About the Authors xv
Acknowledgments xvi
Reviewers xvii
New to the Fifth Edition xx
Letter from the Authors xxi
Prologue xxii
Part 1 Looking at the Business Environment 2
Chapter 1 Business Basics 2
The Business Landscape 2
Business Defined 3
The Factors of Production 4
THE LIST: Names to Know in Business 5
Common Business Challenges and Opportunities 5
Competition 6
ON TARGET: Nantucket Nectars: Tom and Tom’s Partnership 7
BizChat: Apple: Taking a Bite Out of Microsoft? 8
Social Environment 8
Globalization 10
Technological Changes 12
Types of Businesses 14
Local and Regional Businesses 15
National Businesses 16
Multinational (International) Businesses 17
Taking Business Personally 18
Life Skills for Business 19
Summary 21
Key Terms 21
Self Test 22
Team Time 23
Ethics and Corporate Social Responsibility 24
Web Exercises 24
References 25
Chapter 2 Economics and Banking 26
The Basics of Economics 27
Economics Defined 27
Economic Systems 28
Planned Economic Systems 28
Market Economies 29
Mixed Economies 29
Business and Economics 30
Determining Price: Supply and Demand 30
Supply 31
Demand 32
Factors That Determine Price 32
Factors That Affect Demand 33
Factors That Shift Supply 35
Degrees of Competition 37
Monopolies 38
ON TARGET: Keurig’s Monopoly 38
Duopolies and Oligopolies 39
Monopolistic Competition 39
Perfect Competition 39
BizChat: Is Sirius XM Radio a Monopoly? 40
Economic Indicators 40
Gross Domestic Product 41
THE LIST: Countries by GDP, 2012 41
Consumer and Producer Price Indices 42
The Unemployment Rate 43
BizChat: How Much Money Do You Need to Get By? 44
Productivity of Firms 44
Government and the Economy 45
Economic Policies 46
Fiscal Policy 46
Monetary Policy 47
OFF THE MARK: The Dodd-Frank Act and the Consumer Financial Production Bureau 47
Reserve Requirements 49
Short-Term Interest Rates 50
Open Market Operations 51
Summary 52
Key Terms 53
Self Test 53
Team Time 55
Ethics and Corporate Social Responsibility 56
Web Exercises 56
References 57
Chapter 3 Ethics in Business 58
Ethics: The Basics 59
Ethics Defined 59
Systems of Ethical Conduct 59
Personal Ethics 60
BizChat: Can Living Ethically Make You Happy? 62
Personal Ethics Meets Business Ethics 62
You as a Person and as an Employee 63
Identifying a Company’s Ethics 65
Corporate Social Responsibility 66
The Five Pillars of Corporate Social Responsibility 66
OFF THE MARK: Cheating Pays Off….Until It Doesn’t 67
THE LIST: Nine Causes Americans Think Charities Should Focus On 68
The Conflict of CSR in the Business Environment 69
The Benefits of CSR 69
Measuring CSR 69
BizChat: Corporations as People 70
CSR and Social Networking 71
The Challenges of CSR 71
The Effects of CSR on Society 71
The Effects of Individuals on CSR 72
Dangers of a Weak Ethical Focus 73
Legal Regulations and Legal Compliance 74
Recovering from Weak Ethical Conduct 75
Business Opportunities Created by Ethical Needs 76
Creating New Markets with an Ethical Focus 77
Businesses Going Green 78
How Businesses Develop an Ethical Environment 79
Ethical Focus from the Start 80
Ethical Focus Every Day 80
ON TARGET: Playing the Ethics Game 80
Summary 82
Key Terms 83
Self Test 83
Team Time 84
Ethics and Corporate Social Responsibility 85
Web Exercises 85
References 86
Chapter 4 Business in a Global Economy 88
What Is Globalization? 89
THE LIST: Powerful People to Know 89
The Effects of Globalization 90
Reasons for the Rise in Globalization 91
Global Business Trends 91
THE LIST: Countries in Which It Is Easy to Start a Business 92
International Trade 93
International Competition 93
Fostering Competitiveness 93
The Benefits and Costs of International Trade 94
Free Trade and Protectionism 95
Types of Trade Barriers 96
Trade Barriers: Winners and Losers 96
International Organizations Promoting Free Trade 98
Regional Free Trade Agreements 99
Conducting Business Internationally 101
International Business Strategies 102
Entering Foreign Markets 102
The Advantages and Disadvantages of Each Entry Mode 104
International Business: Economic Factors and Challenges 105
The Role of Exchange Rates 106
THE LIST: Top U.S. Trading Partners 107
Other Economic Challenges to Conducting International Business 108
BizChat: Which Is Better—A Strong Dollar or a Weak Dollar? 109
Creating Successful International Businesses 110
Sociocultural Challenges 110
OFF THE MARK: International Business Blunders 111
Political Challenges 112
Legal Challenges 112
Ethical Challenges 113
Summary 114
Key Terms 115
Self Test 115
Team Time 117
Ethics and Corporate Social Responsibility 117
Web Exercises 118
References 119
Mini Chapter 1 Business Law 120
Part 2 Starting and Structuring a Business 130
Chapter 5 Small Business and the Entrepreneur 130
Small Business: The Mainstream of the American Economy 131
Small Business and the Economy 131
THE LIST: Ten Great Industries for Starting a Business 132
Small Business and the Workforce 133
Reasons for Starting a Small Business 134
BizChat: What’s in a Name? 135
The Impact of Technology on Small Businesses 135
Social Media and Mobile Marketing 135
OFF THE MARK: iSmell 136
Entrepreneurs and the American Dream 136
The Traits of Successful Entrepreneurs 137
Types of Entrepreneurs 139
ON TARGET: Origami Owl 142
Entrepreneurial Teams 142
Buying Franchises and Existing Businesses 143
Franchising Basics 143
Pros and Cons of Franchising 144
Franchising Considerations 145
Buying an Existing Business 146
The Risks of Small Businesses and Where to Get Help 148
Why So Many Small Businesses Fail 148
Getting Help 150
Financing Considerations 152
Cash and Credit 153
Small Business Loans and Grants 154
Angel and Venture Capital Financing 154
BizChat: Conducting a SWOT Analysis 155
Summary 156
Key Terms 157
Self Test 157
Team Time 159
Ethics and Corporate Social Responsibility 159
Web Exercises 160
References 161
Chapter 6 Forms of Business Ownership 162
Sole Proprietorships 163
Starting a Sole Proprietorship 163
Advantages and Disadvantages 164
Partnerships 167
Advantages and Disadvantages of Partnerships 167
Elements of a Partnership Agreement 168
BizChat: How Do You Find the Right Business Partner? 169
Types of Partnerships 169
Corporations 171
Advantages of Incorporation 172
Structure of a Corporation 173
Disadvantages of Incorporation 174
S Corporations 175
Limited Liability Companies 176
Comparing Forms of Ownership 177
Not-for-Profit and Cooperatives 178
Not-for-Profit Organizations 179
THE LIST: Largest Not-for-Profit Organizations 179
Cooperatives 180
Mergers and Acquisitions 181
Mergers versus Acquisitions 181
Advantages of Mergers and Acquisitions 182
OFF THE MARK: AOL–Time Warner Merger 183
Types of Mergers 183
Disadvantages of Mergers 184
Summary 186
Key Terms 187
Self-Test 187
Team Time 189
Ethics and Corporate Social Responsibility 190
Web Exercises 190
References 191
Mini Chapter 2 Constructing an Effective Business Plan 192
Part 3 Managing a Business and Employees 200
Chapter 7 Business Management and Organization 200
The Foundations of Management 201
Business Management 201
Levels of Management 202
OFF THE MARK: How Are Managers Responsible for Employee Behavior? 203
The Skills of Successful Managers 203
BizChat: Social Media: How Do Web-Based Tools Make Time Management Easier? 205
The Functions of Management: Planning 205
Strategic Planning 206
Vision and Mission Statement 207
SWOT Analysis 208
Tactical and Operational Planning 209
Contingency Planning 210
The Functions of Management: Organizing 211
Organizational Structures 212
Changing Structures 214
THE LIST: Bits of Advice for Managers 214
Alternative Organizational Structures 215
The Functions of Management: Controlling 216
Controlling to Stay on Course 217
Control Strategies 217
ON TARGET: Pest Control Company Controls Its Fleet 217
Summary 221
Key Terms 222
Self Test 222
Team Time 223
Ethics and Corporate Social Responsibility 224
Web Exercises 224
References 225
Chapter 8 Motivation, Leadership, and Teamwork 226
Motivation 226
Personal Motivation 227
Motivating Employees 227
Traditional Theories of Motivation 229
Motivational Theories in the Modern Workplace 230
Evolution of Motivational Theories 233
Leadership 234
Traits of Leadership 237
OFF THE MARK: Masataka Shimizu 238
Leadership and Corporate Culture 238
BizChat: Do You Have to Be Tall to Be a Leader? 239
ON TARGET: Southwest Airlines 239
Teamwork 240
THE LIST: Does Your Team Function Like Google Teams? 240
The Advantages of Teams in the Workplace 241
The Challenges of Teams in the Workplace 241
Best Practices for Teams 242
ON TARGET: Red Teamers in the Military 243
Your Role on a Team 245
Summary 247
Key Terms 247
Self Test 248
Team Time 249
Ethics and Corporate Social Responsibility 250
Web Exercises 250
References 251
Chapter 9 Human Resource Management 252
Human Resource Management 253
Managing Staffing Needs 253
BizChat: Social Media and Privacy 257
Hiring 258
Training and Evaluating Employees 259
Training Methods and Requirements 259
Performance Appraisals and Alternatives 262
Compensating, Scheduling, Promoting, and Terminating Employees 264
Compensation Strategies 265
Benefits 266
Alternative Scheduling and Work Arrangements 267
Contingent Workers 268
Promotions 268
THE LIST: Top 10 Ways to Get Promoted 268
Terminating Employees 269
Retirement 269
Managing Workplace Diversity 270
Benefits and Challenges of Diversity 271
OFF THE MARK: One Diversity Training Does Not Fit All 272
Labor and Union Issues 273
Organized Labor 273
Collective Bargaining 274
The State of Labor Unions 275
Summary 276
Key Terms 277
Self Test 278
Team Time 279
Ethics and Corporate Social Responsibility 279
Web Exercises 280
References 281
Chapter 10 Online Business and Technology 282
Online Business 282
Marketing Online 283
THE LIST: Brought to You by PayPal 284
Types of Online Business Transactions 286
Challenges of E-Commerce 287
Technology in Business 289
The Information Technology Organization 289
Information Systems 291
Security 293
Threats to Online Business 294
BizChat: How a Simple Mistake Can Lead to a Major Data Breach 295
OFF THE MARK: Spying Scandal at Hewlett-Packard 296
Privacy 296
Impact of Social Media and Mobile Technology 297
Social Networking 298
OFF THE MARK: Tasteless Tweet 300
Mobile Devices 300
Summary 302
Key Terms 303
Self Test 303
Team Time 305
Ethics and Corporate Social Responsibility 305
Web Exercises 306
References 307
Chapter 11 Production, Operations, and Supply Chain Management 308
The Production of Goods and Services 309
The Importance of Production 309
Moving to a Service-Based Economy 310
The Global Production Landscape 310
Production Management 311
The Make-or-Buy Decision 312
Common Production Processes and Techniques 312
Social Media and Manufacturing 314
Operations Planning and Management 314
Capacity Planning 315
Facility Location 315
Facility Layout 317
Production Technology 318
OFF THE MARK: Technology: Too Much of a Good Thing? 319
BizChat: 3D Printing: An Industrial Revolution? 320
Operations Control 320
Production Process Control 321
Purchasing and Inventory Control 322
Quality Management 324
ON TARGET: The Baldrige Awards 325
Suppliers and Supply Chain Management 327
Supply Chains 328
THE LIST: Top U.S. Firms in Terms of Their Supply Chains and Management 328
Summary 331
Key Terms 332
Self Test 333
Team Time 334
Ethics and Corporate Social Responsibility 335
Web Exercises 335
References 336
Mini Chapter 3 Business Communications 338
Part 4 Principles of Marketing 348
Chapter 12 Marketing and Consumer Behavior 348
Marketing Fundamentals 349
The Evolution of Marketing 350
Marketing for Not-for-Profits and Others 353
Benefits of Marketing 353
THE LIST: Ten Great Marketing Strategies 354
Criticisms of Marketing 354
Marketing Tactics 355
Marketing Strategy: The Four Ps of Marketing 356
The Four Cs of Marketing: Marketing from the Consumer’s Perspective 357
The Marketing Process 358
The Marketing Environment 359
The Competitive Environment 360
The Economic Environment 361
The Technological Environment 361
ON TARGET: Viral Marketing 361
The Social and Cultural Environment 362
The Political, Legal, and Regulatory Environments 362
The Global Environment 362
OFF THE MARK: The Hard Lessons of Social Media 362
Marketing Research and Planning 363
The Market Research Process 363
The Marketing Plan 365
Target Markets 367
Consumer Behavior 369
B2C Markets 369
B2B Markets 371
BizChat: Augmented Reality: A Passing Phase or the Future? 372
Summary 374
Key Terms 375
Self Test 375
Team Time 377
Ethics and Corporate Social Responsibility 377
Web Exercises 378
References 379
Chapter 13 Product Development, Branding, and Pricing Strategies 380
New Product Development 381
The New Product Development Process 381
The Product Life Cycle 383
Modifying Existing Products and Product Lines 385
The Total Product Offer 386
Product Differentiation 386
Product Lines and the Product Mix 387
Consumer Products and Business-to-Business Products 388
Consumer Product Classifications 388
B2B Classifications 389
Branding 391
Branding Benefits 391
ON TARGET: Nike’s Reuse-A-Shoe 391
Brand Loyalty and Brand Equity 392
Branding Strategies 393
THE LIST: Retailers and Their Private-Brand Labels 394
Packaging 395
BizChat: Brand You: Creating a Personal Brand 396
OFF THE MARK: Genericized Trademarks 396
The Importance of Labels 397
Pricing Goods and Services 398
Product Pricing and Pricing Objectives 398
Pricing Strategies and Price Perceptions 400
Adjusting Prices 403
Summary 405
Key Terms 406
Self Test 406
Team Time 408
Ethics and Corporate Social Responsibility 408
Web Exercises 409
References 409
Chapter 14 Promotion and Distribution 410
Promotion and the Promotional Mix 411
Promotion 411
Advertising and Public Relations 413
The Role of Advertising 413
Types of Advertising 414
Advertising Media 414
ON TARGET: Dove’s Real Beauty 414
Internet Advertising 417
Social Media 417
Mobile Marketing 417
Product Placement 417
THE LIST: Interesting Mobile Marketing Facts 418
Infomercials 418
Global Advertisements 418
Public Relations 418
BizChat: Negative Political Ads: Do They Really Work? 419
OFF THE MARK: Volkswagen’s Deceptions—A Public Relations Problem? 420
Personal Selling and Sales Promotion 421
Personal Selling 421
Sales Promotions 424
Social Media Promotions 425
Distribution: Marketing Intermediaries 426
Distribution Channels and Marketing Intermediaries 426
Wholesalers, Agents, and Brokers 429
Retailers 430
Distribution Logistics 433
The Benefits and Costs of Transportation Modes 433
Warehousing and Inventory Control 434
Summary 436
Key Terms 437
Self Test 438
Team Time 439
Ethics and Corporate Social Responsibility 439
Web Exercises 440
References 441
Mini Chapter 4 Finding a Job 442
Part 5 Principles of Finance 456
Chapter 15 Financing and Accounting for Business Operations 456
Financial Management 457
The Financial Manager 457
Planning for a Firm’s Financial Needs 458
Addressing Cash Flow and the Budget 460
Financing Small Business Activities 462
Short-Term Financing Options 462
Short-Term Loans and Grants 464
Social Funding 465
THE LIST: Interesting Crowdfunding Campaigns 466
Financing Big Business Activities: Debt and Equity 467
Short-Term Financing Options 467
Long-Term Financing Options 467
Financing with Bonds 468
Financing with Equity 470
ON TARGET: Using Social Networks to Raise Venture Capital 471
Accounting Functions 472
Accounting Fundamentals 473
Types of Accounting 473
OFF THE MARK: How’s This for an Accounting Goof? 474
Accounting Standards and Processes 475
BizChat: The Cost and Benefit of the Sarbanes-Oxley Act 477
Financial Statements 478
The Balance Sheet 479
Assets 480
Liabilities 481
Owners’ Equity 481
Analyzing a Balance Sheet 481
Balance Sheet Ratios 482
Income Statements 484
Revenue 484
Cost of Goods Sold 484
Operating Expenses 485
Analyzing Income Statements 485
Income Statement Ratios 486
Statement of Cash Flows 487
Components of a Statement of Cash Flows 488
Analyzing a Statement of Cash Flows 488
Summary 490
Key Terms 491
Self Test 492
Team Time 493
Ethics and Corporate Social Responsibility 494
Web Exercises 494
References 495
Chapter 16 Investment Opportunities in the Securities Market 496
Investment Fundamentals 497
The Risks and Rewards of Saving and Investing 497
Investment Risk 498
BizChat: I Cannot Lose Money by Saving, Right? 499
THE LIST: Personal Finance Blogs Worth Reading 500
Investing in Stocks 503
Primary and Secondary Security Markets 503
ON TARGET: Berkshire Hathaway: The Highest-Priced Stock 504
Types of Stocks 504
Changing Stock Prices 508
OFF THE MARK: The Madoff Ponzi Scheme 510
Investing in Bonds 511
Bond Basics 511
BizChat: Downgrade of the U.S. Debt 516
Mutual Funds and Other Opportunities 516
Mutual Funds 517
Risk-and-Return Relationships of Different Types of Mutual Funds 518
Other Investment Opportunities 520
Summary 522
Key Terms 523
Self Test 524
Team Time 525
Ethics and Corporate Social Responsibility 526
Web Exercises 526
References 527
Mini Chapter 5 Personal Finance 528
Appendix 540
Glossary 549
Index 563
Answer Key 592