MGT 111 -Chapter 1

MGT 111 -Chapter 1 - MGT 111 CHAPTER ONE: Taking Risks and...

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MGT 111 CHAPTER ONE: Taking Risks and Making Profits within the Dynamic Business Environment Entrepreneurship and Wealth Building 1. Success in business is often based on the strategy of finding a need and filling it by providing goods, jobs, and services to people 2. Good – tangible products (i.e. computers, food, clothing, cars, and appliances 3. Services – intangible products or products that cannot be held (i.e. education, health care, insurance, recreation, and travel and tourism) 4. The United States is home to more than 10 million millionaires 5. Business –any activity that seeks to provide goods and services to others while operating at a profit 6. Entrepreneur –a person who risks time and money to start and manage a business A. Revenues, Profits, and Losses 1. Revenues –the total amount of amount of money a business takes in during a given period by selling goods and services 2. Profit –the amount of money a business earns above and beyond what it spends for salaries and other expenses needed to run the operation 3. Loss –when a business’s expenses are more than its revenues a. Starting a business may com e with huge risks but those risks can result in huge profits b. About 80,000 businesses in the US close each year and even more do during periods of slowdown in the economy B. Matching Risk with Profit 1. Risk –the chance an entrepreneur takes of losing time and money on a business that may not prove profitable a. Not all enterprises make the same amount of profit b. Those that take the most risk may make the most profit C. Standard of Living and Quality of Life 1. The wealth businesses generate and the taxes they pay help everyone in their communities a. A nation’s businesses are part of an economic system that contributes to the standard of living and quality of life for everyone in the country b. Business and their employees pay taxes that the federal government and local communities to use to i. Build hospitals, schools, libraries, playgrounds, roads, and other public facilities ii. Help to keep the environment clean, support people in need, and provide police and fire protection 2. Standard of living –the amount of goods and services people can buy with the money they have Ex. The United States has one of the highest standards of living in the world even though workers in some other countries (i.e. Germany and Japan) may on average make more money per hour
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MGT 111 i. Prices for goods and services in Germany and Japan are higher than in the United States so a person in those countries can buy less than what a person in the United States can buy with the same amount of money a. Goods cost more in one country than another because of higher taxes and stricter government regulations 3. Quality of life –the general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and reward that add to the satisfaction and joy that other goods and services
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This note was uploaded on 04/21/2011 for the course MGT 111 taught by Professor Schloemer during the Spring '08 term at Miami University.

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MGT 111 -Chapter 1 - MGT 111 CHAPTER ONE: Taking Risks and...

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