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Chapter 1 - Chapter 1 Taking Risks and Making Profits...

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Chapter 1: Taking Risks and Making Profits within the Dynamic Business Environment Objectives: 1. Describe the relationship between profit and risk, and show how business and nonprofit organizations can raise the standard of living for all. 2. Compare and contrast being an entrepreneur and working for others 3. Analyze the effect of the economic environment and taxes on business. 4. Describe the effects of technology on businesses. 5. Demonstrate how businesses can meet and beat competitions. 6. Analyze the social changes affecting businesses. 7. Identify what businesses must do not to meet global challenges, including war and terrorism. 8. Review how past trends are being repeated in the present and what those trends mean for tomorrow’s college graduates. I. Describe the relationship between profit and risk, and show how business and nonprofit organizations can raise the standard of living for all. a. Entrepreneurship and wealth building i. Goods are tangible products such as computers, food, clothing, cars, and appliances. ii. Services are intangible products (i.e., products that can’t be held in your hand) such as education, health care, insurance, recreation, and travel and tourism. iii. Business is any activity that seeks to provide goods and services to others while operating at a profit. iv. Entrepreneur is a person who risks time and money to start and manage a business. 1. Needs reliable accountant, a good lawyer, strong managers and other employees b. Revenues, Profits, and Losses i. Revenue - the total amount of money a business takes during a given period by selling goods and services. ii. Profit - the amount of money a business earns above and beyond what is spends for salaries and other expenses iii. Loss - when a business’s expenses are more than its revenues. 1. Business loses money over time; it will close 2. About 80,000 businesses in USA close each year c. Matching Risk with Profit i. Risk - the chance an entrepreneur takes of losing time and money on a business that may not prove profitable. 1. –Big risk, big profits. d. Standard of Living and Quality of Life.
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i. Standard of living- the amount of goods and services people can buy with the money they have. 1. For examples beer cost $7 in Japan but $3 in USA 2. Standard of living depends on wealth created by its businesses ii. 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 rewards that add to the satisfaction and joy that other goods and services provide. 1. Maintain high quality of life ; effort of businesses, nonprofit organizations, and government agencies.
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