Business Principles

The prosperity of Americans is not equally distributed among the population. According to the Bureau of the Census, between 12 and 15 percent of the population in any given year live in poverty. This means that these people are poorly housed, clothed, and fed. Many live in inner-city slums or in rural areas. Statistics suggest that the richest 20 percent of American families have continued to earn more over the past 30 years, whereas the income of the lowest fifth has remained about the same....

As the population grows, so does the labor force. The labor force includes most people aged 16 or over who are available for work, whether employed or unemployed. Of course, many of the people in the labor force may be available for work but are not actively seeking employment, such as students and full-timehomemakers. In a recent year, the Bureau of Labor Statistics reported that the size of the American labor force was almost 140 million. Figure 2-2 shows the growth of the labor force. The labor...

Americans are people on the move. Every year, on average, one out of five Americans changes his or her address. People move short distances, often from cities to suburbs. They also move long distances,such as from the Frost Belt, the colder northern half of the country, to the Sun Belt, the warmer southernhalf of the nation. As businesses relocate to where customers are located, they affect where other people move to in order to find jobs. For example, factories have relocated to the southeastern...

The nature of the population has been changing, too. Currently, more than 80 percent of Americans can be racially classified as Caucasian. Because of higher birth rates among nonwhite Hispanics and African-Americans, and recent immigration, their proportions in the population have been growing. This growingdiversity of the workforce increases the need for better cross-cultural communication and sensitivity to the interests and concerns of various groups. Changes in the birth rate have caused shifts...

The population of the United States has grown steadily over the years, as shown in Figure 2-1. The growth rate is largely determined by the birth rate, the death rate, and the level of immigration into the country. Generally, as the standard of living increases, the birth rate falls, and this has been the case in the United States. At the same time, because of better health care and an improved public health system,people are living much longer. Much of the population increase takes place through...

The gross domestic product (GDP) of a country cannot increase unless there are enough people to provide the necessary labor and to purchase the goods and services produced. Population statistics enable businesses to plan how much and what kinds of goods and services to offer. However, the GDP of a country must grow at a faster rate than its population in order to improve living standards. Both the size and the characteristics of the population are important in business planning. Information about...

Since its establishment more than 225 years ago, the United States has become the world’s leading economic, technical, and political power. The country has the world’s largest economy and relies on highly sophisticated and modern means of production, transportation, and communication. Americans enjoy a veryhigh standard of living. All these achievements can be attributed to the enormous resources that the country possesses: the ingenuity of its people, a democratic form of government, a social...

Whether you plan to operate a business of your own, move into a top management position in a large company, or work as a valuable and valued employee for a company, you benefit from being well informed about the production, marketing, and financial activities of the business. As an owner, you must have a complete understanding of all phases of business operations, including employee relations and government regulations. This knowledge will also give you many advantages as an employee in organizations...

Sometimes large businesses are not viewed as places that encourage the creativity that leads to new ideas and opportunities. Some talented employees leave to start their own businesses when they believe they are not able to use all of their talents. To keep their businesses on the cutting edge and to encourage their creative employees, some larger employers are supporting intrapreneurs. An intrapreneur is an employee who is given funds and freedom to create a special unit or department within a...

Anyone who starts a business has a responsibility to the entire community in which the business operates. Customers, employees, suppliers, and even competitors are affected by a single business. Therefore, a business that fails creates an economic loss that is shared by others in society. For example, an unsuccessful business probably owes money to other firms that will also suffer a loss because they cannot collect. In fact, a business that cannot collect from several other businesses may be placed...

The success of a business depends greatly on managerial effectiveness. If a business is well managed, it will likely earn an adequate income from which it can pay all expenses and earn a profit. If it does not earn a profit, it cannot continue for long. An entrepreneur assumes the risk of success or failure. Risk -  the possibility of failure - is one of the characteristics of business that all entrepreneurs must face. Risk involves competition from other businesses, changes in prices, changes...

For the person with an entrepreneurial spirit, a popular way to launch a small business is through a franchise. A franchise is a legal agreement in which an individual or small group of investors purchases the right to sell a company’s product or service under the company’s name and trademark. Wireless Zone, Supercuts, and Bruegger’s Bagels are examples of franchises operated by small-business owners under such agreements. The two parties to a franchise agreement are the franchisor, the parent...

It is the tradition of this country to encourage individuals to become entrepreneurs. Few government controls, for example, prevent a person from launching a new business. Almost anyone who wishes to do so may start a business. Some require almost no money to start and can be operated on a part-time basis. As a result, many new businesses spring up each year. These new businesses may have physical facilities, such as a store in a mall or a small rented space used for manufacturing or service activities....

The successful growth of business in the United States has resulted from many factors. Two reasons for business growth are the strong desire by individuals to own their own businesses and the ease with which a business can be started. Someone who starts, manages, and owns a business is called an entrepreneur. POPULARITY OF SMALL BUSINESS GROWTH OF FRANCHISE BUSINESS RISKS OF OWNERSHIP OBLIGATIONS OF OWNERSHIP INTRAPRENEURSHIP STUDYING BUSINESS PRINCIPLES AND MANAGEMENT     ...

A second measure of a nation’s wealth is the individual well-being of its citizens. Although GDP figures are helpful in judging the overall growth of an economy, such figures by themselves tell little about the economic worth of individuals. However, the U.S. Department of Commerce gathers information that reveals the financial well-being of U.S. citizens. With increased income, an average family improves its level of living. Over 65 percent of all families live in homes they own. Many families...

The chief measure of a nation’s economic wealth is the gross domestic product (GDP). The GDP is the total market value of all goods and services produced in a country in a year. Whenever products or services are purchased, the total dollar amount is reported to the federal government. The GDP of the United States is compared from year to year and is also compared with the GDP of other countries. These comparisons provide an ongoing measure of economic success. Certain types of transactions, however,...

Overall, the United States is a prosperous nation. Much of its prosperity is due to business growth. Around the world, people admire and envy this country’s economic strength. Let’s look at two ways in which a nation measures its economic wealth and its benefits to citizens. GROSS DOMESTIC PRODUCT INDIVIDUAL WELL-BEI...

Companies can satisfy customers in many ways. Most buyers want a high-quality product at the lowest possible price and immediate help when trouble occurs with a product. Successful firms in recent years have introduced innovative ways to meet customer expectations. Not only pizza businesses make home deliveries; now many furniture companies make deliveries to the customer’s home on the day of purchase. United Parcel Service and Federal Express not only make door-to-door deliveries but also pick...

Not only must firms do the right things, such as offering high-quality products, but they must also produce their products efficiently. Efficiency is measured by output—the quantity produced within a given time. Productivity, on the other hand, refers to producing the largest quantity in the least amount of time by using efficient methods and modern equipment. Workers are more productive when they are well equipped, well trained, and well managed. Employee productivity in the United States has...

Making the right decisions requires both common sense and skill. Knowing what customers want is critical to business success and to achieving effectiveness. What kind of sleeping bags, for example, will best satisfy the needs of the Inglish family when they take their summer vacation in the mountains? In the early days of manufacturing, customers bought whatever was available because there were few brands, colors, and styles from which to select. Today, the choices for most products have increased...

Businesses often study their own operations to determine whether they are doing the right things and doing the right things well. Two terms are used to describe the best business practices. First, effectiveness means making the right decisions about what products or services to offer customers and the best ways to produce and deliver them. Second, efficiency means producing products and services quickly, at low cost, without wasting time and materials. Firms that provide products at the lowest cost...

For hundreds of years, American businesses led the way in producing new goods and services for sale around the world. Consumers worldwide eagerly purchased exciting new products that were invented and made in the United States. Factories hummed with activity, workers from other countries arrived by the thousands to find jobs, and people spent their wages buying the goods that the firms produced. Many businesspeople and government leaders from foreign countries also arrived to find out how American...

An innovation is something entirely new. Innovations affect the kinds of products and services offered for sale by other businesses. For example, clothing used to be made from only natural fibers, such as cotton and wool. Then chemical researchers developed synthetic fibers, such as rayon, nylon, and polyester. Now consumers have more choices in clothing and other fabric products.   Innovations also affect business operations. For example, since Apple Computer built one of the first personal...

An important characteristic of business is that it is dynamic, or constantly changing. To be successful, businesses must react quickly to the changing nature of society. For instance, horses were the principal means of transportation until the invention of steam power. Then, with the emergence of the first cross-country railroad in 1869, goods and services traveled mainly by rail for about 50 years. When the gasoline engine arrived, travel patterns shifted from train to car, bus, and truck. Shortly...

This book will focus on the various types of businesses and business activities and what it takes to manage a business successfully. But before beginning that study in detail, let’s take a look at the general nature of business. Generally, there are two major kinds of businesses—industrial and commercial. Industrial businesses produce goods used by other businesses or organizations to make things. Companies that mine coal or ore and that extract oil and gas from the earth provide resources for use...

An organization that produces or distributes a good or service for profit is called a business. Profit is the difference between earned income and costs. Every business engages in at least three major activities. The first activity, production, involves making a product or providing a service. Manufacturing firms create products that customers purchase to satisfy needs, whereas service firms use the skills of employees to offer activities and assistance to satisfy customer needs. Examples of service...