Dynamics of business and economics PDF

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Dynamics of business and economics...

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Chapt er1 Thedy nami csofbus i nes sandeconomi cs TheNat ur eofBusi ness Abusi nesst r i est oear napr ofi tbypr ov i di ngpr oduct st hats at i s f ypeopl e’ sneeds .The out c omeofi t seffor t si spr oduct st hathav ebot ht angi bl eandi nt angi bl ec har ac t er i s t i cst hat pr ovi des at i s f act i onandbenefit s .Wheny oupur c haseapr oduct ,y ouar ebuy i ngt hebenefit s ands at i s f act i ony out hi nkt hepr oductwi l l pr ov i de.

TheGoalofBusi ness Thepr i mar ygoalofal l busi nes sesi st oear napr ofit ,t hedi ffer enc ebet weenwhati tc os t st o mak eands el l apr oductandwhatac us t omerpay sf ori t . Busi nes seshav et her i ghtt ok eepandus et hei rpr ofit sast heyc hoos ebecaus epr ofi ti st he r ewar df ort her i s k st heyt ak ei npr ov i di ngpr oduct s .Ear ni ngpr ofi t scont r i but est os oc i et yby pr ovi di ngempl oy ment ,whi chi nt ur npr ov i desmoneyt hati sr ei nv es t edi nt heeconomy . Notal l or gani zat i onsar ebus i ness es,howev er .Nonpr ofitor gani z at i onsdonothav et he f undament alpur poseofear ni ngpr ofi t s ,al t hought heymaypr ov i degoodsors er v i c esand engagei nf undr ai s i ng. Toear napr ofi t ,aper s onoror gani z at i onneedsmanagements ki l l st opl an,or gani z e,and c ont r ol t heact i v i t i esoft hebusi nes sandt ofi ndanddev el opempl oy eess ot hati tc anmak e pr oduct sc ons umer swi l l buy .Abus i nessal s oneedsmar k et i ngexper t i set ol ear nwhat pr oduct sc ons umer sneedandwantt odev el op,manuf act ur e,pr i ce,pr omot e,anddi st r i but e t hosepr oduct s .Addi t i onal l y ,abus i nessneedsfi nanci alr esour cesands ki l l st of und,mai nt ai n, andex pandi t soper at i ons . Toac hi ev eandmai nt ai npr ofit abi l i t y ,busi ness eshav ef oundt hatt heymus tpr oduc equal i t y pr oduct s ,oper at eeffic i ent l y ,andbes oci al l yr es pons i bl eandet hi c al i ndeal i ngwi t hc ust omer s , empl oy ees ,i nv est or s ,gov er nmentr egul at or s ,andt hecommuni t y . Becaus et hes egr oupshav east ak ei nt hes ucc es sandout comesofabusi ness ,t heyar e s omet i mesc al l edst akehol der s.

ThePeopl eandAct i vi t i esofBusi ness Thet hr eemai npar t i c i pant si nbus i nes sar eowner s ,empl oy ees ,andc ust omer s ,butot her s— gov er nmentr egul at or s ,s uppl i er s ,s oc i al gr oupsands oon— ar eal soi mpor t ant . Managementi nv ol v espl anni ng,or gani z i ng,andc ont r ol l i ngt het as ksr equi r edt oc ar r youtt he wor koft hecompany . Mar ket i ngr ef er st ot hoseact i v i t i es—r esear ch,pr oductdev el opment ,pr omot i on,pr i c i ng,and di st r i but i on— des i gnedt opr ovi degoodsands er vi cest hatsat i s f yc us t omer s. Fi nancer ef er st oact i v i t i esconc er nedwi t hf undi ngabus i nessandusi ngi t sf undeffect i v el y , ands t udyi ngbus i nes sc anhel py oupr epar ef orac ar eerandbecomeabet t ercons umer .

WhySt udyBusi ness? St udyi ngbusi nes sc anhel py oudev el ops ki l l sandacqui r eknowl edget opr epar ef ory our f ut ur ecar eer ,s t ar ty ourownbus i nes s ,wor kf oragov er nmentagency ,ormanageorv ol unt eer atanonpr ofi tor gani z at i on,

TheEconomi cFoundat i onofBus i ness Economi csi st hes t udyofhowr esour cesar edi st r i but edf ort hepr oduct i onofgoodsand s er v i c eswi t hi nas oc i al s y st em. Land,f or es t s ,mi ner al s ,wat er ,andot hert hi ngst hatar enotmadebypeopl ear enat ur al r esour ces.HumanResour ces,orl abor ,r ef er st ot hephy si calandment alabi l i t i est hat peopl euset opr oducegoodsands er vi ces .Fi nanci alResour ces,orc api t al ,ar et hef unds usedt oac qui r et henat ur al andhumanr es our cesneededt opr ov i depr oduct s .Because nat ur al ,human,andfi nanci alr es our cesar eusedt opr oducegoodsands er vi c es ,t heyar e s omet i mesc al l edf ac t or sofpr oduct i on.

Economi cSyst ems Aneconomi csyst em desc r i beshowapar t i cul ars oc i et ydi s t r i but esi t sr es our c est opr oduc e goodsands er vi ces .Ac ent r ali s s ueofeconomi csi showt of ul fil l anunl i mi t eddemandf or goodsands er vi cesi nawor l dwi t hal i mi t eds uppl yofr esour c es . Al t houghec onomi cs y s t emshandl et hedi st r i but i onofr es our cesi ndi ffer entway s ,al l economi cs y s t emsmus taddr es st hr eei mpor t anti s sues : 1.Whatgoodsands er vi ces ,andhowmuchofeach,wi l l s at i s f yc us t omer s ’ needs ? 2.Howwi l l goodsands er vi c esbepr oduced,whowi l lpr oducet hem,andwi t hwhat r es our ceswi l l t heybepr oduced? 3.Howar et hegoodsands er v i c est obedi st r i but edt oc onsumer s ? Communi sm,s oci al i s m,andc api t al i s m,t hebasi cec onomi cs y s t emsf oundi nt hewor l dt oday , hav ef undament al di ffer enc esi nt hewayt heyaddr esst hei ri ss ues . Communi sm i saneconomi cs y s t em i nwhi c ht hepeopl e,wi t houtr egar dt oc l as s,ownal l t he nat i on’ sr es our ces .Ev er y onec ont r i but esaccor di ngt oabi l i t yandr ec ei v esbenefi t saccor di ng t oneed.I nac ommuni s teconomy ,t hepeopl eownandoper at eal lbusi nes sesandf act or sof pr oduct i on.Cent r algov er nmentpl anni ngdet er mi neswhatgoodsands er v i c essat i s f yci t i z ens ’ needs ,howt hegoodsands er vi cesar epr oduc ed,andhowt heyar edi s t r i but ed. Soci al i sm i sanec onomi cs y st em i nwhi c ht hegov er nmentownsandoper at esbasi c i ndus t r i es—pos t al s er v i ce,t el ephone,ut i l i t i es,t r ans por t at i on,heal t hc ar e— buti ndi vi dual s ownmostbusi nes ses .Cent r al pl anni ngdet er mi neswhatbasi cgoodsands er v i cesar e pr oduced,howt heyar epr oduced,andhowt heyar edi st r i but ed.I ndi vi dual sands mal l bus i nes sespr ovi deot hergoodsands er vi cesbasedonc ons umerdemandandt heav ai l abi l i t y orr esour c es .Ci t i z ensar edependentont hegov er nmentf ormanygoodsands er v i c es . Capi t al i sm,orf r eeent er pr i se,i saneconomi cs y s t em i nwhi c hi ndi v i dual sownandoper at e t hemaj or i t yofbus i ness est hatpr ovi degoodsands er vi ces .Compet i t i on,s uppl y ,anddemand det er mi newhi c hgoodsands er vi cesar epr oduced,howt heyar epr oduced,andhowt heyar e di st r i but ed. Ther ear et wof or msofc api t al i sm:

-Pur ecapi t al i s m,al s oc al l edaf r eemar ketsyst em.I npur ec api t al i s m,al lec onomi c dec i s i onsar emadewi t houtgov er nmenti nt er v ent i on. -Modi fiedc api t al i sm di ffer sf r opur ec api t al i sm i nt hatt hegov er nmenti nt er v enesand r egul at esbusi nes st os omeext ent .Oneoft heway si nwhi cht heUni t edSt at esand Canadi angov er nmentr egul at ebus i nessi st hr oughl aws . Mi xedEconomi eshav eel ement sf r om mor et hanoneec onomi cs y s t em.

TheFr eeEnt er pr i seSyst em Manyeconomi esar ebas edonf r eeent er pr i se,andmanycommuni stands oc i al i stc ount r i es , ar eappl yi ngmor epr i nci pl esoff r eeent er pr i s et ot hei rownec onomi cs y st ems .Fr eeent er pr i s e pr ovi desanoppor t uni t yf orabusi nesst os ucc eedorf ai l ont hebas i sofmar k etdemand.I na f r eeent er pr i s es y s t em,c ompani est hatc aneffic i ent l ymanuf act ur eandsel l pr oduct st hat c ons umer sdesi r ewi l lpr obabl ys uc ceed.I neffic i entbus i ness esandt hos et hats el l pr oduct s t hatdonotofferneededbenefit swi l ll i k el yf ai lascons umer st ak et hei rbusi nes st ofi r mst hat hav emor ec ompet i t i v epr oduct s .

TheFor cesofSuppl yandDemand I nt heU. S.andi not herf r eeent er pr i s es y s t ems ,t hedi s t r i but i onofr es our cesandpr oduct si s det er mi nedbys uppl yanddemand. Demandi st henumberofgoodsands er vi cest hatcons umer sar ewi l l i ngt obuyatdi ffer ent pr i c esatas pec i fict i me. Suppl yi st henumberofpr oduct st hatbus i ness esar ewi l l i ngt os el latdi ffer entpr i cesata s peci fi ct i me. Thepr i ceatwhi cht henumberofpr oduct st hatbus i nes s esar ewi l l i ngt os uppl yequal st he numberofpr oduc t st hatcons umer sar ewi l l i ngt obuyatas pec i ficpoi nti nt i mei st he equi l i br i um pr i ce.

TheNat ur eofCompet i t i on Compet i t i on,t her i v al r yamongbusi nes sesf orcons umer s ’dol l ar s ,i sanot hervi t al el ementi n f r eeent er pr i se.Compet i t i onf os t er seffic i enc yandl owpr i cesbyf or c i ngpr oducer st ooffert he bes tpr oduct satt hemostr eas onabl epr i ce;t hos ewhof ai lt odos oar enotabl et os t ayi n bus i nes s .Thus ,c ompet i t i ons houl di mpr ov et hequal i t yoft hegoodsands er v i c esav ai l abl eor r educepr i ces . Wi t hi naf r eeent er pr i s es y s t em,t her ear ef ourt y pesofc ompet i t i v eenv i r onment s :pur e c ompet i t i on,ol i gopol y ,andmonopol y . Pur ecompet i t i onexi s t swhent her ear emanysmal lbusi nes sess el l i ngones t andar di z ed pr oduct ,s uc hasagr i c ul t ur alc ommodi t i esl i k ewheat ,cor n,andcot t on. Noonebusi nes ss el l senoughoft hepr oductt oi nfl uencet hepr oduct ’ spr i ce.And,because t her ei snodi ffer encei nt hepr oduct s ,pr i cesar edet er mi neds ol el ybyt hef or cesofs uppl yand demand. Monopol i st i ccompet i t i onex i s t swhent her ear ef ewerbus i nes sest hani napur ec ompet i t i onenvi r onmentandt hedi ffer encesamongt hegoodst heys el l ar esmal l .As pi r i n,

s of tdr i nk s ,andv ac uum c l eaner sar eex ampl esofs uchgoods.Thes epr oduct sdi ffers l i ght l y i npack agi ng,war r ant y ,name,andot herc har act er i st i cs ,butal ls at i s f yt hesamec onsumer need. Anol i gopol yexi s t swhent her ear ev er yf ewbus i ness essel l i ngapr oduct s .I nanol i gopol y , i ndi vi dual bus i nes seshav ec ont r olov ert hei rpr oduc t s ’pr i cebec auseeachbus i nes ss uppl i es al ar gepor t i onoft hepr oduct ss ol di nt hemar k et pl ace. Whent her ei sonebus i nes spr ov i di ngapr oducti nagi v enmar k ed,amonopol yexi s t s .Ut i l i t y c ompani est hats uppl yel ec t r i ci t y ,nat ur al gas ,andwat erar emonopol i es .

Economi cCycl esandPr oduct i vi t y Economi esar enots t agnant :t heyex pandandc ont r ac t . Economi cexpansi onoccur swhenaneconomyi sgr owi ngandpeopl ear es pendi ngmor e money .Thei rpur chases t i mul at est hepr oduc t i onofgoodsands er v i c es ,whi c hi nt ur n s t i mul at esempl oyment . Rapi dex pans i onsoft heeconomy ,howev er ,mayr es ul ti ni nflat i on,acont i nui ngr i s ei n pr i c es .I nfl at i oncanbehar mf uli fi ndi v i dual s ’ i ncomesddl noti ncr easeatt hes amepaceas r i si ngpr i c es ,r educ i ngt hei rbuy i ngpower . Economi ccont r act i onoc cur swhens pendi ngdecl i nes .Bus i ness esc utbackonpr oduct i on andl ayoffwor k er s ,andt heeconomyasawhol es l owsdown.Cont r act i onsoft heeconomy l eadt or ecessi on—adec l i nei npr oduc t i on,empl oyment ,andi ncome. Reces si onar eof t enc har ac t er i z edbyr i s i ngl ev el sofunempl oyment ,whi chi smeasur edas t heper cent ageoft hepopul at i ont hatwant st owor kbuti sunabl et ofi ndj obs . As ev er er ecess i onmayt ur ni nt oadepr essi on,i nwhi c hunempl oy menti sv er yhi gh, c us t omers pendi ngi sl ow,andbus i nes sout puti ss har pl yr educed. Economi esex pandandc ont r acti nr esponset oc hangesi ncons umer ,busi nes s ,and gov er nments pendi ng.

TheRol eoft heEnt r epr eneur Anent r epr eneuri sani ndi v i dualwhor i s kshi sorherweal t h,t i me,andeffor tt odev el opf or pr ofi tani nnov at i v epr oductorwayofdoi ngs omet hi ng. Thef r eeent er pr i ses y st em pr ov i dest hec ondi t i onsnecess ar yf orent r epr eneur st os ucc eed....