product Design and Development ............................................................. 506
What Is a Product? ..................................................................................................................................507
Where Do Product Ideas Come From? ...................................................................................................513
Identifying Business Opportunities .........................................................................................................517
Understand Your Industry ......................................................................................................................521
Forecasting Demand ...............................................................................................................................525
Breakeven Analysis.................................................................................................................................530
Product Development .............................................................................................................................534
Protecting Your Idea...............................................................................................................................540
Cases and Problems .................................................................................................................................543
Chapter 11: Operations Management in Manufacturing and Service Industries 549
Operations Management in Manufacturing ...........................................................................................550
Facility Layouts .......................................................................................................................................558
Managing the Production Process in a Manufacturing Company ........................................................562
Graphical Tools: PERT and Gantt Charts ................................................................................................567
The Technology of Goods Production .....................................................................................................571
Operations Management for Service Providers .....................................................................................574
Producing for Quality .............................................................................................................................583
Cases and Problems .................................................................................................................................590
Chapter 12: The Role of Accounting in Business .......................................................... 595
The Role of Accounting ...........................................................................................................................596
Understanding Financial Statements ......................................................................................................600
Accrual Accounting .................................................................................................................................612
Financial Statement Analysis.................................................................................................................623
Challenges Facing the Accounting Profession .......................................................................................638
Cases and Problems .................................................................................................................................644
Chapter 13: Managing Financial Resources .................................................................. 653
iv
