U.S. The Business Environment
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How high will you go?
What Will We Pay?
12 10
8
6
4
2
0
Gas Price History
How did the rising prices of 2007-08 affect you?
Source: http://www.randomuseless.info/gasprice/gasprice.html
What was different about 2008 and past gas crises?
PAST: Prices went up when supply was reduced. 2008: Supply increasing... Complicated mix of global supply and demand issues.
What's been going on?
Global supplies of gas increasing substantially. U.S. refiners producing less gas here since 1972. Why? U.S. now more dependent on foreign oil. U.S. demand for gasoline continues to grow.
We keep using more and more gas in the U.S. Why?
population growth love our big cars plastics and other petrolbased products
The other problem...we aren't the only country in the world wanting oil.
lots of countries have improved economies more countries moving to freemarket systems war and unrest global population growth increasing demand (China now #2)
MIDDLE EAST GOVERNMENTS HAVE THE OIL
OPEC (Organization of the Petroleum Exporting Countries)
NOT PRIVATE BUSINESS THEY DON'T COMPETE THEY COLLUDE
SO, WHAT WAS THE RESULT OF THE HIGH GAS PRICES? (not all bad)
more fuel efficient vehicles oil companies really successful! gasoline thieves budget problems for everyone (schools) travel and tourism declines some of us had to adjust our behavior increased prices for oil-based products (plastic)
Economics matter to business.
WHAT IS A BUSINES S? A business is an
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organization
PROFIT that provides
a
PROFI =
Revenue
Expenses
Why is profit important? Encourages people to open businesses & keep them
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going.
Are these businesses?
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Do they
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make
Non-profits do make money, but it is reinvested in the organization to expand and improve.
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To make a profit, your business has to SELL its product/service.
That means there have to be _____________________.
CUSTOMERS
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Who are your business's potential customers?
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Businesses must consider CUSTOMER NEEDS AND WANTS
Think about yourself as a consumer...do you change?
What's good about businesses?
1. 2. 3. 4. 5.
6.
7. 8.
produce what we need employ people innovate create opportunities for more businesses increase quality of life and standard of living increase income & value for owners, shareholders pay taxes support charities and provide community leadership
WHAT DOES A BUSINESS NEED TO DO TO
How would your business succeed?
All businesses are affected by their external ECONOMIC environments.
DOMESTIC SOCIOCULT URAL
GLOBAL
POLITICALLEGAL TECHNOLO GICAL
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Business External Environments
Domestic where firm conducts its operations Global international forces that affect a business (DO
YOU NEED TO WORRY ABOUT THIS IF YOU DON'T DO BUSINESS INTERNATIONALLY?)
Technological human knowledge, work methods, equipment, electronics/telecom, systems Political-Legal relationship between business and government Sociocultural customs, mores, values, demographics Click to edit Master subtitle style Economic conditions of the country's economic system
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Click to edit Master subtitle style Here in the U.S., what is the state of our economic environment right now?
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.....all part of our ECONOMIC SYSTEM
How our nation allocates resources among its citizens.
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EVERY NATION HAS RESOURCES
But maybe not enough. EXAMPLES U.S.?
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Economists IN call these resources the
FACTORS OF
P_________EN___________C__________I______
There's a macro way and a micro way to look at the factors of production.
_______L________
PHYSICAL RESOURCES
tangible items (natural resources, raw
Physical Resources
ENTREPRENE URS
Physical Resources ENtrepreneurs
CAPITAL
Physical Resources ENtrepreneurs Capital
INFORMATIO N
Physical Resources ENtrepreneurs Capital Info
LABOR (Human Resources)
Physical Resources
ENtrepreneurs
Capital
STARBUCKS FACTORS OF PRODUCTION
COFFEE BEANS AND PAPER PRODUCTS? COFFEE TASTERS, BARISTAS, STORE MANAGERS? CONSUMER TASTE
ECONOMIC SYSTEMS
North Korea Chi
Communis m
U.S
Socialis m Mixed Cap.
na
.A
Pure Cap.
PLANNED SYSTEMS SYSTEMS
FREE MARKET
Demand Supply
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The willingness and ability of buyers to
The willingness and ability of producers to offer a good or service for sale.
Law of Demand
Buyers will purchase (demand) more of a product as its price drops and less as its
Law of Supply
Producers will offer (supply) more of a product for sale as its price rises and less as its price drops.
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LIBERTY PIZZA
SCHEDULE OF
PRICE PER PIZZA
DEMAND AND QUANTITY OF SUPPLY QUANTITY OF
PIZZAS DEMANDED PIZZAS SUPPLIED PER WK 100 400 600 800 1000 1200 1300 1600 1800 2000
PER WK $2 2000 $4 1900 $6 1600 Click to edit Master subtitle style $8 1200 $10 1000 $12 800 $14 600 $16 400 $18 200 $20 100 4/8/10
PIZZA SLIDE HERE
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FREE MARKETS REQUI RE 4 CONDI TI ONS: 1. Right to own property
2. Freedom of choice 3. Profit motive
4. Competition
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DEGREES OF
MONOPO LY UTILITY PUBLIC
FARMER No competitors Government regulated
MONOPOL COMPETITION OLIGOP ISTIC
STEEL INDUSTRY Few competitors Difficult to enter industry
PERFECT COMPETI
LOCAL
OLY
STATIONERY COMPETIT STORETION Many competitors Many competitors Fairly easy to enter
ION
Very easy entry Identical products Some ability to
No similar products available Significant ability to influence influence
May involve similar or different Similar products Limited ability to influence prices
No ability to influence
THE NATIONAL DEBT AND Click to edit Master subtitle style THE NATIONAL DEFIC
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Click to edit Master subtitle style MEASURING THE ECONOMY FOR DECISION MAKING
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COLLEGE STUDENT STANDARD OF LIVING 4/8/10
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productivity
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July 12, 2009 Goods and Services Deficit Decreases in May 2009 The Nation's international deficit in goods and services decreased to $26.0 billion in May from $28.8 billion (revised) in April, as exports increased and imports decreased. (SOURCE: http://www.census.gov/indicator/www/ustrade.html)
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Strength and Stability
Click to edit Master subtitle style Marcio Melo
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INFLATION
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The Consumer Price Index subtitle style Click to edit Master
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Recession
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Depression
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Strength and Stability
Click to edit Master subtitle style Marcio Melo
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The Fed
Click to edit Master subtitle style Ben Bernanke, Fed Chairman
Another Ben
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