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Nickels

McHugh

McHugh

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

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McGraw-Hill/Irwin Understanding Business, 8e

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

CHAPTER

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Business & Entrepreneurship

Business Profit Entrepreneur Match Risk With Profit

Revenue Loss

Standard of Living/Quality of Life Stakeholders Nonprofit Organizations

1-2

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Objectives of Business
Survival

Growth

Profit

Social Responsibility

1-3

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Creating Wealth: Factors of Production

Land Labor Capital Entrepreneurship Knowledge

1-4

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Business Environment
Global Business Economic & Legal

Social

Technology

Competitive

1-5

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Economic & Legal Environment

$ Minimum taxes and regulations $ Freedom of ownership $Contract laws $Tradable currency $Elimination/minimization of
corruption
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Government Takeover

Crude oil price per barrel:

2000 Mid $20 range 2006 Mid $70 range

Russia, Venezuela, and Bolivia have Which country will be next?

Source: wtrg.com; Cumberland Times-News, May 3, 2006

asserted greater state control over its oil or natural gas assets

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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

1-8

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Technological Environment
Productivity E-Commerce Responsiveness
to Customer

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Identity Theft

1. Credit card fraud 2. Phone/utilities fraud 3. Bank fraud 4. Employment-related fraud

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

Total number of identity theft victims in 2005 255,565 Top four ways how victims information was misused:

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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

1-11

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Competitive Environment

Customer

Expectations

Restructure/Empower

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Consumer Trends

U.S. Bottled Water Sales in Past 15

Years Increased more than fourfold 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

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Social Environment

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

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U.S. Household Size

5 4.5 4 3.5 3 Number of 2.5 Persons 2 1.5 1 0.5 0

1900

1940

1980

2000

2004

Source: U.S. Census Bureau

1-15

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Buying Power of Diverse Groups

Women African Americans Hispanic Americans Gay Men & Lesbians Asian Americans Native Americans $3,700 Billion 761 Billion 686 Billion 610 Billion 397 Billion 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.

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21st Century Diversity Issues

Race Gender Ethnicity Disability

Source: U.S. Equal Employment Opportunity Commission

Age Language Religion Sexual

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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

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Older Americans Working

80% 70% 60% 50% 40% 30% 20% 10% 0%
55-59
Source: USA Today

Fem ale Male

60-64

65+

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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.
2500000 2000000 1500000 1000000 U .S . D eath s

500000 0

1900s

2004

Source: Investors Business Daily, December 8, 2003; Cumberland Times-News, April 20, 2006; U.S. Centers for Disease Control and Prevention; U.S. Census

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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

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Global Environment

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

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The Economic Cost of Disaster

Disaster
Kobe, Japan Earthquake -- 1995 September 11, 2001 Attacks Northridge, CA Earthquake 1994 Hurricane Andrew 1992
Source: Business 2.0 , November 2002; MSNBC.com, September 10, 2005.

Costs
100 B 70 B 44 B 35 B
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Hurricane Katrina 2005 (estimate)$ 200 B

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Does Global Experience Help Your Career?

No Response 5% 19% Unnecessary

56% Very Helpful

Somewhat 20%
Source: USA Today

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Evolution of American Business

Agricultural/Manufacturing Service Industries Future???

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

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

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Leveraging Diverse Workforce

According to the Society for Human Resources survey, about 70 percent of the respondents actively leverage workforce diversity through:

Ensuring leadership development programs reach all employees (40%) Meeting the needs of diverse customers (39%) Integrating diversity into the organizations business strategy (35%) Increasing innovation by tapping employees of all backgrounds (34%)
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Source: SHRM Weekly Survey, August 3, 2004

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Skill Level Required

58%
Average Skill Level: 3.6

40%

2%
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6

Source: Hudson Institute as reported in Arnold Packer, Retooling the American Worker, Washington Post

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Current Skill Level

70.5%
Average Skill Level: 2.6

16.1% 6.8%
Level 1 Level 2 Level 3 Level 4

6.6%

Level 5

Level 6

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