file:///C|/Users/linziyu/Downloads/DownloadAttachment.html[10/17/2016 5:59:40 PM] Abide Fghijlk Introduction to Business Professor Maros Chapter 2 Case Study: Fresher than Fresh - Economics and how businesses can build and distribute wealth 1) Explain how Lindsay obtained the funding to start her business. In the Fresher Than Fresh (FTF) video, Lindsay explains that she started financing her business out of her own pocket. However, she soon realized that she would incur a lot of expenses because of her desire have her products be 100% organic. She received some financing from investors who wanted to see her business succeed. 80% of these investments were made by local people who trusted in Lindsay and believe that this business was going to be successful. 2) Explain the different economic systems and how Lindsay's business might fare under each one. According to Better Business (p. 26-27), Capitalism is an economic system that allows freedom of choice and encourages private ownership of the resources required to make and provide the goods and services we enjoy. On the other hand, Communism (p. 26) is an economic system in which a state's government makes all economics decisions and controls all the social services as well as many of the major resources required for the production of goods and services. Finally, Socialism, is defined as a system whereby the government owns or controls many basic businesses and services and the profits from them are distributed evenly among the people. The FTF video explains some differences that can be found between these economic systems. Capitalism tends to be defined as a free exchange. People are in charge of setting their own prices and promoting their own products. In this economic system people is allowed to keep their profits for themselves. Communism does not provide for private business profits. Socialism allows businesses to keep some profits but they have to pay high taxes so the government can provide extensive public services. It's important to mention that some countries have a mixed economy, where countries can have elements of all three systems. Lindsay's business works within a capitalist system. She is free to produce her own products and she has the right to keep profits. It's important to highlight the fact that she has to pay taxes as all businesses do. In her case, it would be really hard to develop this business in a socialistic or communistic economy. In a socialistic economy she would have to pay higher taxes that wouldn’t allow her to maintain her businesses profitability. Her costs are high and the price of her product is $3.00 which is not that high to cover all of her expenses (Fresher Than Fresh, video). If Fresher than Fresh operated in a communist economy, Lindsay would be working to receive benefits from her government instead of being able to keep her own profits. 3) Describe Adam Smith's concept of the "Invisible Hand." According to Investopedia.com, the "I ...

1. file:///C|/Users/linziyu/Downloads/DownloadAttachment.html[1
0/17/2016 5:59:40 PM]
Abide Fghijlk
Introduction to Business
Professor Maros
Chapter 2 Case Study: Fresher than Fresh - Economics and how
businesses can build and
distribute wealth
1) Explain how Lindsay obtained the funding to start her
business.
In the Fresher Than Fresh (FTF) video, Lindsay explains that
she started financing her business out of her
own pocket. However, she soon realized that she would incur a
lot of expenses because of her desire have
her products be 100% organic. She received some financing
from investors who wanted to see her business
succeed. 80% of these investments were made by local people
who trusted in Lindsay and believe that this
business was going to be successful.
2) Explain the different economic systems and how Lindsay's
business might fare under each one.
According to Better Business (p. 26-27), Capitalism is an
economic system that allows freedom of choice
and encourages private ownership of the resources required to

2. make and provide the goods and services
we enjoy. On the other hand, Communism (p. 26) is an
economic system in which a state's government
makes all economics decisions and controls all the social
services as well as many of the major resources
required for the production of goods and services. Finally,
Socialism, is defined as a system whereby the
government owns or controls many basic businesses and
services and the profits from them are distributed
evenly among the people.
The FTF video explains some differences that can be found
between these economic systems. Capitalism
tends to be defined as a free exchange. People are in charge of
setting their own prices and promoting
their own products. In this economic system people is allowed
to keep their profits for themselves.
Communism does not provide for private business profits.
Socialism allows businesses to keep some profits
but they have to pay high taxes so the government can provide
extensive public services. It's important to
mention that some countries have a mixed economy, where
countries can have elements of all
three systems.
Lindsay's business works within a capitalist system. She is free
to produce her own products and she has
the right to keep profits. It's important to highlight the fact that
she has to pay taxes as all businesses do.
In her case, it would be really hard to develop this business in a
socialistic or communistic economy. In a
socialistic economy she would have to pay higher taxes that
wouldn’t allow her to maintain
her businesses profitability. Her costs are high and the price of
her product is $3.00 which is not that high
to cover all of her expenses (Fresher Than Fresh, video). If

3. Fresher than Fresh operated in a
communist economy, Lindsay would be working to receive
benefits from her government instead of being
able to keep her own profits.
3) Describe Adam Smith's concept of the "Invisible Hand."
According to Investopedia.com, the "Invisible Hand" theory by
Adam Smith is defined as an
economic phenomenon where a free market itself sets prices
based on supply and demand. The belief is
that there is no need for intervention from the government or
any other institution. This term can relate to
Fresher than Fresh because it describes how this business
operates in its economic environment.
FTF's price is determined by the demand and the supply of the
resources available (Fresher Than Fresh,
Video). In this case, FTF's success is based on how many
customers want to purchase its snow cones.
Under the Invisible Hand the business itself will establish a
price, set a demand goal and purchase the
supplies required to satisfy projected demands.
4) Describe the different forms of competition: Perfect
competition, oligopoly, monopolistic competition and
monopolies.
file:///C|/Users/linziyu/Downloads/DownloadAttachment.html[1
0/17/2016 5:59:40 PM]
Better Business (p. 35) describes the differences among forms
of competition. Perfect competition occurs
when there are many buyers and seller of virtually identical
products and no barriers of entry. Oligopoly

4. refers to the existence of a few sellers, who have a fairly large
share of the market. Monopolistic
competition makes reference to many buyers and sellers and
little differentiation that exists between
products, however, there is a perceived difference among
consumers. A monopoly occurs when a provider
of a service or a good has control of all or nearly all of its
market.
It's pretty important to clarify the difference between these
degrees of competition. First, a monopoly
describes the situation of a unique business in the market.
Oligopoly makes reference to a few businesses
who participate in the market, and who own the biggest shares
of it. Moreover, monopolistic competition
makes reference to a market that has different businesses with
similar products but still the consumers
notice the difference between them. Lastly, in perfect
competition the market has identical products and
there are no barriers to enter in the market, which means that
anyone can participate (Investopedia).
Based on the information in the video, Monopoly would best
describe her business at this stage. She is the
only one who has a snow cones business in Kansas, which
means that there are no substitutes for her
product. She can develop any new ideas without worrying about
competition. Of course there are similar
businesses, but none of them sell snow cones or produce a 100%
organic product. Lindsay has enjoyed
much success so far because she has had no direct competition
as she is unique in her market.
5) How might Lindsay's business, Fresher Than Fresh be
impacted by changes in economic cycles?

5. The four primary economic cycles are 1) expansion, (2) peak,
(3) recession, and (4) recovery. Fresher then
Fresh can be impacted in different ways. In expansion and peak
Lindsay will be benefit from a good
economy that provides opportunities to improve her business. A
recession could slow the demand for snow
cones and she might lose many of her customers because they
will be saving more money and spending
less on non essential items.
However, it's important to mention that Fresher Then Fresh
would not be overly effected by
economic downturns. Even if the economy enters in a recession,
Lindsay's product is a simple luxury that
people would still be able to afford even in tough financial
times. Her products uniqueness, low relative
cost, high quality make it an affordable "splurge."
Works Cited
"Fresher than Fresh:Economics: How Business Bulds and
Distribute Wealth." Pearson. N.p., n.d. Web. 29
Sept. 2015.
"Invisible Hand." Investopedia. N.p., 20 Mar. 2015. Web. 30
Sept. 2015. .
Solomon, Michael, MaryAnne Poatsy, and Kendall Martin.
Better Business. 4th ed. Pearson Education, 2015.
Web. 20 Nov. 2015.
Local
DiskC:UserslinziyuDownloadsDownloadAttachment.html

6. file:///C|/Users/linziyu/Downloads/DownloadAttachment.html[1
0/17/2016 5:55:11 PM]
Case Studies: The practical application of business skills.
Case studies give you a chance to apply your growing
knowledge of business principles across many
important topics. These homework assignments take time to do
well. Allow at least 1-2+ hours to prepare
your answers for these case studies. Don't wait until the last
minute to complete these assignments. It will
add unneeded stress to you life. Take the time to do your best.
You'll be glad you did! You will also learn so
much more in this class.
Your grade will be determined by the following factors:
1) Your thoughtful analysis of each question
Demonstrate the ability to use both video info and textbook info
to answer each question
Identify the key, most relevant information provided within the
video
Explain how this information relates back to the chapter content
in our textbook
Include appropriate level detail and insight in each of your
answers
Use relevant business vocabulary from our textbook
2) Use of at least one independent research source to support
your answers
3) Use of MLA citations in each of your answers as appropriate
for all research reference

7. (including our textbook & case video)
4) Inclusion of a Works Cited section (e.g. MLA formatted
bibliography)
Include at the conclusion of each assignment
List each of the research sources used
Include our textbook and case video info every time
5) Use of appropriate grammar and accurate spelling
At least 1-2 detailed paragraphs per question are required to
receive the maximum points for each case.
Overly brief answers will not receive full credit. Each question
must be answered. Unanswered questions
will significantly lower your grade. You homework submission
should be well organized and well written.
Homework will be graded within one week of the homework due
date unless you are advised otherwise.
Local
DiskC:UserslinziyuDownloadsDownloadAttachment.html
file:///C|/Users/linziyu/Downloads/DownloadAttachment.html[1
0/17/2016 5:57:40 PM]
Chapter 3 Case Study
American Apparel: Ethical Dilemmas
This week, our assignment will ask you to apply what you have
learned about business ethics to an actual
business situation.

8. You will need to complete a number of activities for this
assignment, please be sure to read each step
carefully and check your work prior to submission. You should
expect to spend between 1 and 2 hours to
complete the research and write your paper.
Preparation
1. Review the chapter 3 study materials.
2. Review the AA advertisements provided in the assignment
dropbox.
3. Go on line to to your own research and learn as much as you
can about American Apparel and it's
founder Dov Charney. While you will likely find many great
research sources, a few sources to check
out include NPR, Newsweek and MSNBC's Dateline.
4. Review the case study grading criteria and example case
study before preparing your assignment.
5. Deliverable
1. Based on your review of the textbook, study materials,
Power Point, the advertisements,
and the results of your research, answer the following
questions:
a) Objective research findings: Begin your paper with a brief,
but objective summary of the
findings of your research. In other words, for this first question
you need to identify and describe
the ethical conflicts identified during your research. Do not
state your own opinion about these
findings. Just provide your findings.
2. Your view of the American Apparel ethics: Next, based on

9. your understanding of business
ethics plus the outcome of your research, discuss your views on
the each of the following:
a) How do you think American Apparel's conflicting ethical
stances relates to the power of "ethical"
marketing vs standard marketing practice?
b) To what extent do you believe the benefits of working for
higher wages and a better
environment makes people close their eyes to other types of
unethical behavior?
c) What should be done with Mr. Charney? Do his high moral
standards in one area outweigh his
less than ethical behavior in another?
d) If sex sells, is it okay to use the most provocatively sexy ads
a business can?
e) Is there a line that should not be crossed in advertising, and
if so, where should it be? Why do
you think so?
3. How would you relate American Apparel's ethical stance to
the 5 CSR pillars we've covered
this week? Your answer should address each area below
individually.
Human rights and employment standards in the workplace
Ethical sourcing and procurement
Marketing and consumer issues
Environmental, health, and safety concerns
Community and “good neighbor” policies
4. Applying personal values to company ethics: Finally, apply
your own personal values to the
outcome of your research and this week's study of business
ethics to answer the following two
questions:

10. a) Assuming you were to purchase from American Apparel,
identify which of the AA ads would be most
file:///C|/Users/linziyu/Downloads/DownloadAttachment.html[1
0/17/2016 5:57:40 PM]
likely to entice you to do so, and explain why. Please be
specific.
b) Based on the outcome of your research of American Apparel,
Dov Charney, and in context of your
studies of business ethics, discuss whether or not you would
purchase American Apparel products.
Explain the reasoning for your answer based on your own
personal values and moral standards.
Your submission should be a single spaced, block format Word
document with numbers to indicate each
question you are answering. You should include and cite at least
one external research source in addition to
the material provided here and your textbook. At the conclusion
of your submission make sure to include
a MLA Works Cited to list each of the references used to
support your answers.
Approximate Completion Time: between 2 and 2.5 hours
If you have questions, please ask your instructor! That's why
I'm here.
Local
DiskC:UserslinziyuDownloadsDownloadAttachment.html