Business in Action
Eighth Edition
Chapter 1
Developing a Business
Mindset
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Introduction
• This chapter gets you ready for the whirlwind tour of the
business world you will get in this course, starting with a
quick overview of what businesses do, and then some
advice on making the leap from consumer to business
professional.
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Understanding What Businesses Do
• Business
– Any profit-seeking organization that provides goods
and services designed to satisfy the customers’ needs
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Adding Value: The Business of Business (1 of 2)
• Revenue
– Money that a company brings in through the sale of
goods and services
• Business model
– A concise description of how a business intends to
generate revenue
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Adding Value: The Business of Business (2 of 2)
• Profit
– Money left over after all the costs involved in doing
business have been deducted from the revenue
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Competing to Attract and Satisfy Customers
• Competitive advantage
– Some aspect of a product or company that makes it
more appealing to its target customers
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Identifying Major Types of Businesses (1 of 2)
• Not-for-profit organizations
– Organizations that provide goods and services without
having a profit motive; these are also called nonprofit
organizations
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Identifying Major Types of Businesses (2 of 2)
• Goods-producing businesses
– Companies that create value by making “things,” most
of which are tangible
• Service businesses
– Companies that create value by performing activities
that deliver some benefit to customers
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Risk and Reward (2 of 3)
• Goods-producing businesses are often capital-intensive
businesses
• Service businesses tend to be labor-intensive businesses
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Risk and Reward (3 of 3)
• Barrier to entry
– Any resource or capability a company must have
before it can start competing in a given market
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Seeing Business from the Inside Out
• Business mindset
– A view of business that considers the myriad decisions
that must be made and the many problems that must
be overcome before companies can deliver the
products that satisfy customer needs
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Exhibit 1.3 The Business Mindset (1 of 2)
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Exhibit 1.3 The Business Mindset (2 of 2)
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Exhibit 1.4 Positive and Negative Effects of
Business
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Exhibit 1.5 The Multiple Environments of
Business
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Recognizing the Multiple Environments of
Business (1 of 4)
• Social environment
– Trends and forces in society at large
• Stakeholders
– Internal and external groups affected by a company’s
decisions and activities
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Recognizing the Multiple Environments of
Business (2 of 4)
• Technological environment
– Forces resulting from the practical application of
science to innovations, products, and processes
• Disruptive technologies
– Those that fundamentally change the nature of an
industry
– Can be powerful enough to create or destroy entire
companies
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Recognizing the Multiple Environments of
Business (3 of 4)
• Economic environment
– The conditions and forces that affect the cost and
availability of goods, services, and labor and thereby
shape the behavior of buyers and sellers
• Legal and regulatory environment
– Laws and regulations at local, state, national, and even
international levels
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Recognizing the Multiple Environments of
Business (4 of 4)
• Market environment
– A company’s target customers, the buying influences
that shape the behavior of those customers, and
competitors that market similar products to those
customers
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Identifying the Major Functional Areas in a
Business Enterprise (1 of 6)
• Research and development (R&D)
– Functional area responsible for conceiving and
designing new products
• Information technology (IT)
– Systems that promote communication and information
usage through the company, or that allow companies to
offer new services to their customers
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Identifying the Major Functional Areas in a
Business Enterprise (2 of 6)
• Manufacturing, production, or operations
– An area where the company makes whatever it makes
(for goods-producing businesses) or does whatever it
does (for service businesses)
– Purchasing, logistics, facilities management
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Identifying the Major Functional Areas in a
Business Enterprise (3 of 6)
• Marketing
– Charged with identifying opportunities in the
marketplace
– Working with R&D to develop the products to address
those opportunities
– Creating branding and advertising strategies to
communicate with potential customers, and setting
prices
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Identifying the Major Functional Areas in a
Business Enterprise (4 of 6)
• Finance and accounting
– Responsible for virtually every aspect of a firm’s
finances
– Ensuring that the company has the funds it needs to
operate
– Monitoring and controlling how those funds are spent
– Drafting reports for company management and outside
audiences such as investors and government
regulators
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Identifying the Major Functional Areas in a
Business Enterprise (5 of 6)
• Human resources (HR)
– Responsible for recruiting, hiring, developing, and
supporting employees
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Identifying the Major Functional Areas in a
Business Enterprise (6 of 6)
• Business services
– Exist to help companies with specific needs in law,
banking, real estate, and other areas
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Exploring Careers in Business
• Operations management
• HR specialists
• Information technology manager
• Marketing specialist
• Sales professional
• Accountant
• Financial manager
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Achieving Professionalism
• Professionalism
– The quality of performing at a high level and conducting
oneself with purpose and pride
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Exhibit 1.7 Major Functional Areas in a
Business Enterprise
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Being a Team Player
• Professionals know that they are contributors to a larger
cause.
• Great team players know how to make those around them
more effective.
• Being a team player also means showing loyalty to your
organization and protecting your employer’s reputation.
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Communicating Effectively
• Listen actively.
• Provide practical information.
• Give facts rather than vague impressions.
• Don’t present opinions as facts.
• Present information in a concise and efficient manner.
• Clarify expectations and responsibilities.
• Offer compelling, persuasive arguments, and
recommendations.
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Demonstrating Etiquette
• Etiquette
– The expected norms of behavior in any particular
situation
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Maintaining a Confident, Positive Outlook
• Successful people are optimistic.
• Successful people buckle-down and get the job done
despite obstacles.
• Energy, either positive or negative, is contagious.
• One negative personality can make an office miserable.
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