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Chapter 1

COMMERCE 1B03 Chapter Notes - Chapter 1: Baby Boomers, Switching Barriers, Crowdsourcing


Department
Commerce
Course Code
COMMERCE 1B03
Professor
Rita Cossa
Chapter
1

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Chapter 1
The Dynamic Business Environment
Business Fundamentals
Business: any activity that seeks to provide goods and services to others while operating at a
profit
Entrepreneur: a person who risks time and money to start and manage a business
Learns that a business needs an accountant, lawyer and strong managers.
Must go to financial institutions or venture capital firms to borrow money (not easy)
Business principles are used in for-profit, non-profit, and government agencies where
oftentimes, goals are other than making a profit for their owners or organizers
Survival
Growth profit
Social responsibility
Revenues, Profits, and Losses
Revenue is the total amount of money received during a given period for goods sold and
services
Profits is the amount of money a business earns beyond what it spends for salaries and other
expenses
Loss business expenses are more than its revenue than its revenues
Matching Risk with Profit
Business involves risk: refers to the chance of loss, the degree of probability of loss, and the
amount of possible loss
It is the chance an entrep. takes of losing time and money on a business that may not prove
profitable
Potential business owners bust research, and calculate the risks and the potential rewards of
each decision
Standard of LIving and Quality of Life
Business and employees pay taxes to the gov. This goes towards building hospitals, schools,
libraries, roads, and other public facilities.

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A country's business are part of an economic system that contributes to the standard of living
and quality of life for everyone in the country
Standard of living: the amount of goods and services people can buy with the money they have
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 adds to the
satisfaction and joy that other goods and services provide.
Responding to the Various Business Stakeholders
Stakeholders: all the people who stand to gain or lose by the policies and activities of a business
Primary: those who without whom whose participation the business would not exist
Secondary: whose influence is not essential to the survival of the business
Investors
want a strong return on investment
Financial
institutions
want returns
Suppliers
want to be pain
Government
want compliance
Employees
want security
Dealers
want support
Environmentalists
want change
Surrounding
community
want “equity”
Customers
want value
Future
employers
want skilled graduates
Challenge is for organizations to find balance, the need for business to make profits must be
balanced against the needs of employees for sufficient income
This is why companies will offshore jobs
Offshoring v. Outsourcing v. Insourcing
Offshoring: sourcing part of the purchased inputs outside of the country
obtaining services or products from another country
Outsourcing: refers to obtaining certain services or products from a third party company,
essentially sourcing something like accounting services or manufacturing of a certain input to
another company.
Insourcing: assigning various functions that could go to an outside organization to employees in
the company
Using Business Principles in non-Profit Organizations
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