7. The Environment of Business Demographic change Global competition Social change Evolving economic systems Emerging technology Entrepreneurs, managers, workers, customers
8.
9. Women’s Presence in the Workforce Source : AFL-CIO, 135.145.13.100/women/wwfacts.htm
10. Demographics Relevant to Business Source : Fortune , Sept. 28, 1998, p. 227 Baby boomers 29% Generation Y 26% Older customers 23% Generation X 16% Other
2 2 Here are some factors I’ll cover in chapter 1: 1. Factors of Production 2. Social Trends 3. Economic Systems 4. Trends in Technology 5. Trends in Global Competition
What’s the difference between goods and services?
The focus is not on making a profit. Exs. United Way, most hospitals, zoos and museums. About 28% of organizations are Not-for-profits Do NFP’s face the same challenges as for profit organizations? Yes: They have to generate enough funds to cover operating costs, keep their customers happy, ensure employees are efficient in their work, work on marketing campaigns, and manage a budget. Is the current trend that the US government will give more or less money to NFP’s? Less.
How do businesses and not-for-profit organizations help create our standard of living? The standard of living is measured by the total output of goods and services. Thus, businesses and not-for-profit organizations create and contribute to our standard of living. Switzerland and Germany both offer employees higher wages, but the US dollar goes further in being able to buy more products here. The highest quality of life can be found in the US, Canada, Japan, the Netherlands, and Norway. Some countries who have some of the lowest quality of living are in China, India, and Russia.
2 2 1. Natural resources – land and resources in their raw form like forests, oil, minerals. 2. Labor - workers using their brains and muscles. 3. Capital – tools, machinery, and buildings. 4. Entrepreneurship – starting and operating your own business. 87% of young people (16-25) want to own their own business. 5. Knowledge – the talents and skills of the workforce.
Demographic changes – more products and services for growing population of Asians, Hispanics and African-Americans. People are living much longer and healthier. Evolving economic systems – global move toward capitalism. Technology – Mass amounts of research dollars spent by businesses to develop new technologies. There’s more technology in a Happy Birthday card that play the song “Happy Birthday” than existed in the world over 50 years ago. Dynamic changes. Global competition – internet breaking down barriers to new markets. Various free trade agreements making it easier to get foreign products into other countries. Social Change – we’re a mobile society. More two income households. Convenience items valued. Time saving devices are important.
2 2 One social trend is that people of all ages have a broader range of interests, defying traditional consumer profiles. An older couple 40 years ago might have been expected to vacation only in Florida. Today they want adventurous vacation packages. 50 years ago, it was easy to market products to a woman in her thirties – most likely she was a married, stay at home mom whose husband made the major investments. Today, do businesses make that assumption? Not if they plan to stay in business for long. Customers can make or break a company. Consider the changing footwear preferences of young adults. When customers began to think of hiking boots with a casual, outdoor look as fashionable, The Timberland Company became a major beneficiary of this trend . In a continuing effort to satisfy customers, Betty Crocker products and cookbooks reflect the changing needs of its customers. They have developed cookbooks for dieters, dessert lovers, microwave oven users, and lovers of southwest and international recipes. In addition, some of the company’s most successful products, such as Hamburger Helper and Potato Buds, seek to meet the needs of today’s busy customers. Our society is becoming more and more computer literate. The population is growing older, businesses are offering more products that appeal to middle-aged and elderly markets. We are continuing to become a more diversified multi-culture. Car companies last few years marketing to Hispanics and African Americans. 20 years ago, airline TV ads showed only white men in their thirties wearing suits boarding planes with young, white, female flight attendants serving them.
2 2 Another trend is women entering the work force in greater numbers. This trend is increasing family incomes, heightening demand for time-saving goods and services, and changing family shopping patterns. Sears marketing campaign changed to “Come see the softer side of Sears.” For years, women weren’t given credit cards unless they submitted their credit application with their husband.
2 2 Generation Y – born after 1982. Born to shop. At least 60% have computers at home and almost all use them at school. Very ethnically diverse.They love high-tech gadgets. Educational software makers are targeting this group. Generation X – Born somewhere between 1968 and 1980. Their cynical and savvy shoppers who have been blasted with commercials their entire lives. Some are still in college or living at home. Many have experienced downsizing and unemployment. Baby Boomers – Born between 1946 and 1964. They’re individualists who cling to their youth. Businesses do well selling pharmaceuticals or products that promise to make them feel younger and healthier. They value convenience and they consider themselves to be hard workers. Older consumers – Have more money, are healthier, and better educated than earlier generations. They’re about 26% of the market who like products that help them remember the past, prefer comfortable clothes (with elastic and velcro), books with big print that are easy to read and more adventurous vacations than earlier generations took.
2 2 Go to the next slide to learn more about each of these.
Global move toward capitalism, competition, private ownership of businesses, pursuing a profit is encouraged, and numerous rights are offered to business owners. Adam Smith is identified as the father of capitalism. He said “The economy is best regulated by the invisible hand of competition.” What does this mean? Competition ensures the best products and services are offered to the public. The bad ones will not survive. The US leans towards pure capitalism, but intervenes with laws to ensure smaller/weaker companies can compete against the Wal-Marts and General Electrics in the nation. It also instills controls through the department of transportation and EPA. It once regulated the airline industries up until the Reagan administration.
Communism – the government owns almost all of the resources and makes economic decisions for its people. The central government does all planning – what will be produced, where, how much, and who will get what. Before 1991, the Soviet Union, China, and many eastern countries had mostly command economies. Now there is primarily only Cuba and North Korea left. A good example of communism to use in class: Tell the students that they can come to class, do the homework, take the tests, and do the class project if they feel like it, but no matter how much work they do or how well they do – everyone will get a “C”.
Socialism – There is strong government control over private industries and the government controls bigger operations like transportation, utilities and communications. The state also may determine prices, what will be produced, and workers’ rights. They provide high levels of unemployment benefits and health care benefits than more capitalists countries. It exists throughout western Europe, Great Britain for example. Denmark, China, Sweden.
Most economies are a mix of socialism and capitalism. Canada and Sweden use more than one economic system. Most activity is carried out through private enterprise but the government intervenes in providing health care, transportation systems/roadways, welfare, postal service, social security, etc.
2 2 The application of technology can increase efficiency, lower costs, and enable firms to build better products and offer better services. Working on cars is no longer turning a wrench – but computerized operations. The Internet is changing how companies sell and how consumers buy. Effects of these rapid changes in technology?
2 2 The world is becoming more competitive. Exports continue to rise in the world markets. As more countries open their markets, U.S. firms are finding greater opportunities abroad .
ISO 9000 Quality Management – a set of five technical standards to ensure sound quality procedures for designing, producing, inspecting, packaging, and marketing. ISO 14000 designed to ensure clean production processes to cut down on environmental pollution.
A survey of 6,000 managers found that talented employees will be the hardest resource to find. Companies will have to become more and more creative to attract the best applicants and keep them. While predictions state that the economy will continue to grow, the number of people between 35 and 45 years of age will not keep pace.
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