BUS101: Introduction to Business

Read each section for an overview of basic business concepts.  These sections will provide you with a solid foundation for the course material to follow. While the goal of business is to make a profit, there are many other goals, as well. These sections will explain the various types of goals, how they are assessed, the markets they serve, and the impact on society. As you read these pages, make sure to click on any embedded hyperlinks for additional definitions and explanations of the concepts.

Read Section 1.2 in Exploring Business to learn about internal and external factors that affect the success of businesses. Pay particular attention to Figure 1.2 to gain an understanding of where each of these factors fall.

Read section 2.5 in Exploring Business, paying particular attention to the sections on communities, financial contributions, volunteerism, and supporting local causes, to learn more about the positive impact of businesses.

Read section 2.6 in Exploring Business to gain an understanding of environmental impacts of businesses and the importance of sustainability.

Read this article for an interesting look at the environmental impact that changes in industry can have. While many would argue that the shift away from coal as an energy source is good for the environment, one must also consider the lasting impact that coal plants can have on the environment even after they have closed.

Next, read this article from Futurism, which helps show what can happen when businesses that once employed many people in an area begin to advance technologically and rely more on automation. Pay special attention to the "Sleeping Through a Wake Up Call" section of the article, which describes the negative effect that shifts to automation in the manufacturing industries can have on the labor force.

Now that you’ve read about some of the positive and negative impacts of businesses, complete the Global View Activity in Section 2.8 of Exploring Business, "Was Nike responsible for compensating Honduran factory workers?".

Consider how Nike impacted society, and determine whether you think their impact was positive or negative.

Read Module 1 on pages 51–74 for an explanation of the United States economy.

American workers are considered some of the most productive in the world. Productivity is your final output after you have considered the hours worked. Our productivity in this country has grown because technology has lowered the cost of producing goods and services.

As you read these pages, please note that for this first section, you are focusing on macroeconomics which includes gross domestic product, unemployment rate, and price indexes.

Try your hand at the individual and team assignments on pages 85–147.

Read the article below. Pay particular attention to the items listed under Key Points, Terms, and Examples.

After reviewing this section, summarize what you consider the three most viable causes of business cycles.

Review pages 81–84 of Introduction to Business.

For this activity, you should research three economic indicators: leading, coincidental, and lagging. Discuss what the data seems to be showing in the results of your research. Rank, or order, the economic indicators you consider most important. Write a 2 to 3 page essay that explains your findings, especially in terms of what the indicators say about the economy. In your conclusion, share where you believe the economy is going.

Go to the CPI Inflation Calculator and perform two calculations:

1. Compute what a pair of denim jeans cost the year you were born, if they cost $80 today.
   
2. Compute what a car cost the year you were born, if it is selling for $23,000 today.
   

Please feel free to explore the inflation rate of interest by performing additional calculations on this calculator.

Read this article about the pattern of U.S. price and inflation rates from 1913 to the present. Pay particular attention to the charts that show the comparison between U.S. rates and those of other countries around the world.

Read this section, which provides an explanation of Gross Domestic Product. 

The GDP is the dollar value of goods and services produced in a given country in a year. Please be thorough in answering the following question: what is the significance of GDP as an economic indicator?

Carefully review this chart, which compares the GDP per capita of several countries around the world. Note the date of information provided, and compare this to the charts provided on pages 66 through 69 of Introduction to Business. Studying GDP per capita will allow you to compare one country to another.

As you review this resource, answer the following questions:

1. Why is the U.S. GDP per capita higher than China?
   
2. How is GDP per capita found?
   

Read this section for an in-depth look at the relationship between inflation, the economy, and how we spend our money.

As you read this material, consider the effect of inflation on your own purchasing power and buying habits. As the rate of inflation increases, there is a decline in your purchasing power as a consumer, but a decrease in inflation and lower prices can also affect what we buy. For example, as gas prices decline, we see an associated decline in the rate of hybrid car purchases.

List three ways that inflation might affect your life.

Refer back to page 70 in Leslie Lum’s Introduction to Business.

The graph entitled "Inflation rate" at the top of the page shows the direction inflation has gone from 1914 to 2007. Review this graph and read the text below it. High interest rates can hurt businesses because consumers are less likely to buy when interest rates are high. Additionally businesses find it expensive to purchase equipment and other overhead they may need to prosper.

Please re-read the section titled "Fiscal Policy" on page 77 and review the graph on page 78 to learn about the definition of the budget deficit.

In the year of an election, the candidates promise to reduce government spending. Usually this does not happen. The deficit in the United States is growing with the continuation of the wars in Iraq and Afghanistan. The yearly deficit continues to add to the national debt. Some U.S. citizens think that government spending helps the economy grow. Others think that government spending comes out of the hands of consumers and business owners, thereby slowing growth.

After reviewing the text, write a paragraph that expresses your thoughts on this argument.

Read this entire section, particularly focusing on the selection under the heading of "The National Debt" to learn about budget surplus. It is quite unlikely that the United States will see a budget surplus in the near future. This situation is present when the tax revenues collected are greater than the expenses of the United States government. Complete Exercise 1 at the end of the section.

Introduction to Business covers monetary policy and the Federal Reserve in Module 1.

Review the graphic and text on page 79 to learn about the monetary policy. (Monetary policy manages the money supply under the control of the Federal Reserve Board.)

Read Boundless Business' “The Drive for International Trade,” to learn about why businesses are going global, as well as the difference between imports and exports.

There are a variety of methods businesses can use to enter the global marketplace. Some carry heavier risk than others, and some require businesses to give up some of their control.

Read about the types of international business and rate them based on risk and control.

While international trade seems like a win-win situation for businesses, many governments impose trade restrictions such as tariffs or quotas as a way to control how much foreign product is introduced into their country. Often, these trade restrictions are put in place to protect domestic industries or insure a working population.

Read about the trade restrictions and reflect on what would precipitate a government imposing one trade restriction rather than another.

These TED talks will provide information on the 2008 financial crisis in the United States. Click on the first video for Didier Sornette’s views of how early warning signs for a financial crisis can be plotted. Then, watch the second video, which provides William Black’s insider view of how banking practices led to the 2008 financial crisis.

Read Module 2, pages 149 – 158, to get an overview of the various forms of business ownership including advantages and disadvantages. Continue reading pages 158 – 159 to learn about some of the factors that go into deciding which form is best for any given situation.

As the text states, there is no hard and fast formula that helps an entrepreneur pick the right form, however, there are some important considerations such as risk, taxes, transferability, and even image.

Read Section 4.1 in Exploring Business for a more in depth look at these factors and some questions entrepreneurs can ask themselves to help them decide which form is right for them. Then we'll look at each of the forms in more detail.

Many new business owners choose the sole proprietorship because it is the easiest form to initiate and provides the most control since only one person makes the decisions (for good or ill).

Read section 4.2 in the Exploring Business resource. Pay particular attention to the discussion on unlimited liability as this is a major drawback for sole proprietorships. It might be interesting to try the exercise at the end of the section and find a sole proprietor in your area.

Now let’s look at partnerships: Just like in any other element of society, when more than one person is involved, things become a little more complicated. As you’ll see, unlimited liability is an issue with partnerships as well.

Read section 4.3 in the Exploring Business resource. In light of what you learn, think about what advice you would give Jason in the exercise at the end of the section.

Corporations are the most complicated form of business ownership. Remember, while it is more complicated, it does provide some safeguards that sole proprietorships and partnerships do not.

Read section 4.4 in the Exploring Business resource where you’ll learn about the most common type of corporation, the C Corporation. You’ll also learn some important information about purchasing ownership in a publicly traded corporation in the form of stocks.

While C-corporations are the most common type of corporate ownership, there are other forms that you should be aware of.

Read section 4.5 in the Exploring Business resource to learn about S-corporation, Limited Liability companies, cooperatives, and non-profit organizations. Completing the exercise at the end of the section will give you a nice table to use as you prepare for the final exam.

Go to pages 171 and 172 for the "Team Assignment: Forms of Business". Try to complete this exercise, though note that as you are working individually, you only have to choose one scenario to consider what would happen if it was a different form of business: sole proprietorship, partnership, or corporation. Of course, you may alternatively consider all of six scenarios provided, though this is not required.

Review the various options and select two business structures to compare and contrast. Review the various options and select two business structures to compare and contrast. You will write about these structures in the following writing activity.

Review section 5.1 in the Exploring Business resource to learn about entrepreneurs.

Read this brief webpage to determine if you have what it takes to be an entrepreneur. Then, write a summary paragraph that explains the characteristics of an entrepreneur that you believe you have and ones that you feel you could work on improving.

Read section 5.2 of the Exploring Business resource to learn more about the importance of small businesses to the US economy.

Read section 5.3 to gain an understanding of the industries you are likely to find small business operations. You’d be surprised at how much of the US economy is driven by small businesses.

Now read sections 5.4 and 5.5 for more detail about starting a business and some of the advantages and disadvantages in store for small business owners.

Read this article for a detailed explanation of what duties are assigned to the U.S. Small Business Administration.

This article goes into more detail on specific programs the SBA offers including a guaranteed loan program.

Read the introduction section of Chapter 5 to gain an understanding of the challenges facing business owners.

Reading Section 5.6 in the Exploring Business resource will give you an idea of why business plans are important and what sections should be included.

You can find a nice explanation of Break-Even analysis in Module 2, on pages 167–169.

For a more detailed look at how Break-Even analysis calculations are performed read section 10.6 in the Exploring Business resource then try the exercise at the end of the section.

Read this article about the impact taxes have on the U.S. economy. Be sure to view the short video within the text for additional information.

Read pages 176 – 190 of Module 3 in the Introduction to Business resource to gain an understanding of the marketing process.

Read the introduction and sections 9.2 and 9.3 of the Exploring Business resource to get another perspective on marketing and the marketing mix. Complete the exercises at the end of the sections

Read this section, which describes the various marketing orientations through time. As you read, think about how this evolution has impacted products or services you may purchase.

The first element is the product. A product is a good or service intended to meet the needs of consumers or society.

Read the introduction and sections 10.1, 10.2, and 10.7 in Chapter 10 of the Exploring Business resource to gain an understanding of products and product development.

Once a business has a product to sell, the next consideration is how to price the product. They want to price the product high enough that they make a profit, but not so high that their typical customer wouldn’t buy it.

Read Section 9.3 to learn about various pricing strategies.

Once a product has been developed and a pricing strategy has been chosen, the business must now consider where it should place the product and how to get it there. This placement and distribution.

Read section 9.4 to learn about product distribution strategies and supply chain management.

The final P in our marketing mix is promotion. This is often what people think about when they hear the term marketing. But, as we have seen, it is only a part of the entire marketing mix. The promotion mix includes advertising, personal selling, sales promotion, and publicity. Some of these elements are paid for and the business has direct control over the message, some are not.

Read section 9.5 to learn more about promoting a product.

Read this section. This material provides an overview of consumer behavior. Be sure to click on the tabs within the Key Points and Terms sections for a more in-depth look at the elements that influence what we buy and why we buy.

The customer should be the focus of all business endeavors; without the customer, there would be no business. In fact, without repeat customers, most businesses would be hard pressed to keep going. Because of this, creating a relationship with the customer is extremely important to the business in general and marketers in particular.

Read this short piece describing Customer Relationship Management (CRM) and what it means to businesses.

Read pages 191–192 in Module 3 to look at Customer Relationship Management from a multicultural perspective. Complete the assignment on page 193, working independently to develop a PowerPoint presentation that addresses the five main points of research. Instead of presenting this to a class, you should try to present to family members or friends and have them give you feedback on your presentation.

First we need to understand the difference between electronic commerce and e-business. Read this short excerpt that explains the terms and how they came about.

Read this short excerpt to learn the various forms ecommerce could take.

Most businesses how have an online presence ranging from just an informational website to a full blown buying and selling online. Read this short excerpt for some key motivators for taking a business online.

Now that we’ve learned a little about e-business and e-commerce, read about the importance of interacting with customers paying particular attention to the section about social media marketing. You’ll gain a better understanding of why businesses are using social media to promote their products and what their goals may be.

Rather than trying to sell their products to every possible consumer, businesses will concentrate their marketing efforts on a target market. The target market is the consumer who would be most likely to purchase a product.

Re-read pages 183–184 to learn more about target markets paying particular attention to the figure on page 183 detailing the differences between segmentation, targeting, positioning. Complete the assignment on page 199. Note that you will be working on this assignment as an individual, rather than with a team, so you may decide only to create a brief profile on one radio station.

To accurately define their, businesses must conduct research to find out who their typical customer is.

Read each section to learn about conducting marketing research. Try to summarize these lessons, and write a brief reflection of how you would conduct your own research if you were the owner of an upscale retail clothing store in a major metropolitan city with several competitors.

Earlier we learned about products and product development (Marketing Mix). Businesses must consider where a product currently is in its life cycle so appropriate marketing strategies can be created. For example, a product in the introductory stage would require heavy advertisement compared to a product in the decline state.

Re-read pages 186–188 in Module 3 looking carefully at the product life cycle. Complete the assignment on the product life cycle on pages 194–195, working independently. For this assignment, you will indicate where each of the eight technology products is on the product life cycle chart, based on the percentages of the population that has that technology. You will also explain your reasoning.

Selling its products to make a profit is certainly something businesses desire, the next level up is making their business a household name or a brand.

Re-read the section on branding on page 190 of Module 3. Next, complete the "Individual Assignment: Branding" exercise on page 196. For this exercise, you will explore PBS's "Persuaders" website that discusses the branding of a failed airline. You will then write a personal reflection, which should be approximately 700–900 words.

Finally, complete the "Team Assignment: Starbucks Branding and Channels", starting on page 197. Instead of working as a team, remember that you will work as an individual to answer the questions in the assignment instructions.

Watch this brief video about how a SWOT analysis can be applied in various business scenarios. After watching the video, select a company and develop a general SWOT analysis for that organization. Based on your analysis, consider two actions the company could take to improve their market position. After developing your new strategies, re-create the SWOT analysis for the company and consider how the company’s situation has been affected by these changes.

Now read the Chapter 12 introduction and section 12.1 in Exploring Business to get more detailed information and learn the difference between managerial and financial accounting.

Read section 12.2 from Exploring Business for an overview of the functions of the basic financial statements: income statement, balance sheet, and statement of owner's equity. These documents serve as guidelines for making intelligent business decisions.

Let’s look at the income statement in more detail. The income statement shows sales, expenses and net profit or net loss.

Read pages 208–209 in Module 4 to learn the basics.

Read sections 12.3 and 12.4 from Exploring Business to learn how to evaluate your company's success based on the income statement and ratio analysis. For section 12.3, focus on the material under "The Income Statement" heading and work through the business scenario with the College Shop, which will allow you to determine if in fact this company made any money.

Review the text under the heading "How Do Financial Statements Relate to One Another?" in Section 12.2 of Exploring Business. Then, read the "Key Takeaways" for a summary that brings all the concepts of the reading together. Also, read "Section 12.4: Financial Statement Analysis" again and focus on the material beneath "Ratio Analysis".

Working independently, complete the assignment on pages 234–240 of Module 4, in which you will perform a financial analysis on one retail company based on the given financial statements. As you work, try to answer the following questions: 

• What is the main purpose of completing ratio analysis using any firm's financial statement?
  
• What are the categories of financial ratios?
  
• It is important to remember that financial ratio guidelines may be different for one industry as compared to another.
  

Now that you've had a chance to look at the income statement and balance sheets and see some of the financial ratios that can be calculated from the individual statements, let's take a look at profitability ratios that can be developed by using data from both statements.

Read pages 214–220 paying particular attention to the profit margin, return on equity, and debt to equity ratios.

Read this overview of the Federal Reserve. Note that this document covers the topics outlined in subunits 4.3.1 and 4.3.2. Then, in the Exploring Business textbook, review Section 13.2 and consider the following questions as you read: What were the causes of the 2008 banking crisis? What does the FDIC do for you if you deposit your money in a bank? Are savings, loans, and credit unions part of the banking system?

To get a better understanding of the Federal Reserve read pages 220–223 in Module 4, starting under "Banking".

In the Exploring Business resource, review "Section 13.3: The Federal Reserve System" and focus on the definition of the Fed in the first paragraph.

Finally, watch these two videos to bring it all together.

Review Section 13.3 of Exploring Business, focusing on the text below the heading "Reserve Requirements". Consider the following questions as you read: 

• What are the three tools used by the Federal Reserve System to regulate the money supply in the United States?
  
• How does the usage of these three tools affect you as a consumer?
  
• Who is at the head of the Federal Reserve Board?
  

Working independently, complete the assignment on page 245 of Introduction to Business. View the timeline and video. In an essay of 900–1,200 words, answer the questions provided in the instructions.

Re-read pages 220–223 from Module 4 in Introduction to Business, starting with the material beneath the "Banking" subheading.

In the Exploring Business textbook, review "Section 13.3: The Federal Reserve System", focusing on the text below the heading "The Tools of the Fed".

Read Section 13.4 in Exploring Business to see where businesses can get capital to start up and operate their businesses.

Read section 13.5 to take a closer look at equity financing in the form of buying and selling stocks.

Finally, read Section 13.6 to look at the advantages and disadvantages of equity and debt financing.

It’s all well and good to know the difference between debt and equity financing, but businesses (and individuals) must understand what lenders are looking for in terms of credit worthiness.

Review the material on credit analysis on pages 225–227 in Module 4. Afterward, complete the assignment on page 242.

Another consideration for whether or not a business should participate in investment or financing activities is the time value of money.

Take a moment to review Module 4, pages 228–230, starting under the heading "The Time Value of Money". Note that this topic is also covered by Exploring Business, particularly in "Section 13.1: The Functions of Money" and "Section 14.2: Time Is Money". Once you have reviewed this information, complete the assignment on pages 243–244 of Introduction to Business.

This unit wouldn’t be complete without giving you a look at how individuals manage their money. Read Chapter 14 (all sections) to see how you might be able to give advice to someone who has too much debt or whose monthly bills are too high.

Read Module 5, pages 248 – 264, of the Introduction to Business resource to get an overview of what management in business is like. We’ll look at sections of this Module in more detail as we delve deeper into the process of management.

To help answer the question about pay differences between managers and other employees, read section 6.6 from Chapter 6 of the Exploring Business resource. Managers have to have a number of skills that put them at the top of the pay scale including problem solving skills the average worker doesn’t need to have.

Human resource management (HRM) could be the most important managerial duty for a business. Consider this: if a business cannot recruit, train, develop, motivate and appraise their human resources (read employees) they are likely wasting money which means cutting into their profit.

Read the Chapter 7 introduction and section 7.1 in the Exploring Business resource to get an overview of the scope of HRM.

What happens once an employee has been hired? Section 7.2 in the Exploring Business resource discusses training and developing employees and the importance of having a diverse workforce.

Drawing on many some older theories of motivation such as Maslow’s Hierarchy of Needs and Herzberg’s two factor theory as well as newer theories such as expectancy and equity theories, HR managers can gain insight into what might motivate employees to do their best work.

Read section 7.3 in the Exploring Business resource to see how these theories can be used.

It’s not enough for HR to recruit, train, develop, and motivate employees. It is also important for employees to be assessed or reviewed so they know how they are doing.

Read section 7.5 in the Exploring Business resource to learn about some methods for employee performance review.

Another important duty of human resources is creating a compensation or benefits package that is sufficiently robust to keep employees from leaving but not so extravagant that the business goes bankrupt in trying to compensate their employees.

Re-read pages 256–262 for an overview of a few common and a few less common, but enticing, types of employee benefits.

Section 7.4 in the Exploring Business resource takes another look at benefits and some factors that make a business a good place to work.

A discussion of human resource management would not be complete without including some information on labor unions. While it would be nice to think that business owners would have their employees best interests at heart, this isn’t and hasn’t always been the case. To provide employees with some power to negotiate for their benefits, labor unions use collective bargaining to get employees what they deserve.

Re-read pages 263–264 in the Introduction to Business resource to learn some key terms in labor unions and labor negotiations.

Now, let’s take a look at why unions exist, how they are structured, and how the collective bargaining process works.

Communication is a vital part of any human interaction and business is no exception.

Read Chapter 8 in the Exploring Business resource to learn about teams, teamwork, and communication in general in business environments. Complete the exercises at the end of each section to gain a better understanding of the importance of communication.

Review pages 249–250, starting with the text below "Mission Statement" and reading through the end of the "Corporate Culture" section.

Then, complete the assignment on page 265. You will be working on this assignment independently, rather than with a team, which means you should develop your own mission statement from your company analysis. It may help to find mission statements online for similar companies. Fill in the chart with your company and mission statement, as well as other the companies, and their mission statements, that you found online. Summarize your findings in a 500–700 word report.

While the primary goals of business are to provide a product society needs and to make a profit, they do not operate in a vacuum. In fact, they are an integral part of society and have a certain amount of responsibility to the society in which they operate.

Reread pages 252 – 253 in the Introduction to Business resource to refresh your memory about corporate responsibility.

Corporate social responsibility also includes a mandate for businesses to act ethically. While businesses themselves are neither ethical nor non-ethical, the people that run them are.

Read Chapter 2 in the Exploring Business resource to see how ethics plays a role in business operations, then complete the "Three Ethical Dilemmas" exercise at the end of the chapter.

Complete this assignment. Instead of working as a team, work individually to research several companies that have succeeded or failed at maintaining ethics for social responsibility. Keep track of these companies by using the chart provided. After you have completed your research, present your finding to family members or friends, and then have them vote on which company was the best for the Hall of Fame and the worst for the Hall of Shame.

There is so much that is risky in operating a business, shouldn’t there be ways to manage the risk? Read the Wikipedia entry on risk management to get an overview of how businesses can manage risk.

Contracts are an integral part of doing business. Managers in all areas of a business should have a basic understanding of what constitutes an enforceable contract.

Read "8.1 General Perspectives on Contracts" from Introduction to Contracts, Sales and Product Liability. Then, use the links provided on that page to read the Introduction and first section of Chapters 9, 10, 11 and 12, which combined will provide you will a basic understanding of the requirements for a contract.

Finally, while business managers would of course hope not to be in a situation where they had to consider bankruptcy, they should still be aware of the options that are available to them – from complete liquidation, to reorganizing, to renegotiating just part of their debt.

Read the Section 13.1 to learn more about the purpose of, and options for, bankruptcy.