Business Essentials: Unit 3 The U.S. Business Environment.
Transcript of Business Essentials: Unit 3 The U.S. Business Environment.
Business Essentials: Unit 3
The U.S. Business Environment
Discussion Points
Concept of Business and Profit
External Environments of Business
Factors of Production
Economics of Market Systems
What is a Business?
An enterprise owned by one or more people whose activities is to provide goods and services to consumers.
A business can be operated for profit or not-for-profit.
Types of Businesses
Industrial Businesses Produce goods used by other businesses Examples: Mining companies,
agricultural producers
Service Businesses Engaged in marketing, finance, and in
providing services to consumers Examples: Banks, retailers, and mobile
phone companies
Profit – Making Money$
Profit is the difference between earned income and costs.
Profit is one indicator of an organizations ability to sustain.
Organizations use profit to invest back into their business
External Environments of Business
Political-Legal Environment
Domestic Environment
Economic Environment
Technological Environment
Socio-Cultural Environment
Global Business Environment
Technological Environment
Includes all the ways by which firms create value for their constituents.
Includes human knowledge, work methods, physical equipment, electronics and telecommunications, and various processing systems.
Political-Legal Environment
Reflects the relationship between business and government.
Legal system defines in part what an organization can and cannot do.
Domestic Business Environment
Environment in which a firm conducts its operations and derives its revenues.
Businesses seeks to be close to their customers and build strong relationships with their suppliers.
Businesses distinguishes themselves from competitors.
Global Business Environment
International forces that affects a business. General factors affecting global
environment International trade agreements International economic conditions Political unrest
Socio-Cultural Environment
Includes the customs, mores, values and demographic characteristics of the society in which organization operates.
Determines the goods and services and standards of business conduct.
Economic Environment
Relevant conditions that exist in the economic system in which a company operates.
An economic system is a major component of a nation’s economic environment.
Four basic inputs an economic system requires:
Natural Resources All production inputs that are useful in their natural state.
Capital Technology, tools, information, and physical facilities.
Human Resources Anyone who works, including the CEO and a self-employed mechanic.
Entrepreneurship Willingness to take risks to create and operate a business.
Factors of Production
Supply and Demand
Decisions about what to buy and sell are determined by the forces of supply and demand.
Demand is the willingness and ability of buyers to purchase a good or service.
Supply is the willingness and ability of producers to offer a good or service for sale.
Factors Driving Demand Demand curve shows the amount of a product buyers will
purchase at different prices. Quantity increases as price decreases. Economists distinguish between changes in the quantity demanded
at various prices and a true shift in the demand curve.
A supply curve shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand.
Movement along the supply curve is the opposite of movement along the demand curve.
The factors of production play a central role in determining the overall supply of goods and services.
Factors Driving Supply
Key Terms
business capital demand demand curve domestic business
environment economic
environment entrepreneur global business
environment
information resources labor physical resources political-legal
environment sociocultural
environment supply supply curve technological
environment