What is business?
● Business
○ An organization that satisfies a customer demand for mutual benefit
○ Success in business: Understanding and being able to fill the need better than
the competition (warby parker with its lower prices and appealing approach to
purchasing glasses online)
○ What makes money?
■ Consumer Choice and Demand
■ Opportunity and Enterprise
■ The Benefits of Business
○ Positive effects of business:
■ offer goods and services,
■ provide employment,
■ paying taxes,
■ contribute to growth, stability, and security
○ Negative effects of business:
■ Generates pollution and creates waste
■ Creates health and safety risks
■ Disrupts communities
■ Causes financial instability
● Certainty
○ Perfect knowledge that has total security from error, or the mental state of being
without doubt (very rare in business)
● Risk
○ situation where the probability of a variable is known but when a mode of
occurrence or the actual value of the occurrence is not
■ Ex. 70% change that it will work
■ Ex. Casino, Slot Machine, Lottery
■ Statistics help people make good decisions when faced with risk
● Uncertainty
○ situation which involves imperfect or unknown information.
■ Ex. Stock Market, Romance, earthquakes, Business, Health
● Factors of Production
○ Labor (the people who work for you)
○ Capital (money)
○ Physical Resources (trucks, warehouses, etc)
○ Information Resources (data, knowledge, etc.)
○ Entrepreneurs (The one who takes a chance)
■ Our reactions to things decide if the outcome will be positive or negative.
It is all under our control
● Supply Chain/ Operations
○ Systematic direction and control of the activities that transform resources into
finished products that create value for and provide benefits to customers.
, ○ Sourcing Raw Materials→ Logistics→ Manufacturing/Operations/Production→
Product Distribution→ Point of Sale
○ Have relationships with suppliers and the production/distribution of labor
● Marketing
○ Organizational function and a set of processes for creating, communicating, and
delivering value to customers; and for managing customer relationships in ways
that benefit organization and its stakeholders
■ Know the customer! Who are they
■ What do they need/want?
■ Communicating the value proposition (scheme or plan of action)
■ Pricing the service/product
■ Relationship with customer/ end user
■ Important aspect of marketing: SALES ***being able to listen***
● Accounting
○ Comprehensive system for collecting, analyzing, and communicating financial
information
○ Language of business
○ Documents, records, validates/audits
○ Keep track of “Stock and Flows” or “Levels and Changes”:
■ Balance Sheet
■ Income Statement
■ Cash Flow Statement
○ Relationship with Investors and Regulators
● Finance
○ Concerned with the flow of funds between the capital markets and the firm’s
operations
○ Address only 2 questions for the firms:
■ What should the firm invest in?
■ How should the firm pay for that investment?
● Management
○ Process of planning, organizing, leading, and controlling an organization’s
resources to achieve its goals
○ Human Capital (the skills, knowledge, and experience possessed by an
individual or population)
■ The most valuable asset any firm possesses is the people that work at the
firm. And often is the only thing that differentiates one firm from another.
○ Acquires employees with particular skill sets
○ Organized and coordinates the other business functions
○ Incentivized employees to perform
○ Relationships with all employees and board of directors
*****All of these functional areas of business are interconnected and interdependent. They
demand teamwork among each area in order to operate efficiently/effectively. No one area is
more important than another.*******
, The U.S. Business Environment
● Business Profit
○ Business profit = Total Revenue of the business - the expenses of running that
business
○ Encourages people to open and expand business
○ Reward business owners for risking their money
○ Right to pursue profit distinguishes businesses from other organizations like
hospitals, universities and government agencies that are run the same way but
don’t generally seek profit
○ To get profits, business owners must take into account what consumers in their
area want or need (no profit from an umbrella shop in alaska)
○ Can gain profit from other competing businesses closing their doors and earning
their liquidation
● External Environment (also Macro or General environment) (UO)
○ Everything outside of an organization’s boundaries that may affect it.
○ Consists of the domestic business environment, the global business
environment, the political-legal business environment, the economic
environment, the sociocultural environment, the technological environment.
● Domestic Business Environment
○ the environment in which a firm conducts its operations and derives its revenues
○ Businesses seek:
■ To be close to their customers
■ To establish strong relationships with their suppliers
■ And to distinguish themselves from the competition
○ Ex. Urban Outfitters
■ Initially located stores in urban college campuses→now located in more
upscale areas too
■ Strong network of suppliers and is itself a wholesale supplier through its
free people division
■ Sets a clear identity for itself- enabling it to compete with big brands
such and J. Crew and American Eagle
● Global Business Environment
○ the international forces that affect a business
○ General level:
■ International trade agreements
■ International economic conditions
■ Political unrest (political protests in middle east caused oil prices to surge,
companies with operations in region had to go to extreme measures to
protect their employees)
○ Immediate level
■ International market opportunities
■ Suppliers
● Business
○ An organization that satisfies a customer demand for mutual benefit
○ Success in business: Understanding and being able to fill the need better than
the competition (warby parker with its lower prices and appealing approach to
purchasing glasses online)
○ What makes money?
■ Consumer Choice and Demand
■ Opportunity and Enterprise
■ The Benefits of Business
○ Positive effects of business:
■ offer goods and services,
■ provide employment,
■ paying taxes,
■ contribute to growth, stability, and security
○ Negative effects of business:
■ Generates pollution and creates waste
■ Creates health and safety risks
■ Disrupts communities
■ Causes financial instability
● Certainty
○ Perfect knowledge that has total security from error, or the mental state of being
without doubt (very rare in business)
● Risk
○ situation where the probability of a variable is known but when a mode of
occurrence or the actual value of the occurrence is not
■ Ex. 70% change that it will work
■ Ex. Casino, Slot Machine, Lottery
■ Statistics help people make good decisions when faced with risk
● Uncertainty
○ situation which involves imperfect or unknown information.
■ Ex. Stock Market, Romance, earthquakes, Business, Health
● Factors of Production
○ Labor (the people who work for you)
○ Capital (money)
○ Physical Resources (trucks, warehouses, etc)
○ Information Resources (data, knowledge, etc.)
○ Entrepreneurs (The one who takes a chance)
■ Our reactions to things decide if the outcome will be positive or negative.
It is all under our control
● Supply Chain/ Operations
○ Systematic direction and control of the activities that transform resources into
finished products that create value for and provide benefits to customers.
, ○ Sourcing Raw Materials→ Logistics→ Manufacturing/Operations/Production→
Product Distribution→ Point of Sale
○ Have relationships with suppliers and the production/distribution of labor
● Marketing
○ Organizational function and a set of processes for creating, communicating, and
delivering value to customers; and for managing customer relationships in ways
that benefit organization and its stakeholders
■ Know the customer! Who are they
■ What do they need/want?
■ Communicating the value proposition (scheme or plan of action)
■ Pricing the service/product
■ Relationship with customer/ end user
■ Important aspect of marketing: SALES ***being able to listen***
● Accounting
○ Comprehensive system for collecting, analyzing, and communicating financial
information
○ Language of business
○ Documents, records, validates/audits
○ Keep track of “Stock and Flows” or “Levels and Changes”:
■ Balance Sheet
■ Income Statement
■ Cash Flow Statement
○ Relationship with Investors and Regulators
● Finance
○ Concerned with the flow of funds between the capital markets and the firm’s
operations
○ Address only 2 questions for the firms:
■ What should the firm invest in?
■ How should the firm pay for that investment?
● Management
○ Process of planning, organizing, leading, and controlling an organization’s
resources to achieve its goals
○ Human Capital (the skills, knowledge, and experience possessed by an
individual or population)
■ The most valuable asset any firm possesses is the people that work at the
firm. And often is the only thing that differentiates one firm from another.
○ Acquires employees with particular skill sets
○ Organized and coordinates the other business functions
○ Incentivized employees to perform
○ Relationships with all employees and board of directors
*****All of these functional areas of business are interconnected and interdependent. They
demand teamwork among each area in order to operate efficiently/effectively. No one area is
more important than another.*******
, The U.S. Business Environment
● Business Profit
○ Business profit = Total Revenue of the business - the expenses of running that
business
○ Encourages people to open and expand business
○ Reward business owners for risking their money
○ Right to pursue profit distinguishes businesses from other organizations like
hospitals, universities and government agencies that are run the same way but
don’t generally seek profit
○ To get profits, business owners must take into account what consumers in their
area want or need (no profit from an umbrella shop in alaska)
○ Can gain profit from other competing businesses closing their doors and earning
their liquidation
● External Environment (also Macro or General environment) (UO)
○ Everything outside of an organization’s boundaries that may affect it.
○ Consists of the domestic business environment, the global business
environment, the political-legal business environment, the economic
environment, the sociocultural environment, the technological environment.
● Domestic Business Environment
○ the environment in which a firm conducts its operations and derives its revenues
○ Businesses seek:
■ To be close to their customers
■ To establish strong relationships with their suppliers
■ And to distinguish themselves from the competition
○ Ex. Urban Outfitters
■ Initially located stores in urban college campuses→now located in more
upscale areas too
■ Strong network of suppliers and is itself a wholesale supplier through its
free people division
■ Sets a clear identity for itself- enabling it to compete with big brands
such and J. Crew and American Eagle
● Global Business Environment
○ the international forces that affect a business
○ General level:
■ International trade agreements
■ International economic conditions
■ Political unrest (political protests in middle east caused oil prices to surge,
companies with operations in region had to go to extreme measures to
protect their employees)
○ Immediate level
■ International market opportunities
■ Suppliers
