Dias1 Im Ch01 FINAL1

Other Teaching Tools
1.3
Video Notes
1.4
Brief Chapter Outline and Learning Goals
1.5
Lecture Outline and Lecture Notes
1.7
Career and Study Skills Notes
1.25
CAREER DEVELOPMENT: Understanding Career Planning
1.25
STUDY SKILLS: Study Skills Are a Learned Behavior
1.26
Lecture Links
1.27
LECTURE LINK 1-1
The Worlds Richest People
1.27
LECTURE LINK 1-2
Milestones in Business
1.28
LECTURE LINK 1-3
The Language of Business
1.28
LECTURE LINK 1-4
America Loves Its Pets
1.29
Bonus Internet Exercises
1.30
BONUS INTERNET EXERCISE 1-1
Trends in Population
1.30
Opportunities in Entrepreneurship
1.31
Researching Philanthropy
1.33
Social Entrepreneurship
1.34
Critical Thinking Exercises
1.35
CRITICAL THINKING EXERCISE 1-1
How Much Profit?
1.35
Job and Career vs. Owning

a Business
1.37
Bonus Cases
1.38
BONUS CASE 1-1
Dual-Career Planning
1.38
BONUS CASE 1-2
Dealing with Changing Family Structures
1.40
1.1
CHAPTER
THE DYNAMIC BUSINESS

ENVIRONMENT
1.2
BONUS CASE 1-3
The Worlds Largest Charity
1.42
BONUS CASE 1-4
Cirque du Soleil: No Clowning Around (Video Case)
1.44
INTRODUCTION TO BUSINESS: Instructors Resource Manual
OTHER TEACHING TOOLS

For a description of each of these valuable teaching tools, please see the Preface in this manual.
Student Learning Tools

Student Online Learning Center (OLC) www.mhhe.com/diasbusiness
Student Study Guide
Spanish Translation Glossary (OLC)
Spanish Translation Quizzes (OLC)
Instructor Teaching Tools

Annotated Instructors Resource Manual
IRCD (Instructors Resource Manual, Test Bank, PowerPoints, EZtest)
Asset Map
Online Learning Center (OLC) www.mhhe.com/diasbusiness
PageOut
PowerPoint Presentations (on IRCD and OLC)
Test Bank
Business Videos on DVD
Enhanced Cartridge option
Spanish Translation Glossary (OLC)
CHAPTER 1: The Dynamic Business Environment
1.3
VIDEO NOTES
Twenty videos are available, geared to individual chapter topics. The teaching notes for these
videos are also included in the Video Notes section of this Instructors Resource Manual, beginning on
page V.1.
VIDEO 1. Cirque du Soleil: No Clowning Around
This video features Cirque du Soleil, a unique and successful circus. Topics
covered include Cirque du Soleils mission, competitive advantages, relationships with
stakeholders, and the importance of technology to its productions.
(BONUS CASE 1-4, Cirque du Soleil: No Clowning Around, on page 1.44
of this manual relates to this video.)
1.4
BRIEF CHAPTER OUTLINE AND LEARNING GOALS

CHAPTER 1
The Dynamic Business Environment

I. THE IMPORTANCE OF STUDYING BUSINESS
LEARNING OBJECTIVE 1
Understand the importance of studying business.
II. DEFINING BUSINESS

A.
Profit, Revenue, Loss, and Risk and Reward
B.
Stakeholders and Shareholders
III. THE EVOLUTION OF AMERICAN BUSINESS
Explain the evolution of American business.
A.
Progress in the Agricultural and Manufacturing Industries
B.
Progress in Service Industries
C.
Your Future in Business
IV. THE FIVE PARTS OF THE BUSINESS ENVIRONMENT
Describe the five elements of the business

environment.
A.
The Economic and Legal Environment

1.
B.
C.
D.
What Can Government Do?
The Technological Environment

1.
Increased Productivity
2.
Making Buying and Selling Easier
3.
Responsiveness to Customers
The Competitive Environment

1.
Customer-Driven Organizations
2.
Employee Empowerment
The Social Environment

1.
Diversity
2.
Aging Consumers
1.5
E.
3.
Dual Incomes
4.
Single Parents
5.
Marriage
The Global Environment
V. YOUR FUTURE IN BUSINESS
Understand your options in the world of business

in the future.
A.
B.
Entrepreneurship vs. Working for Others

1.
Working for Other Businesses
2.
Entrepreneurial Challenge
3.
Creation of Wealth
Working for a Nonprofit Organization or a Government Agency
VI. SUMMARY
1.6
LECTURE OUTLINE AND LECTURE NOTES

CHAPTER OPENING PROFILE
Central Bark (Text pages 2-3)

The opening profile focuses on Central Bark, a small doggie day care and grooming business.
Owner Curt Greenberg purchased the business after a career as a middle-school teacher. Central Bark
is affected by all the business environmentseconomic and legal, technical, competitive, social, and
global. This profile provides an opportunity to introduce the basic business principles and concepts,
such as profit, risk, stakeholders and entrepreneurship.
LECTURE OUTLINE
I. THE IMPORTANCE OF STUDYING
BUSINESS
Understand the importance of studying

business. (Text page 4)
A. Each of us is affected by business daily.

B. A BUSINESS is an individual or
organization that seeks to provide goods
and services to others while operating at a
profit.
LECTURE NOTES
POWERPOINT 1-1
Chapter Title
(Refers to text page 2)
POWERPOINT 1-2
Learning Objectives
(Refers to text page 3)
POWERPOINT 1-3
The Importance of
Studying Business
(Refers to text pages 4-6)
II. DEFINING BUSINESS

A. Businesses provide people with the
opportunity to become wealthy.
1. Examples: Sam Walton (Wal-Mart)
and Bill Gates (Microsoft)
2. An ENTREPRENEUR is a person who
owns and operates his or her own
business.
B. Profit, Revenue, Loss, and Risk and
Reward
1. PROFIT is the amount a business
earns above and beyond what it
spends for salaries and other
expenses.
CRITICAL THINKING
EXERCISE 1-1
How Much Profit?
Profit is the amount a
business earns above and
beyond what it spends for
salaries and other expenses.
Students often have a very
inaccurate idea of how much
profit businesses actually
make. This exercise leads
students to find this actual
profit percentage. (See
complete exercise on page
1.35 of this manual.)
1.7
LECTURE OUTLINE
LECTURE NOTES
2.
Starting a business involves risktaking, a critical element for improving

the standard of living.
3. STANDARD OF LIVING is a grade or
level of subsistence (basic needs) and
comfort in everyday life enjoyed by a
community, class, or individual.
4. RISK is exposure to the chance of a
financial or time loss due to something
that is not successful.
a. The more risks you take, the
higher the rewards may be.
b. As a potential business owner,
you should do research to find the
right balance between risk and
profit.
5. An entrepreneur must calculate the
risks and the potential REWARDS, or
the gratification as a result of some
action, for a venture.
C. Stakeholders and Shareholders
1. STAKEHOLDERS are all the people
who stand to gain or lose by the
policies and activities of a business.
a. Stakeholders include customers,
employees, stockholders,
suppliers, bankers, and people in
the local community,
environmentalists, and elected
leaders.
b. The challenge for companies in
the 21st century is to balance, as
much as possible, the needs of all
stakeholders.
c. To stay competitive, firms may
1.8
LECTURE LINK 1-1

The Worlds Richest
People
These are the worlds 20
richest peopletheir wealth,
age, country of residence,
and country of citizenship.
(See complete lecture link on
page 1.27 of this manual.)
TEXT REFERENCE
Real World Business Apps
(Box in text on page 5)
Rochelle Johnson, the owner
of a small marketing
company, and her employee
John discuss the importance
of keeping stakeholders in
mind when making business
decisions. This box
introduces the concept of
multiple stakeholders and the
importance of balancing the
needs of all of them.
POWERPOINT 1-4
Defining Business
TEXT FIGURE 1.1
A Business and Its
Stakeholders (Text page 7)
TEXT REFERENCE
Thinking Critically
All Hail the Entrepreneur
(Box in text on pages 7-8)
Roughly 45 million
Americans run their own
business. The
entrepreneurship happening
today is different from what
came before. Big companies
are adapting and new
LECTURE OUTLINE
2.
3.
outsource jobs to other countries.

d. However, outsourcing may cause
more harm to the country than
good for the company.
A SHAREHOLDER, in contrast, is a
person who actually owns stock in a
company.
Businesses try to satisfy the needs of
the stakeholders, including its
shareholders.
LECTURE NOTES
entrepreneurial enterprises
are filling unmet needs.
SELF CHECK QUESTIONS (Text page 8)
1.
Define business and explain why the study of business

is important. Define risk. Are you willing to take risks
in order to own your own business? Why or why not?
2.
How are revenue and profit different? Are they related

to each other also?
3.
How are stakeholders and shareholders different? The

same?
III. THE EVOLUTION OF AMERICAN

BUSINESS
Explain the evolution of American business.

(Text pages 9-11)
A. Progress in the Agricultural and

Manufacturing Industries
1. The use of technology allowed the
agricultural industry to become so
productive that the number of farmers
dropped from about a third of the
population to less than 2%.
a. Agriculture is still a major industry
in the U.S., but fewer and larger
farms have replaced millions of
small farms.
b. Many farmers lost their jobs and
LECTURE LINK 1-2

Some important dates in the
history of business. (See
complete lecture link on page
TEXT REFERENCE
Career Development:
Understanding Career
Planning
Career planning is the
process by which an
individual develops
objectives for the future and
acquires the necessary
resources and takes
appropriate steps to achieve
the desired career outcome.
The key is to start planning
now. An additional exercise
and discussion is available in
this chapter on page 1.25 of
1.9
LECTURE OUTLINE
LECTURE NOTES
went to work in factories.

2. Technology made manufacturing more
productive and workers again lost their
jobs.
3. However, new jobs were created in
other industries.
4. The challenge managers face today is
balancing profit with the good of the
employees and society.
B. Progress in Service Industries
1. Many workers who lost their
manufacturing jobs found jobs in
service industries.
2. SERVICES are intangible products
(i.e., products that cant be held in your
hand,) such as education, health care,
insurance, recreation, and travel and
tourism.
a. Since the mid-1980s, the service
sector has generated almost all of
our economys increases in
employment.
b. Service-sector growth has slowed,
but is still the largest growth area.
3. There are more high-paying jobs in the
service sector than in the goodsproducing sector.
this manual.
POWERPOINT 1-5
Evolution of American
Business (Refers to text
pages 9-11)
TEXT FIGURE 1.2

What Is the Service Sector?
(Text page 12)
SELF-CHECK QUESTIONS (Text page 13)
1.
What do you think is the biggest change that has

occurred in business discussed in this section?
2.
In what area of the service industry would you be most

interested in working? Why?
IV. THE FIVE PARTS OF THE BUSINESS

ENVIRONMENT
1.10
POWERPOINT 1-6
The Five Parts of the
LECTURE OUTLINE
Describe the five elements of the business
environment. (Text pages 13-29)
A. The business environment is the

surrounding factors that either help or
hinder the development of business; they
are:
1. the economic and legal environment
2. the technological environment
3. the competitive environment
4. the social environment
5. the global business environment
Businesspeople must be aware of all the
environments in which they operate.
B. The Economic and Legal Environment
1. If people feel that the risk is
acceptable, they are willing to take the
risk of starting businesses
a. Part of entrepreneurs risk
involves the setup of the
economic system and how
government works with or against
businesses.
b. Governments can lessen the risk
of starting a businesses and
increasing entrepreneurship and
wealth.
2. Entrepreneurs seek an acceptable
return on investment (ROI), the money
gained from taking a business venture
risk.
a. RETURN ON INVESTMENT
(ROI), is the money gained from
taking a business venture risk; in
addition to money, investment of
LECTURE NOTES
Business Environment
TEXT FIGURE 1.3

Todays Dynamic Business
Environment (Text page 14)
LECTURE LINK 1-3

More businesses are looking
for bilingual employees. (See
complete lecture link on page
POWERPOINT 1-7
The Economic and Legal
Environment
TEXT FIGURE 1.4

1.11
LECTURE OUTLINE
3.
4.
1.12
LECTURE NOTES
time is also an important

consideration.
b. If the investment of time and
money becomes too high, the ROI
may no longer be worth the risk.
c. States and cities with high taxes
drive entrepreneurs out, while lowtax governments attract them.
d. Some tax laws also help small
businesses.
What can government do?
a. Governments can lessen the risks
by passing laws that let
businesspeople write contracts
that are enforceable in court.
b. The UNIFORM COMMERCIAL
CODE (UCC) is a comprehensive
set of commercial laws, adopted
by every state in the United
States, which covers sales laws
and other commercial laws.
c. Government can also establish a
currency thats tradable in world
markets.
d. A TRADABLE CURRENCY is
money that is allowed to be
exchanged for another countrys
money.
e. Governments can help minimize
corruption in businesses and in
their own ranks.
Corrupt and illegal activitiessuch as
Enron, WorldCom, and Tyco
negatively affect the business
community and the economy.
POWERPOINT 1-8
Environment
LECTURE OUTLINE
Other forms of corruption can
affect small businesses, such as
employees stealing money or
giving free merchandise to friends.
b. According to Bloomberg Personal
Finance, one of the greatest
threats to the U.S. economy is
the wholesale undermining of
investor confidence in the stock
market as a result of corporate
deceptions.
c. Such scandals emphasize the
need for laws restraining people
from committing unethical acts.
5. A BOARD OF DIRECTORS is a group
that oversees the activities of a
corporation.
a. A board of directors generally
represents a mixa small number
of company executives and a
greater number of outsiders.
b. The Hewlett-Packard scandal
involved the chairman of the
board of directors, who allegedly
used unconventional methods to
spy on board members.
6. The capitalist system relies heavily on
honesty, integrity, and high ethical
standards.
7. In a CAPITALIST SYSTEM companies
and businesses are owned by citizens
instead of government.
C. The Technological Environment
1. Few technical changes have had a
more lasting impact on businesses
LECTURE NOTES
a.
TEXT REFERENCE
Ethical Challenge:
Biz Majors Get an F for
Honesty
A survey of college students
found that undergraduate
business students do more
cheating that just about
anyone else54% admitted
to cheating on written
assignments. What ethical
practices do these students
take with them into careers?
POWERPOINT 1-9
The Technological
Environment (Refers to text
1.13
LECTURE OUTLINE
2.
3.
4.
1.14
LECTURE NOTES
than information technology.

The Internet is a major force in
business today.
Increased productivity
a. Technology means everything that
makes business processes more
efficient and productive.
b. EFFECTIVENESS is producing
the desired results.
c. EFFICIENCY is the ability to
produce using the least amount of
resources.
d. A RESOURCE is something used
in the production of goods.
e. PRODUCTIVITY is the amount of
output you generate given the
amount of input (e.g. hours
worked.)
f. Tools and technology have greatly
improved productivity.
g. Example: CAD, CAM and AI are
used to automate manufacturing
plants.
h. Farmers use high technology to
increase production and profit.
i. Access to technology is one
reason U.S. workers are more
productive than those in other
countries.
Making buying and selling easier
a. E-COMMERCE is business
conducted electronically over the
Internet.
b. There are two types of e-
pages 17-19)
TEXT FIGURE 1.5

The Technological
POWERPOINT 1-10
The Technological
pages 19-20)
LECTURE OUTLINE
5.
LECTURE NOTES
commerce transactions: Businessto-Consumer (B2C) and Businessto-Business (B2B).

c. BUSINESS-TO-CONSUMER
(B2C) is business that produces
products to sell directly to the
consumer.
d. B2B (BUSINESS-TO-BUSINESS)
E-COMMERCE is business that
produces products to sell to
another business.
e. B2B is at least five times as big as
B2C.
f. E-commerce experienced
phenomenal initial growth,
creating companies such as
Amazon.com, as well as many
failed enterprises.
g. Many traditional companies, such
as J.C. Penney, are also
expanding online.
Responsiveness to customers
a. The businesses that are most
responsive to customer wants and
needs will succeed.
b. Businesses can use technology,
such as UPC codes on products,
to become more responsive.
c. UNIVERSAL PRODUCT CODES
(UPC) are the series of lines and
numbers that you see on most
consumer packaged goods; they
identifiy the type of product.
d. A DATABASE is an electronic
storage file where information is
1.15
LECTURE OUTLINE
LECTURE NOTES
kept; one use of databases is to

store vast amounts of information
about consumers.
e. These databases let businesses
tailor products and marketing to
customers.
f. Databases also allow stores carry
fewer items and less inventory.
D. The Competitive Environment
1. Making quality products is not enough
to stay competitive in world markets.
2. Now you have to offer high-quality
products and outstanding service at
competitive prices, or VALUE, the
relative worth, merit, or importance.
3. Consumer-driven organizations
a. Customer-driven organizations,
both large and small, provide
outstanding customer service.
b. Businesses can successfully
compete against competitors if
they offer better and friendlier
service.
c. Successful companies must listen
to customers to determine their
wants and needs and then adjust
their products, policies, and
practices to meet these demands.
d. Customers now also demand
speedfaster deliveries, quicker
responses.
4. Employee empowerment
a. To meet the needs of customers,
firms must enable their front-line
workers to respond quickly to
1.16
POWERPOINT 1-11
The Competitive
pages 20-23)
TEXT FIGURE 1.6

The Competitive
TEXT REFERENCE
Study Skills Are a Learned
Behavior
Studying is a learned
behavior that can improve
with practice. An additional
exercise and discussion is
available in this chapter on
page 1.26 of this manual.
TEXT FIGURE 1.7

How Competition Has
Changed Business (Text
LECTURE OUTLINE
customer requests.
b. EMPOWERMENT is giving
frontline workers the responsibility,
authority, and freedom to respond
quickly to customer requests.
c. To implement empowerment,
businesses must train front-line
people to make decisions, without
consulting managers.
d. Many firms have created CROSSFUNCTIONAL TEAMS, a group
of people with different expertise
working together to achieve a
common goal.
e. With empowerment, workers need
more education and training.
f. It sometimes takes years to
restructure an organization to
empower workers.
E. The Social Environment
1. Businesses need to be aware of the
major changes occurring in the U.S.
population.
2. Diversity
a. DIVERSITY involves broad
differences between people
(ethnically, gender, color, sexual
orientation, body size, age.)
b. Both Hispanic and Asian
populations are growing rapidly.
c. Advantages of diversity:
i. A business can better serve
customers with a diverse
workforce.
LECTURE NOTES
page 21)
POWERPOINT 1-12
TEXT FIGURE 1.8

(Text page 24)
TEXT FIGURE 1.9

Sample Census Table (Text
page 24)
1.17
LECTURE OUTLINE
LECTURE NOTES
ii.
3.
4.
1.18
A diverse workforce brings

about new, fresh ideas and
perspectives.
d. Generational issues
i. The Boomers, or Baby
Boomers (born between 1946
and 1964) have been called
workaholics.
ii. Generation X (born between
1965 and 1980) want work-life
balance.
iii. Generation Y, or the
Millennial Generation, (born
between 1981 and 1994) are
the children of Baby Boomers.
e. Management of diverse groups is
complicated and becomes more
difficult with overseas
assignments.
Aging consumers
a. Baby Boomers are aging, and
their retirement could create
employment imbalances.
b. U.S. citizens aged 45 to 64 are
the richest group in U.S. society.
c. Businesses that cater to the aging
Baby Boomers will have the
opportunity for exceptional growth.
Dual incomes
a. A dual-income family is one in
which both adult members of the
household work.
b. High housing costs have made it
difficult for many households to
live on just one income.
BONUS INTERNET
EXERCISE 1-1
This Internet exercise leads
students online to the Census
Bureaus web page to gather
data regarding trends in
population and the social
environment. (See complete
exercise on page 1.30 of this
manual.)
BONUS CASE 1-1

Dual Career Planning
Dual careers require careful
planning and discussion. See
complete case, discussion
questions, and suggested
answers on page 1.38 of this
manual.
BONUS CASE 1-2

Dealing with Changing
Family Structures
This case focuses on the
economic and social changes
that have affected the nature
of families. (See complete
case, discussion questions,
and suggested answers on
POWERPOINT 1-13
LECTURE OUTLINE
c.
5.
6.
Many companies are

implementing programs to assist
two-income families.
i. Many employers provide child
care benefits of some type,
some through cafeteria
benefits packages.
ii. Cafeteria-style benefits
packages enable families to
choose from a menu of
benefits.
d. Many companies are hiring more
part-time workers to
accommodate parents who work.
e. Some companies allow workers to
telecommute, working from home
and keeping in touch with the
company through
telecommunications.
Single parents
a. The number of single-parent
households has grown rapidly.
b. Many single parents struggle with
the work/life balance.
c. Single parents have encouraged
businesses to implement familyfriendly programs such as family
leave and flextime.
Marriage
a. People are getting married much
later, if at all, and having children
later.
b. Many married couples have
chosen not to have a child, which
creates more wealth and the need
LECTURE NOTES
LECTURE LINK 1-4

America Loves its Pets
Businesses need to monitor
the social environment to
detect trends that can present
opportunities. This lecture
link presents oneAmericas
growing love affair with its
pets. (See complete lecture
link on page 1.29 of this
manual.)
POWERPOINT 1-14
1.19
LECTURE OUTLINE
F.
1.20
LECTURE NOTES
for different products.

1. Two important environmental changes
in recent years have been the growth
of international competition and the
increase of free trade among nations.
2. FREE TRADE is the reduction of
barriers to trade, such as elimination of
tariffs (or taxes) on goods brought into
another country.
3. U.S. companies now must also
compete against manufacturers in lowwage companies overseas.
4. Better technology, tools, and education
enable each worker to be more
productive.
5. All size businesses compete in the
global marketplace, including mediumsized and small companies.
6. Few recent events have had a bigger
effect on U.S. businesses than the
terrorist attacks on the World Trade
Center on September 11, 2001.
a. In the wake of these attacks, the
travel industry suffered because
some people were afraid to fly.
b. The slump also affected hotels,
amusement parks, restaurants,
and more.
7. The threat of terrorism makes people
more fearful and cautious and adds to
a business organizational costs.
8. Events such as the war in Iraq and the
threat of nuclear power in North Korea,
have an impact on businesses
TEXT FIGURE 1.10

(Text page 29)
LECTURE OUTLINE
LECTURE NOTES
everywhereboth positive and

negative.
1.
In what ways can the government make things easier

for businesspeople? Do you think the government
should do more? Why or why not?
2.
Name two changes that have been brought about by

technology. What kinds of long-term effects do you
think these changes will have?
3.
Why is social diversity an important concern for

business?
4.
What is free trade, and how does the issue of free trade
impact businesses competing overseas?
V. YOUR FUTURE IN BUSINESS
Understand your options in the world of

business in the future. (Text page 29-33)
A. Todays students have many career

choices.
B. Entrepreneurship vs. Working for
Others
1. There are two ways to succeed in
business:
a. One way is to rise up through the
ranks of a large company.
b. If you work for others, they
assume the entrepreneurial risk.
c. The more risky path is to start
your own business, as Curt
Greenberg did.
d. Working for yourself can lead to
happiness and fulfillment.
e. However, to earn rewards,
entrepreneurs must accept risks.
2. Working for other businesses
a. A college graduate earns far more
BONUS INTERNET
EXERCISE 1-2
Opportunities in
Entrepreneurship
This Internet exercise
explores the types of
franchise opportunities
available and the amount of
investment necessary. (See
POWERPOINT 1-15
TEXT FIGURE 1.11

The Five Factors of
Production (Text page 31)
TEXT REFERENCE
Career Spotlight: So, You
Think You Want to Be a
Businessperson
(Box in text on page 32.)
A degree in business can
apply to almost any career.
The first step in planning a
1.21
LECTURE OUTLINE
3.
4.
1.22
LECTURE NOTES
than less-educated individuals.

b. Working for a medium to large
company provides more
opportunities for advancement.
c. Working for a small business
gives you diversity and flexibility.
Entrepreneurial challenge
a. Millions of people have taken the
entrepreneurial risk and
succeeded.
b. The number of Hispanic-owned
businesses in the United States
has grown at three times the
national average.
c. Increases have also been made
by Asians, Pacific Islanders,
American Indians, and Alaskan
Natives.
d. Women now own over a third of all
businesses in the U.S.
Creation of wealth
a. The FACTORS OF
PRODUCTION are the resources
used to create wealth:
i. land
ii. labor
iii. capital
iv. entrepreneurship
v. knowledge
b. Some experts believe that the
most important factor of
production is knowledge.
c. What makes rich countries rich is
not land, labor, or capital; it is a
career is to pick an industry,

then study the business
principles presented in this
text. Each chapter in the text
will include a career focus
box.
CRITICAL THINKING
EXERCISE 1-2
Job and Career vs. Owning
a Business
This exercise guides the
student through the decision
making process of evaluating
various career options. (See
TEXT REFERENCE
Real World Business Apps
After doing more research,
Rochelle now understands
how important it is to
consider the needs of
stakeholders. This text box
provides a good overview of
the concepts discussed in this
chapter.
POWERPOINT 1-16
BONUS CASE 1-3
The Worlds Largest
Charity
Three of the wealthiest
people in the world are busy
giving their wealth away
through the Bill and Melinda
Gates Foundation. (See
complete case, discussion
LECTURE OUTLINE
d.
combination of entrepreneurship
and knowledge.
Entrepreneurship also helps make
some states and cities rich while
others remain relatively poor.
C. Working for a Nonprofit Organization or

a Government Agency
1. Nonprofit organizationssuch as
government agencies, public schools,
charities, and social causesmake a
major contribution to societys welfare.
a. A NONPROFIT ORGANIZATION
is an organization whose goals do
not include making a personal
profit for its owners or organizers.
b. Social entrepreneurs are people
who use business principles to
start and manage organizations
that are not for profit and help
countries with their social issues.
2. A government agency is an
organization accountable for
overseeing explicit government
functions (example: Federal
Environmental Protection Agency.)
3.
You need the same skills to work in

nonprofit organizations that you need
in business, including information
management, leadership, marketing,
and financial management.
LECTURE NOTES
questions, and suggested
answers on page 1.42 of this
manual.)
BONUS INTERNET
EXERCISE 1-3
This Internet exercise
explores a charitable
organization created by the
founder of Microsoft. (See
BONUS INTERNET
EXERCISE 1-4
Each year Fast Company
magazine publishes the
Social Capitalist Awards.
This exercise lets students
explore the concept of social
entrepreneurship and
investigate some of the
award winners. (See
BONUS CASE 1-4

Cirque du Soleil: No
Clowning Around (Video
Case)
This bonus case ties in with
the video available for use
with this chapter. It features
Cirque du Soleil, created by
Guy Laliberte. Many of the
concepts in this chapter
(entrepreneurship, risk,
profit, etc.) are also presented
in this case. (See complete
case, discussion questions,
and suggested answers on
1.
What are some of the advantages of working for others?
2.
What do you gain and what do you lose by being an

entrepreneur?
1.23
LECTURE OUTLINE
LECTURE NOTES
3.
What are the five factors of production? Which factors

are keys to wealth creation?
4.
Who are social entrepreneurs? Can you apply the

business principles in a nonprofit organization?
Explain.
VI. SUMMARY
1.24
CAREER AND STUDY SKILLS NOTES

CAREER DEVELOPMENT BOX:
Understanding Career Planning (Text page 11)

Instructors Notes on Text Box One:(Objectives to consider and implement to increase students
knowledge, usage, and understanding of the concepts).
Career planning is often overlooked because of the lack of courses and guides designed to help
students better prepare for their own career. Oftentimes, students who have just completed the rigors of
college in hopes of landing a career, because of their lack of preparation, may make wrong job choices
and become frustrated by the process. Without career planning, it is very difficult to understand how you
might fit into a company or how the hiring process takes place. Consequently, developing a career plan
can show an employer that you have knowledge about the specific industry and the company you have
targeted to work for. This can ultimately make you look informed, interested, and a better decision maker
no matter what the outcome might be.
STUDENT EXERCISE:
1.
Review with the students the importance of understanding what career planning awareness can do
by helping students identify what they need to start working on their own career plans as soon as
they begin their college careers. Ask the basic question: If you could choose your dream job,
what would it be? Next, ask them: How important are career planning skills considering you
already know where you would like to work? Continue the discussion allowing students the
opportunity to express how important career development is to them. Emphasize to the students
that their work now in preparing a career plan can really payoff at a later time.
1.25
STUDY SKILLS BOX:
Study Skills Are a Learned Behavior! (Text page 22)

Instructors Notes on Text Box One:(Objectives to consider and implement to increase students
knowledge, usage, and understanding of the concepts.)
Being good at studying is like anything you tryyou may be better at some things than you are at
other things! Do you participate in any extracurricular activities? What are you good at? What are you
average or below average at and why? Studying is a learned behavior like any engaged activity and you
can improve your study habits and performance with more practice at it. However, before you jump into
doing more, lets figure what you need more of. Improving your study knowledge educates you to the two
main areas of studying that can change your outcome and performance; study preparation and study
execution.
Study preparation involves all the activities that can help you improve the many things that aid
you in becoming better at getting the most out of reading, note taking, and concentration required to learn
and master the materials your are going to be tested on.
Study execution involves the actions you take to stay on course to make sure you get the positive
results you are seeking. Just like the athlete that practices a sport, he or she also knows he or she will be
asked to use the same techniques when in competition to assure success. However, oftentimes athletes
(just like students) have good practice skills but are not mentally tough enough or ready to perform when
it counts. Good students understand preparation and battle readiness are both required to achieve a high
level of success. Both skills are necessary to be considered a good athlete, a good student, a good teacher,
etc. Often students feel assured they are putting in the time necessary to do well in their classes but
somehow it does not translate to consistently good grades. Learning the techniques to test-taking is a
process and can help achieve better results.
STUDENT EXERCISE:
1.
1.26
Explain to students the difference in preparation and execution. Ask students to describe how they
have prepared for something they felt was important which required a certain amount of
preparation for reaching a high level of success. Ask students to also describe an event where they
had to perform or execute as well as they felt they could to reach a high level of success. Discuss
the two activities and how it felt when good preparation led to desired results. Discuss when the
two activities occurred and desired results were not achieved. Ask the students what might have
led to the less-than-desirable outcome.
LECTURE LINKS
LECTURE LINK 1-1
The Worlds Richest People

There are about 946 total billionaires in the world. According to Forbes magazine, their combined
worth in 2007 was $3.5 trillion.
Rank Name
Country of
Citizenship
Age
1
2
3
4
5
6
7
8
9
10
11
12
13
United States
United States
Mexico
Sweden
India
United States
France
Spain
Hong Kong
Canada
United States
France
Saudi Arabia
51
76
67
80
56
73
58
71
78
49
62
84
50
56.0
52.0
49.0
33.0
32.0
26.5
26.0
24.0
23.0
22.0
21.5
20.7
20.3
United States
United States
Mexico
Switzerland
United Kingdom
United States
France
Spain
Hong Kong
Canada
United States
France
Saudi Arabia
India
Germany
Russia
Sweden
India
United States
Germany
49
87
40
59
47
54
84
20.1
20.0
18.7
18.4
18.2
18.0
17.5
India
Germany
United Kingdom
Sweden
India
United States
Germany
William Gates III

Warren Buffett
Carlos Slim Helu
Ingvar Kamprad & family
Lakshmi Mittal
Sheldon Adelson
Bernard Arnault
Amancio Ortega
Li Ka-shing
David Thomson & family
Lawrence Ellison
Liliane Bettencourt
Prince Alwaleed Bin
Talal Alsaud
Mukesh Ambani
Karl Albrecht
Roman Abramovich
Stefan Persson
Anil Ambani
Paul Allen
Theo Albrecht
14
15
16
17
18
19
20
Worth
Residence
($billions)
How do these modern billionaires stack up against tycoons of the past? Using inflation adjusted
dollars, the ten richest men of all time are listed below.
Inflation-Adjusted
Wealth
Rank Name
Source of Wealth
1.
2.
3.
4.
5.
(Oil tycoon, 1839-1937)

(Carnegie Steel, 1835-1919)
(Railroad magnate 1794-1877)
(American Fur Co., 1763-1848)
(Chairman Microsoft)
John D. Rockefeller
Andrew Carnegie
Cornelius Vanderbilt
John Jacob Astor
William Gates III
$200 billion
$110 billion
$100 billion
$85 billion
$60 billion
1.27
6.
7.
8.
9.
10.
Lawrence J. Ellison
King Fahd Bin Abdul Aziz Alsaud
Warren Buffett
Paul Allen
Sheikh Zayed Bin Sultan Al Nahyan
(CEO, Oracle)
(King, Saudi Arabia)
(Chairman, Berkshire Hathaway)
(Co-founder, Microsoft)
(Investor, United Arab Emirates)
$55 billion
$30 billion
$28 billion
$25 billion
$23 billioni
LECTURE LINK 1-2
190
1776
1790
1830s
1834
1841
1867
1876
1903
1911
1930
1946
1950s
1955
1963
1972
1976
1981
1996-2000
2003
Development of the abacus

American Revolution
First patent laws are passed
Labor begins to organize
McCormick patents wheat harvester
First American advertising agency
Invention of the typewriter
Invention of the phone
Wright brothers invent airplanes
Invention of air conditioning
First supermarket/Beginning of Depression
A general-purpose computer is available
The service economy takes off
Disneyland opens
Equal pay for equal work
E-mail is invented
Apple Computers are introduced
IBM PCs enter the fray
Fastest growing industries are in services: computer and data processing, health,
PR, residential care, etc.
Genetic engineering growing in importance
LECTURE LINK 1-3

The population of the U.S. is becoming increasingly diverse. Today Hispanics are the fastestgrowing minority population. In 2007, more than 43 million Hispanics resided in the U.S. These
consumers have significantly increased the demand for bilingual salespersons and professionals
throughout the economy.
One such business is Arise Virtual Solutions, a call center that provides customer service for
about 40 companies. About a third of the independent contractors who work for the company are
bilingual, many of them immigrants or first-generation Americans who grew up speaking the language of
their parents homelands.
1.28
According to Mary Bartlett, talent manager for Arise, by far the biggest demand by Spanish.
companies is someone who can really connect with the customer. Among her employees is Susan
Mattingly, who grew up speaking and writing in both English and Spanish because her Cuban-born
mother wanted to keep the familys Latino heritage alive. Mattingly is among an estimated 11% of
Americans who speak English and a second language fluently, according to the Census Bureau.
Most workers in the U.S. dont need to speak or write a second language. But recruiters say some
telemarketing, banking, engineering, and financial service companies are looking for workers and
managers with bilingual skills because of the growing immigrant population of the U.S. or because they
are doing more business in foreign countries. According to Manpower Professional, the Fortune 500
companies are asking more frequently for managers who speak Spanish, Portuguese, and Mandarin
Chinese.
Kevin Hendzel, spokesperson for the American Translators Association, says demand for skilled
people who can read and write in a foreign language is up. He attributes that to increase international
trade and an executive order that requires federally funded institutions and agencies to provide bilingual
services to clients with limited English skills. Professional translators and interpreters usually take not
only college-level language classes but also attend professional language schools that require their
students to live in the countries whose languages they want to become proficient in. It takes a long time
and a lot of effort to master a language, says Hendzel. ii
LECTURE LINK 1-4
America Loves Its Pets

Organizations must continually scan the external environment to detect trends that could affect
operations. Trends in the general economy can create challenges or threats. They can also create
opportunities for firms nimble enough to adapt and benefit.
One such trendpet owners who are increasingly willing to spend freely on companion animals.
Americans now spend $41 billion a year on their 88 million cats and 75 million dogs. Thats double the
amount spent on pets a decade agomore than what we spend on movies, video games, and recorded
music combined. After consumer electronics, pet care is the fastest-growing category in retail, expanding
at about 6% a year.
Today the term dogs life has a radically different meaning than a few decades ago. The
American Pet Products Manufacturers Association (APPMA) reports that 42% of dogs now sleep in the
same bed as their owners. Their menu includes gourmet organic meat and vegan snacks. Almost a third of
owners buy gifts for their dogs birthdays.
Businesses are feeling these changes on their bottom line. Richard G. Wolford, chairman and
CEO of Del Monte Foods, refuses even to use the work owner. Anyone who has a pet understands
who owns whom, says Wolford. His companys pet business has gone from nothing to 40% of overall
sales through acquisitions of brands such as Meow Mix and Milk-Bone.
Even those who shun designer doggie sweaters are increasingly willing to spend thousands on
drugs for their pets. In 2007 about 77% of dogs and 52% of cats had been medicated in the past year, an
increase of about 20 percentage points from 1996. About 63% of U.S. households, or 71 million homes,
own at least one pet.
PetSmart, for one, has shifted its mission from being the top seller of pet food to helping
consumers become better pet parents. Along with making its 928 retail locations more pet friendly,
PetSmart is rolling out $31 a night pet hotels (kennels) at its stores. The hotels, along with services such
as grooming, training, and in-store hospitals, have helped PetSmart expand its service business from
essentially nothing in 2000 to $450 million, or 10% of overall sales, in 2007. iii
1.29
BONUS INTERNET EXERCISESIV

PURPOSE:
To gather data regarding trends in population and the social environment and to analyze how
these changes affect American businesses. To answer the following questions, explore the Census
Bureaus website on the Internet at www.census.gov. (Sometimes the web address for a location changes.
You might need to search to find the exact location mentioned.)
EXERCISE:
This exercise is an extension of The Internet in Action exercise in your text. Use the Census
Bureaus website to answer the following questions.
1.
What is the fastest growing occupational group? What could contribute to the increase in this
profession? Hint: The Bureau of Labor Statistics is a great place to search for occupational
growth statistics. You will find occupations with the largest job growth for the next decade.
2.
What percentage of consumer expenditures is for food? Transportation? What does the
information tell you about the standard of living in the United States? Hint: There is a search
feature within the Census Bureaus Website. The Bureau of Labor Statistics also has a search
feature. There are even consumer expenditure surveys found within this site.
3.
What percentage of mothers receiving Temporary Assistance for Needy Families (TANF)
formerly Aid to Families with Dependent Children, (AFDC)were never married? What is the
amount of AFDC benefits received in your state? How does this number compare with the
national average? The AFDC site lists information on various parts of the country. What
explanation can you give for this trend? Hint: Try searching for TANF (Temporary Assistance for
Needy Families).
4.
Return to the U.S. Census Bureaus homepage. What is the population of the nation now? Record
the population and the time. If you are doing this project individually, you should collect at least
10 different population counts. Be sure to record the day and the time you collect each one. If you
would like to put the data in chart form, the entire classs data can be used to make a graph. What
does this chart tell you about the U.S. population? How could businesses use this information?
1.30
Opportunities in Entrepreneurship
PURPOSE:
To better understand entrepreneurship and opportunities that exist for individuals that would like
to make a transition into being a single business owner. Purchasing a franchise business involves deciding
on the potential investment an individual is willing to make and the type of business ownership they are
comfortable pursuing. To best answer the following questions, go to the internet and visit the website
www.franchise.com and learn more about purchasing a franchise business. (Sometimes the web address
for a location changes. You might need to search to find the exact location mentioned.)
EXERCISE:
This exercise is an education on types of franchise opportunities that can be purchased and the
amount of investment and start up capital necessary to purchase a franchise.
1.
At the website (www.franchise.com), go to the Search for a Franchise for Sale heading (top
left) and click on Franchise by Industry:
(a)
Pick two categories that you would like to explore (Children Related or Fitness for
example).
(b)
Write down the two companies you have explored.
(c)
Write down the franchise fee.
(d)
Write down the investment required.
*You will need this information for later.

2.
3.
Go to the heading Franchise Directory links (second from left).

(a)
Find two franchises you would have an interest in.
(b)
Pick one company and read the biography. Summarize the biography below and be
prepared to discuss this information in class.
Go to the heading Small Business Information (third from left).

(a)
Click on Franchise Business news.
1.31
4.
5.
1.32
(b)
Click on the article Re-invest Your Career With a Franchise!
(c)
Summarize the article below and be prepared to discuss the article in class.
Go to the Starting a Business Help heading (fourth from left).

(a)
Click on the What Can I Afford heading.
(b)
Do the exercise as instructed.
(c)
What is your amount to invest?
Based on the earlier choices you considered as franchises you might be interested in, why did you
choose these particular companies? Based on the amount you could invest, could you consider
making this investment? How serious would you be in considering purchasing a franchise in the
near future? In the next five years? In the next ten years?
The worlds largest charitable organization is the Bill and Melinda Gates Foundation, created by
the Microsoft founder. Go to the Foundation website (www.gatesfoundation.org,) and answer the
questions below. (Sometimes the web address for a location changes. You might need to search to find the
exact location mentioned.) BONUS CASE 1-3 on page 1.42 in this manual further explores the Gates
Foundation.
1.
What year was the Foundation created?
2.
Who are the Foundations officers?
3.
What is the Foundations total endowment?
4.
List three recent grant recipients and the amount granted.
5.
What are the key values, or mission, of the Foundation?
1.33
Each year Fast Company magazine publishes the Fast Company/Monitor Group Social Capitalist
Awards. The Awards recognize the leading social entrepreneurial organizations and their contributions to
society.
Go to the Fast Company website (www.fastcompany.com) and find the Social Capitalist Awards
for the latest year. (Sometimes the web address for a location changes. You might need to search to find
the exact location mentioned.)
1.
What criteria do Fast Company and the Monitor Group use to choose the Social Capitalist Award
winners?
2.
Choose two of the Social Capitalist Award winners to explore further.

Name of the organization honored ___________________________________________
a.
Name of the person honored and his/her job title:
b.
Location:
c.
Summary of project earning the award:
Name of the organization honored ___________________________________________
3.
1.34
d.
Name of the person honored and his/her job title:
e.
Location:
f.
Summary of project earning the award:
In your own words, give a definition for social entrepreneurship.
CRITICAL THINKING EXERCISES

How Much Profit?

The text defines profit as the amount a business earns above and beyond what it spends for
salaries and other expenses. Choose a large corporation representing each of the following types of
companies. Using the above profit definition, how much profit as a percentage of sales do you think each
corporation earns? In other words, out of every dollar a company earns, how much does it keep?
1.
AUTOMOBILE MANUFACTURER
Corporation _____________________
2.
GROCERY CHAIN
Corporation _____________________
3.
Percent Estimated Profit ____________
ENERGY COMPANY
Corporation _____________________
5.
AIRLINE
Corporation _____________________
4.
COMPUTER COMPANY
Corporation _____________________
1.35
NOTES FOR CRITICAL THINKING EXERCISE 1-1

Students often have a much-exaggerated idea of the amount of profit big corporations make. This
exercise should help set the record straight.
Each spring, Fortune magazine publishes a comprehensive listing of the largest U.S. corporations
along with annual income, profit, employees, etc. There are several financial references on the Web, such
as www.moneycentral.msn.com/investor, http://biz.yahool.com, or www.marketwatch.com. You can also
find the information on each corporations Website. You can use these resources to find the most recent
profit figures for comparison. Below are the published figures for 2006:
1.
AUTOMOBILE MANUFACTURER: Ford Motors Corp, 3.3% annual loss (industry average
1.6% loss.)
2.
GROCERY CHAIN: Kroger Inc., 1.8% annual profit (industry average 1.9% profit.)
3.
AIRLINE: Southwest Airlines, 6.1% annual profit (industry average 5.4% profit.)
4.
ENERGY COMPANY: Exxon, 11.6% annual profit (industry average 9.9% profit.)
5.
COMPUTER COMPANY: Dell Computer, 5.0% annual profit (industry average 7.6% profit.)
(Figures above are from http://biz.yahoo.com, January 25, 2008.)
1.36
Job and Career vs. Owning a Business

To help make a decision about the advantages of pursuing a career and the advantages of owning
your own business, use the list below to answer some basic questions. At the end, look at your two
choices and see where you might have a reason to pursue your anticipated career or where you might find
an interest and potential desire to be a small business owner.
1.
CAREER SALARY OPPORTUNITIES (circle one)

Beginning Salary (average/good/excellent)
Upper Job Salary (average/good/excellent)
2.
CAREER JOB OPPORTUNITIES (circle one)

Growing Field (yes/no)
Requires Trade School/Associate Degree/Bachelors Degree (yes/no)
Best Size Company For Career Job (small/middle size/large)
3.
SMALL BUSINESS OWNERSHIP OPPORTUNITIES (circle one)

Requires Up Front Investment (small investment/medium size investment/large
investment)
Potential Franchise Has A Good Business Model (yes/no)
Competition From Other Franchise Owners Will Be (non existent/some competition/ very
competitive)
4.
POTENTIAL RETURN ON THE SMALL BUSINESS PURCHASE (circle one)

Provides Purchase of Additional Locations (yes/no)
Has Name Recognition (yes/no)
Has A Good Support System (yes/no)
5.
If you could, would pursuing your ideal career be worth the investment? (yes/no)
6.
Are you willing to make the investment (more schooling) and work for moderate pay to get the
knowledge and experience to make this investment pay off? (yes/no)
7.
If you could invest in your own business, would you and could you obtain the necessary finances
to make this happen? (yes/no)
8.
Is the risk of the unknown in the business environment worth the pursuit of your own time,
money, and family adjustment to own your own business? (yes/no)
9.
Given the two choices, what direction would you rather pursue?
1.37
BONUS CASES
BONUS CASE 1-1
Dual-Career Planning
Carey Moler is a 32-year-old account executive for a communications company. She is married to
Mitchell Moler, a lawyer. Carey and Mitchell did not make any definite plans about how to juggle their
careers and family life until Carey reached age 30. Then they decided to have a baby, and career planning
took on a whole new dimension. A company named Catalyst talked to 815 dual-career couples and found
that most of them, like the Molers, had not made any long-range career decisions regarding family
lifestyle.
From the business perspective, such dual-career families create real concerns. There are problems
with relocation, with child care, and so on that affect recruiting, productivity, morale, and promotion
policies.
For a couple such as the Molers, having both career and family responsibilities is exhausting. But
that is just one problem. If Carey is moving up in her firm, what happens if Mitchell gets a terrific job
offer a thousand miles away? What if Carey gets such an offer? Who is going to care for the baby? What
happens if the baby becomes ill? How do they plan their vacations when there are three schedules to
balance? Who will do the housework?
Dual careers require careful planning and discussion, and those plans need to be reviewed over
time. A couple who decide at age 22 to do certain things may change their minds at 30. Whether or not to
have children, where to locate, how to manage the householdall such issues and more can become
major problems if not carefully planned.
The same is true for corporations. They, too, must plan for dual-career families. They must give
attention to job sharing, flextime, paternity leave policies, transfer policies, nepotism rules (i.e., rules
about hiring family members), and more.
DISCUSSION QUESTIONS FOR BONUS CASE 1-1
1.
What are some of the issues you can see developing because of dual-career families? How is this
affecting children in such families?
2.
What kind of corporate policies need changing to adapt to these new realities?
3.
What are the advantages of dual careers? Disadvantages? What can newlywed couples do to
minimize the problems of dual careers? How can a couple achieve the advantages?
ANSWERS TO DISCUSSION QUESTIONS FOR BONUS CASE 1-1

1.
What are some of the issues you can see developing because of dual-career families? How is this
affecting children in such families?
Many issues are raised in this case. They may cause some discussion in class, especially with
older students in night classes. But dual career families raise other issues, such as What happens when
one of them gets promoted and wants to move?
1.38
If one were to quit to stay home with the children, which one should it be? Many of these
questions should be answered before a couple gets married and before having any children. But not all
questions involve children. This case could prove to be quite interesting in class.
2.
What kind of corporate policies need changing to adapt to these new realities?
Some answers are provided in the case. Students may want to brainstorm other answers,
including transferring health care, vacation scheduling, moving allowances, and more.
3.
What are the advantages of dual careers? Disadvantages? What can newlywed couples do to
minimize the problems of dual careers? How can a couple achieve the advantages?
The great advantage of dual careers is more money for living. The disadvantages include the need
for child care, which can result in more childhood illness, more aggressive behavior, and so on. Students,
if they are old enough to be affected, will have lots of input on this one.
1.39
BONUS CASE 1-2
Dealing with Changing Family Structures

Economic and social changes have had a dramatic impact on the nature of the family. It used to
be that a typical family was one with a mother, father, and two kids. Only 11% of all families now fit
that description! In 1970, 40% of the families consisted of a husband, a wife, and children. Today, about
28% match that description. To show you how significant that change is, lets look at another figure.
Since 1970, there has been an increase in families of 22 million, but a decrease of over 1 million in
married-couple families with children. The number of single-person households has increased by about 9
million since 1970 and now accounts for 23% of all households.
Today, couples with no children are the largest group of American households (30%). These are
mostly older couples (two of three are over 50). About 4% of American households consist of unmarried
couples living together. If we were to add up all those people who live alone with those married couples
without children (including those who live together without being married), we find that 57% of all
households fall into a category that might be called new-style family.
Think what that means when communities are trying to get more money for schools. Some 57%
of the voters have no children in school and could resist the increase. Think also, of how many schools
are closing because of declining enrollments. Family changes are affecting all kinds of institutions in
society.
Think also of the economic potential of two-income families with no children. These young urban
professionals are stereotyped as driving fancy sports cars, living in elaborately decorated apartments, and
enjoying the good life. There is some truth in that image. On the other hand, such couples tend to work
long hours and seem to have no time for starting a family.
The tensions of having two-income families plus the social changes that have happened over the
last 25 years or so have led to divorce and the phenomenon called the single-parent family. The number of
households headed by a woman with one or more children has doubled since 1970. There are about 6
million such families, and most of them live in poverty. Another 800,000 single-parent households are
headed by a man. These are the statistics. What do they mean for business?
DISCUSSION QUESTIONS FOR SUPPLEMENTAL CASE 1-2
1.
What effects have the changes in family structure had on businesses thus far? Think of the
products that have been designed for couples with no children and for individuals living alone.
Think also of the working woman phenomenon. What does that mean in the long run for
businesses?
2.
Couples are having fewer and fewer children, and are beginning to have children later. What
effect will these changes have on schools and businesses?
3.
What is the significance of the fact that two of three of the married couples with no children at
home are over 50? What market opportunities does that create?
4.
What is the relationship between the breakup of the family and poverty in the United States?
ANSWERS TO DISCUSSION QUESTIONS FOR SUPPLEMENTAL CASE 1-2

1.
1.40
What effects have the changes in family structure had on businesses thus far?
Many new products such as meals for one have been designed for individuals and couples.
Apartments are often smaller to accommodate smaller families, and many have amenities such as weight
rooms, swimming pools, and game rooms. Businesses have added more flextime, part-time jobs, and day
care centers.
2.
Couples are having fewer and fewer children, and are beginning to have children later. What
effect will these changes have on schools and businesses?
Young couples often have lots of money when they are both working and spend it on cars,
clothes, apartments, travel, and other such items. The name given such people in the 1980s was Yuppies
for young urban professionals. These children of the baby boom era (after World War II) had fewer
children than their parents and spent more money on them. Their children, the Generation X, are now
entering the workforce and spending their incomes.
3.
What is the significance of the fact that two of three of the married couples with no children at
home are over 50? What market opportunities does that create?
It may be more difficult to get school tax referendums passed, but businesses may benefit because
these couples tend to have much discretionary income. No children at home may also increase the desire
for condominiums and smaller homes.
4.
What is the relationship between the breakup of the family and poverty in the United States?
The majority of those living in poverty are in single-parent families. Many are young women who
have never married; others are divorced individuals with children who are not receiving support from the
father. It is important to follow family trends because they will indicate much about the strength of the
economy and the future of business. Strong family units are good for the economy and society.
(SUGGESTION: An interesting extension of this case would be to have your students research the
most current values for the figures given in this case. A good starting point is the U.S. Census site
(www.census.gov.).
1.41
BONUS CASE 1-3
The Worlds Largest Charity

Bill Gates is the wealthiest person in the world. According to Forbes magazine, his net worth is
$50 billion. Microsofts 2007 earnings were over $50 billion. But at age 50 Bill Gates earned respect in a
new way. Along with his wife Melinda, the chairman of Microsoft became the greatest philanthropist in
history. Melinda, a former Microsoft colleague, has a bachelors degree in computer science and
economics and a masters in business from Duke University. Bill dropped out of Harvard at the end of his
sophomore year to run Microsoft.
In its short eight-year existence, the Bill and Melinda Gates Foundation has already helped save
at least 700,000 lives in poor countries through its investments in vaccinations. In the U.S., its library
project has brought computers and Internet access to 11,000 libraries. The fund sponsored the biggest
privately funded scholarship program in history, sending over 9,000 high-achieving minority students to
college. It is the largest foundation in the world, with an endowment of $35 billion. Each year the Gates
Foundation spends almost the same amount as the World Health Organization (WHO.) In 2006 the
Foundation made grants of over $1.5 billion.
In 1993, advisers gave Bill Gates a copy of the 1993 World Bank Development report. The
document explained how many millions of people in poor countries die from diseases that already have
cures. Then it listed the most cost-effective methods of prevention those deaths, from immunization to
AIDS prevention to nutrition. The document reads like a blueprint for the Gates Foundation.
The Gates run the Seattle-based foundation like a business. They are fluent in the science of
public health, and both use the language of business to describe their philanthropic work. There is no
better return on investment that saving the life of a newborn, said Melinda.
The foundation has been able to instill a rare level of accountability from its grantees. In India,
the Foundation runs an HIV AIDS-prevention program, headed by Ashok Alexander. Alexander calls the
programs clinics franchises. In 2005, Alexander cut off funding to three nongovernmental
organizations because they did not meet agreed-upon milestones. People are not used to being
terminated for nonperformance, says Alexander.
In June 2006, Bill Gates announced that he was stepping down from full-time duties at Microsoft,
giving up his role as chief software architect, to devote more attention to the Gates Foundation.
Gates did not keep his title of top philanthropist for long. In that same month, Warren Buffett
announced that he planned to give away his stake in Berkshire-Hathaway, the company he founded, worth
more than $44 billion. Buffett will divide the gift over five foundations, but the largest amount will go to
the Gates Foundation. Buffetts donation exceeds the amounts given by the great philanthropists of the
past. Andrew Carnegies giving totaled about $380 million$7.6 billion in todays dollars. Based on the
Berkshire stock price on the day the gift was announced, Buffetts gifts would be worth $37 billion.
Because the donation is in the form of Berkshire stock shares given over time, the total donation could
grow in value as the company grows.
According to Buffett, he always intended to have his wife oversee his charitable giving when he
died. But after she died in 2004, he saw an opportunity to invest in an existing well-respected foundation
run buy two ungodly bright people. He changed plans and started giving away his fortune in 2006.
Buffett credits his late wife Susan for his change in priority. We agreed with Andrew Carnegie,
who said that huge fortunes that flow in large part from society should in large part be returned to
society, said Buffett.
1.42
The gift more than doubled the size of the Gates Foundation. We are awed by our friend Warren
Buffetts decision to use his fortune to address the worlds most challenging inequities, Bill and Melinda
Gates said in a statement. As we move forward with the work, we do so with a profound sense of
responsibility. Working with Warren and with our partners around the world, we have a tremendous
opportunity to make a positive difference in peoples lives. v
1.
How do Bill and Melinda Gates use basic business principles to run the Gates Foundation?
2.
Since the Foundation does not earn a profit, how should its success be judged?
3.
Most philanthropists are wealthy individuals who begin their charitable work late in life after
years of building an enterprise. Why do you think Gates started so early in his life?
4.
Why do you think Buffett chose the Gates Foundation for his record-breaking donation?

1.
How do Bill and Melinda Gates use basic business principles to run the Gates Foundation?
They use business principles such as return on investment, responsibility, and accountability.
Running a philanthropic enterprise is much the same as running a business. You have the same kind of
goals, the same need for good workers, the same need to measure performance, and the same need to fire
incompetent workers.
2.
Since the foundation does not earn a profit, how should its success be judged?
Performance measures will differ by the goals established. One goal may be to provide medicine
for a certain number of people. Another might be to develop a vaccine for malaria within 6 months. Each
goal calls for a different measure of success. One measure may be simply to raise the publics interest in
an issuesuch as poor schools, or poverty in the United States.
3.
Most philanthropists are wealthy individuals who begin their charitable work late in life after
years of building an enterprise. Why do you think Gates started so early in his life?
Gates was encouraged to do so by other entrepreneurs. Bill and Melinda have a passion for
certain causes, and are willing and able to back their wants with the finances necessary. Gates did not
leave his business until it was running smoothly and people were in place to keep it going. In fact, new
people may add new innovations and help the company to grow, creating more wealth for the Gates
family, and more donations to worthy causes.
4.
Why do you think Buffett chose the Gates Foundation for his record-breaking donation?
The Gates Foundation is run like a business, with clear mission, strategies, and controls. This
appeals to a businessperson like Buffett. Also, the donation is so huge, most charities do not have the
infrastructure to absorb it. The Gates Foundation already has a large global network in place.
1.43
BONUS CASE 1-4
Cirque du Soleil: No Clowning Around (Video Case)

(NOTE: This case can be used with the Video on DVD for this chapter.)
Several themes were introduced in this first chapter, including the importance of entrepreneurship
to the success of the overall economy, the need for entrepreneurs to take risks (and the greater the risk, the
higher the profit may be), and the dynamic business environment and the challenges it presents. Few
organizations in todays society are more indicative of the new challenges than Cirque Du Soleil (sounds
like Serk due Solay).
In the first place, Guy Laliberte took a huge risk by challenging the established circus tradition.
The elaborate shows are expensive to start, and the talent must be the best in the world. But the risk paid
off tremendously with sales of almost a billion dollars a year. Cirque du Soleil creates thousands of new
jobs and contributes greatly to the communities it serves. It does this not only through the taxes it pays,
but through community outreach programs as well. Because of the entertainment value, Cirque
contributes to both the standard of living (through the taxes it pays) and the quality of life (the fun it
provides for citizens of all ages).
Like all organizations, Cirque du Soleil has many stakeholders. They include the owners, the
employees, and the local community. The organization is especially focused on the stakeholder group
called customers. It wants to put on the best show possible, and that means providing the best talent in the
best locations. To reach as many people as possible, many of the shows go on the road. You can even
watch some of the shows on TV.
The business environment presents many challenges to Cirque du Soleil, as it does for all
businesses. The economic and legal environment of the United States greatly supports entrepreneurs like
Laliberte.
The technological environment in the United States is also supportive of new business ventures.
No circus in the past came close to the elaborate technological devices used by Cirque du Soleil. The
stage for one of the Cirque productions in Las Vegas, for example, is a huge pool that delights the
audience with its ability to change from a place where the actors can seem to walk on water to one where
they can dive from many feet above the pool.
The social environment is also conducive to new businesses. The diversity of the U.S. population
has contributed greatly to the ability of the circus to find diverse acts and to recruit such acts from all over
the world. The ability of the organization to adapt to many cultures is shown by its success in various
cities throughout the world.
Of course, success is likely to breed competition, and Cirque has its share. Even traditional
circuses are tending to offer more exciting programs that reflect what Cirque has been doing for years.
Competition is good for business. It prompts all businesses to offer the best products possible.
One of the best things about this video is that is allows you to see part of Cirque du Soleil in
action. If you have never seen the show, search it outif only on TV. It is exciting and fun, and it shows
that entrepreneurship is alive and well and providing wonderful new services. And the result is profits for
the owners and a better quality of life for us.
1.
1.44
What lessons can you take from Guy Laliberte about how to be a successful entrepreneur?
2.
What are some of the challenges and opportunities you see for Cirque du Soleil in todays
dynamic business environment?
3.
How would you compare the excitement and fun of working for a new entrepreneurial venture
like Cirque du Soleil with working for a large, traditional business? What are the risks? The
rewards? The challenges?

1.
What lessons can you take from Guy Laliberte about how to be a successful entrepreneur?
New forms of entertainment include iPods, video games, smart phones, iPhones, and more. No
one knows more about this than students do. What forms of entertainment occupy them the most? Do they
IM? Use Google? Buy online? What effect has such entertainment had on traditional forms of recreation
for students?
2.
What are some of the challenges and opportunities you see for Cirque du Soleil in todays
dynamic business environment?
The answers to this question are specific to your area. They may include population growth or
decline, business growth or failure, and more.
3.
How would you compare the excitement and fun of working for a new entrepreneurial venture
like Cirque du Soleil with working for a large, traditional business? What are the risks? The
rewards? The challenges?
It would be great fun working for Cirque du Soleil, but usually it would mean lots of travel and
the risks that go along with travel. Relationships would be hard to maintain. The challenges are many,
including the need to stay competitive with other acts. Students should have a good time imagining
working for Cirque vs. working for local businesses.
1.45
ENDNOTES
1.46
Source: The Worlds Billionaires, Luisa Kroll and Allison Fass (editors,) Forbes, March 8, 2007 and information at
http://www.askmen.com/toys/top_10/11b_top_10_list.html.
ii
Sources: Firms Seek More Bilingual Workers, Gannett News Sercie, Clarion-Ledger, May 13, 2007; and U.S. Census
Bureau (www.census.gov.)
iii
Sources: Diane Brady and Christopher Palmeri, Americas Growing Pet Economy, Business Week, July 30, 2007; Pet
Spending at All-Time High, USA Today, December 1, 2004; Cheryl Cole, Pet Care Spending Last to Be Hit in Recession,
Birmingham Post, August 28, 2002.
iv
The Internet is a dynamic, changing information source. Web links noted in this manual were checked at the time of
publication, but content may change over time. Please review the website before recommending it to your students.
v
Sources: Amanda Ripley, Time Persons of the Year: From Riches to Rags, Time, December 26, 2005-January 2, 2006,
pp. 72-88; Liv Grossman, Bill Gates: Giving it Away in Style, Time, April 18, 2005; Steven Levy, Bill Gates Goes Part
Time at Microsoft, Newsweek, June 17, 2006; Yuki Noguchi, Gates Foundation to Get Bulk of Buffetts Fortune, The
Washington Post, June 26, 2006; Carol J. Loomis, Warren Buffett Gives Away his Fortune, Fortune, June 25, 2006; and
information from www.gatesfoundation.org.

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Brief Chapter Outline and Learning Goals

Lecture Outline and Lecture Notes

Career and Study Skills Notes

CAREER DEVELOPMENT: Understanding Career Planning

STUDY SKILLS: Study Skills Are a Learned Behavior

LECTURE LINK 1-1

The Worlds Richest People

LECTURE LINK 1-2

LECTURE LINK 1-3

The Language of Business

LECTURE LINK 1-4

America Loves Its Pets

Bonus Internet Exercises

BONUS INTERNET EXERCISE 1-1

BONUS INTERNET EXERCISE 1-2

BONUS INTERNET EXERCISE 1-3

BONUS INTERNET EXERCISE 1-4

Critical Thinking Exercises

CRITICAL THINKING EXERCISE 1-1

How Much Profit?

CRITICAL THINKING EXERCISE 1-2

Job and Career vs. Owning

BONUS CASE 1-1

BONUS CASE 1-2

Dealing with Changing Family Structures

THE DYNAMIC BUSINESS

BONUS CASE 1-3

The Worlds Largest Charity

BONUS CASE 1-4

Cirque du Soleil: No Clowning Around (Video Case)

INTRODUCTION TO BUSINESS: Instructors Resource Manual

OTHER TEACHING TOOLS

Student Learning Tools

Instructor Teaching Tools

CHAPTER 1: The Dynamic Business Environment

INTRODUCTION TO BUSINESS: Instructors Resource Manual

BRIEF CHAPTER OUTLINE AND LEARNING GOALS

The Dynamic Business Environment

Understand the importance of studying business.

II. DEFINING BUSINESS

Profit, Revenue, Loss, and Risk and Reward

Stakeholders and Shareholders

III. THE EVOLUTION OF AMERICAN BUSINESS

Explain the evolution of American business.

Progress in the Agricultural and Manufacturing Industries

Progress in Service Industries

Your Future in Business

IV. THE FIVE PARTS OF THE BUSINESS ENVIRONMENT

Describe the five elements of the business

The Economic and Legal Environment

What Can Government Do?

The Technological Environment

Making Buying and Selling Easier

The Competitive Environment

The Social Environment

CHAPTER 1: The Dynamic Business Environment

The Global Environment

V. YOUR FUTURE IN BUSINESS