Business Principles

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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 southern
half 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 states, where wage rates are lower than in the Rust Belt - the north central and northeastern states where the major manufactur-
ing firms once dominated. As illustrated at the beginning of this chapter, the Quest Company decided to move from Ohio to Georgia to lower its labor and other costs.

The continuing movement of people from the city to the suburbs and from the north to the south has led to many unintended consequences. When families and businesses leave cities in large numbers, the cities lose the financial ability to provide high-quality services. As a result, crime and poverty have increased in some large cities. Many southern states such as Georgia and Florida have experienced rapid economic and industrial growth. When businesses move from the Rust Belt, they leave behind unemployed workers, closed factories, decaying towns, and homeless people. However, in recent years, political and business leaders have taken bold steps to revitalize cities and communities in the northern states.

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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 growing
diversity 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 in the number of people in different age groups. For example, because of the high birth rate during 1945–1965, there are more people in the 42–62 age group. Because of this baby boom, the number of people aged 55 and over today has increased substantially. The lowbirth-rate period that followed the boomer period is called the baby bust period.


The baby bust period has created a shortage of young workers, called “busters.” This shortage will con-
tinue to create serious problems, especially when the boomers retire in large numbers.

Businesses must be prepared to offer the kinds of goods and services needed by people of different age
and racial groups. For instance, because of the increase of Spanish-speaking people, some newspapers
and magazines publish Spanish-language editions.

As people live longer, food companies continue to develop special foods and products for the elderly.

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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 immigration. The United States annually accepts more legal immigrants than any other country in the world, with large numbers coming from Asian and Latin American nations. Many immigrants also enter the country illegally to seek a better life.

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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 the size and characteristics of the

American population can be found at the Web site of the U.S. Census Bureau, www.census.gov.

GROWING POPULATION

CHANGING POPULATION

MOVING POPULATION

 

 

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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 very
high 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 system that rewards individual initiative, and public policies that encourage innovation.

Despite the many successes, problems persist with regard to discrimination, crime and violence, environmental protection, ethical conduct, and social responsibility. Because businesses are a part of the total society in which they operate, social changes affect how they operate. Similarly, businesses affect society in different ways, as Tyler Eastman will soon discover. Thus, one cannot study business principles and management without also having an understanding of the social forces that shape business.

People are a firm’s most important resource. A recent study of top managers found that finding and retaining qualified workers was more important than finance, technology, product innovation, or international business. The workers help businesses achieve their organizational goals. The challenges faced by businesses are closely interwoven with those experienced by the workers.

In particular, such issues as those caused by changes in population and lifestyles have a direct bearing on business operations and on the well-being of the nation.

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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 that empower their personnel to take greater responsibility for managing their own work and participating in employee teams.

Moreover, if you expect to become a supervisor or an executive of a company, you must fully grasp how the activities of all departments are coordinated in a smoothly operating business. Even organizations that are not profit-making businesses, such as the government and charitable organizations, operate in a manner similar to businesses. Business knowledge will help you contribute as an employee or as a manager in these organizations as well.

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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 company in order to develop a new product, process, or service. Although the main company finances the new venture, intrapreneurs enjoy the freedom of running their operations with little or no interference from upper managers.

Some of the largest corporations in the United States provide intrapreneurship opportunities that allow valuable employees to provide the company with innovative products and services. IBM and other major corporations such as 3M (which makes Scotch tape, Post-it Notes, and a variety of other products) and General Electric have also captured the innovative and entrepreneurial talents of employees.

Employees benefit because they risk neither their salaries nor their savings to launch a new business.

Employers benefit by keeping creative employees who might have started successful competing businesses. Furthermore, employers and consumers benefit because new and better products, processes, and services are introduced at a quickened pace through intrapreneurships.

In recent years, businesses that struggled for survival in a global economy looked for ways to increase employee productivity and commitment.

Two methods were sharing profits with employees and offering employees the opportunity to become
owners of the company through the purchase of stock. These programs provide an extra incentive
for employees to increase their efficiency and effectiveness. As a business becomes more successful and profits increase, the employees benefit by receiving a percentage of those profits or a higher value for the stock they own. Companies benefit by obtaining funds from employees who buy shares and by having a loyal, productive workforce.