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Nickels

McHugh

McGraw-Hill/Irwin
Understanding Business, 8e

McHugh

Managing
Within The
Dynamic
Business
Environment:
Taking Risks
and Making
Profits

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CHAPTER

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1
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1-1

2008 The McGraw-Hill Companies, Inc., All Rights

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Objectives of Business
Survival

Growth

Profit

Social
Responsibility

1-2

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Creating Wealth:
Factors of Production

Land
Labor
Capital
Entrepreneurship
Knowledge

1-3

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Business Environment

1-4

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Economic &
Legal Environment
$ Minimum taxes and regulations
$ Freedom of ownership
$ Contract laws
$ Tradable currency
$ Elimination/minimization of
corruption
1-5

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Corrupt Countries
Least Corrupt
1. Iceland
2. Finland
3. New Zealand

Most Corrupt
1. Bangladesh
2. Chad
3. Haiti

Source: Transparency International, 2005; www.transparency.org

1-6

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Technological Environment
Productivity
E-Commerce
Responsiveness
to Customer

1-7

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Identity Theft
Total number of identity theft
victims in 2005 255,565
Top four ways how victims
information was misused:
1.
2.
3.
4.

Credit card fraud

Phone/utilities fraud
Bank fraud
Employment-related fraud

Source: Identity Theft: Victim Complaint Data, 2005, Federal Trade Commission; www.consumer.gov/idtheft

1-8

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ID TheftProtective Steps
Focus on the cheap and easy way
to keep an eye on your accounts

Free Credit Reports

Guard Your Number
Shred
Bug Congress
To pass ultimate protection: A credit
freeze anytime you want one.

Source: Money, August 2005

1-9

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Competitive Environment
Customer
Expectations
Restructure/Empower

1-10

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Consumer Trends
U.S. Bottled Water Sales in Past 15
Years Increased more than four-fold
to $9.8 Billion
From October 2004 to September
2005, top bottle water flavors were:
Blend, Lemon, Lime, and Apple
Source: Business & Economic Review, Jan.-Mar. 2002; Beverage Marketing Corporation, bottledwater.org, 2004 stats;
Productscan Online; datamonitor.com, November 9, 2005

1-11

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Social Environment
Diversity/Multicultural
Aging/Graying of
America
Two-Income Families
Single-Parent Families

1-12

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U.S. Household Size

Source: U.S. Census Bureau

1-13

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Buying Power of
Diverse Groups

Women

$3,700 Billion

African Americans

761 Billion

Hispanic Americans

686 Billion

Gay Men & Lesbians

610 Billion

Asian Americans

397 Billion

Native Americans

51 Billion

Sources: National Organization on Disability Employability; U.S. Pan Asian American Chamber of Commerce; DiversityInc.com; U.S. Census Bureau; The Augusta Chronicle,
October 22, 2005; Selig Center for Economic Growth, 2005.

1-14

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21st Century
Diversity Issues

Race

Age

Gender

Language

Ethnicity

Religion

Disability

Sexual

Source: U.S. Equal Employment Opportunity Commission

1-15

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Immigration
In 2005, roughly 35 million immigrants
lived in the U.S. as compared to less
than 25 million 10 years ago.
According to a November 2005 poll,
60 percent of Americans favor a
barrier built along the US-Mexico
Border.
About 49 percent believe that a child
born to an illegal alien in the U.S.
should be granted a US citizenship
Source: Center for Immigration Studies; RasmussenReports.com

1-16

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Older Americans Working

Source: USA Today

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Americans Living Longer

U.S. life expectancy rises to a
record high 77.9 years
The number of deaths dropped
by 50,000 in 2004 from 2003,
the steepest decline since 1938
By 2005, about one in eight
Americans will be 65 or older.
By 2025, it will be nearly one in
five.
Source: Investors Business Daily, December 8, 2003; Cumberland Times-News, April 20, 2006; U.S. Centers for Disease
Control and Prevention; U.S. Census

1-18

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Exurbs:
Growth of Outer Suburbs
Northeasterners are moving south and
west, and west coast residents are
moving inland.
The states that gained the most
residents: Florida, Arizona, Nevada
The states that lost the most residents:
New York, California, Illinois
Source: Cumberland Times-News, April 21, 2006; U.S. Census Bureau

1-19

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Global Environment
International Competition and Free Trade
Improvements in Transportation
and Communication
War & Terrorism
Global Changes

1-20

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The Economic
Cost of Disaster
Disaster

Costs

Hurricane Katrina 2005 (estimate)$ 200 B

Kobe, Japan Earthquake -- 1995

100 B

September 11, 2001 Attacks

70 B

Northridge, CA Earthquake 1994

44 B

Hurricane Andrew 1992

35 B

Source: Business 2.0 , November 2002; MSNBC.com, September 10, 2005.

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Does Global Experience

Help Your Career?
No Response
5%
19%
Unnecessary

Somewhat
20%

56%
Very
Helpful

Source: USA Today

1-22

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Evolution of
American Business
Agricultural/Manufacturing
Service Industries
Future???

1-23

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Trends in Business
Rise of Information &
Communication
Technology
Globalization
Doing Business 24/7
Educated Consumers
Aging Workforce
Increasing Diversity
Pyramid vs. Web

Self-Directed,
Empowered
Employees
Communication Skills
Decision-Making Skills
Teamwork
Leadership
Continual Learning

Source: Keying In- Newsletter of the National Business Education Association, March 2003

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