Business Now

448 Pages·2010·88.459 MB·English

by  Amit J. Shah, Laura Portolese Dias

going global features articles that highlight real issues from a global >>
Going GloBal
perspective. Refl ect on the related questions and connect the challenges posed

in each article to the chapter content and your own experiences.

Thinking Critically

>> Energy Crisis on the horizon <<

thinking Critically includes a

current business article in eac h

chapter, designed to give you a

look into the real world of busine ss

and spark discu ssion in your cla ss .

Case questions encourage you t o

think in depth about the article an d

chapter concepts.

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uEsTIO
Q

As You a s you Re a d prov ide s a quick

>> su mmary of the o ve rall questions
READ f
e
you should consider as you study
< < i
eac h chap ter. r
B

Busconnections questions save you study time! W e know your time >> [BUS] connections
is valuable—these strategically-place d question s give you the c han ce

to pause and evaluate your own progress through each chapter and

reinforce your understanding of the Learnin g Outcomes as you g o.

!

d tiveS toahcfe c owuonRtlind g
e ec
us reRSP rt
Foc Caree P y Ale << study alerts highlight key concepts
r- ud throughout each chapter at a glance.
ee St
ar
C

<< Career perspectives help you answer the question, “How will the concepts
I am learning in class relate to my future career?” Located in each chapter,

this feature incorporates short, question-based overviews that tie business

concepts to real-w orld career examples and a variety of professions!
BusinessNow
MCGRAW-HILL TEAM AUTHOR
VICE PRESIDENT, EDITOR IN CHIEF Elizabeth Haefele Amit J. Shah, DBA Frostburg State Universi
VICE PRESIDENT, DIRECTOR OF MARKETING John E. Biernat
SENIOR SPONSORING EDITOR Alice Harra
CAREER BOARD CONTRIBUTORS
DIRECTOR OF DEVELOPMENT Sarah Wood
DEVELOPMENTAL EDITOR Jenae Grossart Robert J. Abadie, Jr. National College
EDITORIAL COORDINATOR Vincent Bradshaw Laura Portolese Dias, DBA Shoreline Community College
SENIOR MARKETING MANAGER Keari Green
Frances R. Green Everest University
LEAD MEDIA PRODUCER Damian Moshak
DIGITAL DEVELOPMENTAL EDITOR Kevin White Diane A. Hagan Ohio Business College
DIRECTOR, EDITING/DESIGN/PRODUCTION Jess Ann Kosic Linda A. Rose, Ph.D. Westwood College
PROJECT MANAGER Jean R. Starr Scott T. Warman, MSB ECPI Technical College
DIGITAL PRODUCTION MANAGER Janean A. Utley
SENIOR DESIGNER Anna Kinigakis
SENIOR PHOTO RESEARCH COORDINATOR Lori Kramer
DIGITAL PRODUCTION COORDINATOR Brent dela Cruz
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EDITORIAL SERVICES Agate Publishing, Inc.
PRINTER World Color Press Inc.
COVER CREDITS Front cover: Handshake, © White Packert/
Getty Images; Flash drives, © Photodisc/Getty Images;
Currency, © Stockbyte/PunchStock
Back cover: Credit cards, © Mark Viker/Getty Images
Recycle, © Geir Pettersen/Getty Images
CREDITS The credits section for this book begins on page
423 and is considered an extension of the copyright page.
BUSINESS NOW
Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York,
NY
this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system,
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Some ancillaries, including electronic and print components, may not be available to customers outside the United States.
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ISBN 978-0-07-337728-5
MHID 0-07-337728-7
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Now
Business
Ch. 3
TABLE OF CONTENTS
BRIEF
1 8
The World of Finance and
Business and Its Accounting 205
Environments 1
Ch. 11
9
Management:
BUSINESS IN 2
How Economics Functions and
GLOBAL MARKETS
Affects Business 31 Styles 237
3 10
Entrepreneurship Leadership and
and Starting a Small Motivation 271
Business 57
11
Business in Global
4
The Four Ps of Markets 299
Marketing: Product,
12
Price, Place, and Social Responsibility
>
Ch. 5 Promotion 89 and Ethical Behavior
HUMAN in Business 333
5
RESOURCE Human Resource
MANAGEMENT * Bonus Chapter
Management 121
Managing Your
6
Production Finances 361
Bonus
and Operations
Chapter Management 153
7
Information
< Technology in
Business 177
iii
1 Responsiveness to Customers 15
> The World of Business
The Competitive Environment 16
and Its Environments 1
Customer-Driven Organizations  16
Learning Outcomes 1 Employee Empowerment 17
Opening Case Darryl Alexander and Memphis Best The Social Environment 17
BBQ 1
Managing Diversity 17
As You Read 2
A Rapidly Aging Population 18
What is Business? 2 Dual-Income Families 18
Defining Business 2 CaReeR peRspeCtives Career to Be Determined 19
Real WORld apps Business Is Business 3 Single Parents 19
Understanding Basic Business Terms 3 The Global Environment 19
ethiCal dilemma 5 Free Trade and Globalization 19
thinking CRitiCally Energy Crisis on the Horizon 20
the evOlutiOn Of Business in ameRiCa 5
War and Terrorism 21
Progress in the Agricultural Industries 5
gOing glOBal Is Terrorism a Clear and Present Danger
Progress in the Manufacturing Industries 6
for Insurers? 21
s
Progress in the Service Industries 7
How Global Change Affects You 22
t
n the types Of Business 8 A Final Thought on Environment: Stakeholder
Microenterprises, SMEs, and Large Businesses 8 Recognition 22
e
Microenterprises 9 yOuR futuRe in Business 23
t
Small and Medium-Sized Enterprises  9 Entrepreneurship versus Working for Others 23
n
Large Businesses 10 Working for Other Businesses 23
o
Profit Motive: For-Profit and Nonprofit Diversity and Entrepreneurial Challenge  23
Organizations 10
C Why Entrepreneurship Is Key to Wealth Creation 24
Manufacturing and Service Business 10
Working for a Nonprofit Organization or a

f the Business enviROnment 11 Government Agency 24
o
The Economic and Legal Environment 11 Real WORld apps Business Is Business 25
Laws and Regulations 12 Why Study Business? 25
e
What Can Government Do To Promote Business? 13 For Review 26
l
b ethiCal dilemma What Should Mike Do? 13 Key Terms 27
The Technological Environment 14 Think and Discuss 27
a
Increased Productivity 14 Internet in Action 27
T
Making Buying and Selling Easier 15 Self-Assessment Exercises 28
3
> Entrepreneurship and
Starting a Small Business 57
Learning Outcomes 57
Opening Case: Tom Sullivan and Lumber Liquidators 57
As You Read 58
What is entRepReneuRship? 58
Entrepreneurs and Entrepreneurship 58
Real WORld apps Ice Cream Dreams 59
The Qualities of an Entrepreneur 59
ethiCal dilemma 61
CaReeR peRspeCtives Becoming an Entrepreneur 61
Business staRt-up 62
2
> How Economics Starting a Business from Scratch 62
Affects Business 31 The Advantages and Disadvantages of Sta ing from 
Scratch 62
Learning Outcomes 31 Keys to Getting Started 63
Opening Case Amilya Antonetti and Soapworks 31 Buying an Existing Business 63
As You Read 32 The Advantages and Disadvantages of Buying an 
Existing Business 64
undeRstanding eCOnOmiCs 32
Franchising 64
Real WORld apps Feeling the Recession 32
thinking CRitiCally Microloans Help Small Businesses
The Basics of Economics 32
Start, Grow, and Succeed 65
Microeconomics and Macroeconomics 33
The Advantages and Disadvantages of Buying a 
Adam Smith, Father of Modern Economics 34 Franchise 66
Supply and Demand 35
the legal fORms Of Business OWneRship 69
fRee-maRket Capitalism 37 Sole Proprietorships 69
Competition in Free Markets 38 The Advantages and Disadvantages of Sole 
thinking CRitiCally When Will Consumers Start Proprietorships  70
Spending Again? 38 ethiCal dilemma Tough Decisions 71
ethiCal dilemma 39 Partnerships 71
The Benefits and Limitations of Free Markets 40 The Advantages and Disadvantages of Pa erships 72
Corporations 73
sOCialism and COmmunism 41
Socialism 41 The Advantages and Disadvantages of Corporations 74
S Corporations 75
The Benefits and Limitations of Socialism 42
Communism 42 Limited Liability Companies ( Cs) 76
ethiCal dilemma Hard Times 43 getting staRted in yOuR OWn Business 76
The Trend toward Mixed Economies 44 Planning the Business 76
eCOnOmiC indiCatORs 45 gOing glOBal A Bull Market in Social Entrepreneurs 77
Financing the Business 79
CaReeR peRspeCtives Economics and You 45
Knowing Your Customer 80
Gross Domestic Product 46
Managing Your Employees 80
The Unemployment Rate 47
Record Keeping 81
Price Indexes 48
Interest Rates 49 small Business failuRes veRsus suCCesses 81
The National Debt 49 Why Do Businesses Fail? 82
gOing glOBal Is Offshoring Causing GDP and What Can Entrepreneurs Do to Succeed? 82
Productivity Growth to Be Overstated? 50
Real WORld apps Ice Cream Dreams 83
Real WORld apps Feeling the
Recession 51 For Review 84
Key Terms 85
For Review 52
Think and Discuss 85
Key Terms 53
Internet in Action 86
Think and Discuss 53
Self-Assessment Exercises 86
Internet in Action 53
Self-Assessment
Exercises 54
Table of Contents • v
4
>
The Four Ps of Marketing: Product Life Cycle 101
Product, Price, Place, Pricing Strategies 103
and Promotion 89 THE FOUR Ps OF MARKETING: PLACE 103
ETHICAL DILEMMA Stretching the Truth 105
Learning Outcomes 89
Merchant Wholesalers 106
OPENING CASE Jonathan Fields and Sonic Yoga 89
Agents and Brokers 107
As You Read 90
Retail Intermediaries and Retailing 107
INTRODUCTION TO MARKETING 90
Retailing 108
Market Segmentation 90
CAREER PERSPECTIVES Becoming a Marketer 108
REAL WORLD APPS Selling Sandwiches 91
THE FOUR Ps OF MARKETING: PROMOTION 109
Segmenting the Consumer Market 91
Advertising 109
Consumer Behavior 93
Personal Selling 111
ETHICAL DILEMMA 93
Public Relations 111
Business-to-Business Markets 94
GOING GLOBAL Why Business Schools Should Focus on
THE FOUR Ps OF MARKETING: PRODUCT 94 Emerging Markets 112
Total Product Offer 94 Sales Promotions 113
Market Research 95 Other Types of Promotion 114
Quantitative and Qualitative Research 95 Integrated Marketing Communication: Putting
Product Differentiation 96 Promotions Together 114
THINKING CRITICALLY Primary and Secondary REAL WORLD APPS Selling Sandwiches 115
Research 97
For Review 116
Packaging 98
Key Terms 117
Branding 99
Think and Discuss 117
New-Product Development Process 100
Internet in Action 118
THE FOUR Ps OF MARKETING: PRICE 101 Self-Assessment Exercises 118
vi • BUSINESS NOW
5
> Human Resource
Management 121
Learning Outcomes 121
Opening Case Adrienne Kallweit and SeekingSitters.
com 121
As You Read 122
the hR management pROCess 122
Real WORld apps Personnel to HR 123
hRm: deteRmining needs, ReCRuiting, and
seleCting 123
Determining HR Needs 123
Recruiting from a Diverse Population 124
Selecting Employees 126
Pay Systems 133
ethiCal dilemma 127
Fringe Benefi ts and Retirement Plans 134 
hRm: tRaining and develOpment 128 Alternatives to Traditional Scheduling 135
Employee Training 128 Flextime 135
Employee Orientation 129 Telecommuting 136
On-the-Job Training 129 Job Sharing 136
Apprentice Programs 129 Appraising Employees 136
Off-the-Job Training 129
laWs affeCting hRm 137
Online Training 129
Laws and Government Programs Protecting Equal
Vestibule Training 130 Opportunity 137
Job Simulation 130 ethiCal dilemma The Glass Ceiling 138
Management Training 130 Laws Protecting Disabled Employees 139
thinking CRitiCally What Other Factors besides a Laws Protecting Aging Employees 140
Company’s Size Affect Its Likelihood of Providing Formal
Table of Contents • vii
6 Facility Location 162
> Production and Operations
Facility Location for Manufacturers 162
Management 152
Taking Operations Management to the Internet 163
Learning Outcomes 152 Facility Layout 163
Opening Case Bill Coontz and Rudolph Brothers & Materials Requirement Planning 164
Company 153
Purchasing 165
As You Read 154
CaReeR peRspeCtives The World of Purchasing 166
pROduCtiOn, pROduCtiOn management, and
OpeRatiOns management COntROl
OpeRatiOns management 154
meChanisms 166
Production and Production Management 154
Just-in-Time Inventory Control 166
Operations Management 154
Program Evaluation and Review Technique
Operations Management in the Service Sector 154 (PERT) 167
ethiCal dilemma 155 Gantt Charts 168
advanCes in pROduCtiOn teChniQues 155 Quality COntROl and standaRds 168
Production Processes 155 The Baldrige Awards 169
Real WORld apps Staying Competitive 157 gOing glOBal Six Sigma Is Out, Extreme Lean
Computer-Aided Design and Manufacturing 157 Manufacturing Is In 170
Flexible Manufacturing 158 ISO 9000 and ISO 14000 Standards 170
Lean Manufacturing 158 Real WORld apps Staying Competitive 171
Mass Customization 159 For Review 172
thinking CRitiCally The Custom Touch 160 Key Terms 173
ethiCal dilemma Ensuring Quality 161 Think and Discuss 173
Internet in Action 174
CRitiCal issues in OpeRatiOns management
planning 162 Self-Assessment Exercises 174
viii • BUSINESS NOW
7
> Information Technology
in Business 177
Learning Outcomes 177
Opening Case TecAccess 177
As You Read 178
the ROle Of infORmatiOn teChnOlOgy in
Business 178
Real WORld apps Modern Banking 179
ethiCal dilemma 179
A Brief History of Information Technology 179
IT Changes Two Critical Elements: Time and
Place 180
The Effect of IT on Location 180
E-Business and E-Commerce 182
Broadband Technology 182
Wireless Information Appliances 189
Social Networking and Web 2.0 183
Intranets and Firewalls 189
CaReeR peRspeCtives A Career in IT 184
Extranets 190
gOing glOBal Bill Gates’ Fix for India’s Ills:
Technology 185 Vi ual Private Networks (VPNs) 190
Software 191
managing infORmatiOn 186
ethiCal dilemma Wasting Time? 192
thinking CRitiCally Computer and Information
Systems Managers: The Nature of the Work 187 it Challenges 194
Hackers and Viruses 194
haRdWaRe and sOftWaRe 188
Government Information Security 195
Hardware 188
Privacy and Phishing 196
Real WORld apps Modern Banking 197
Stability 198
Reliability of Data 198
For Review 199
Key Terms 200
Think and Discuss 200
Internet in Action 200
Self-Assessment Exercises 201
8
> Finance and Accounting 205
Learning Outcomes 205
Opening Case Kevin Semcken and Able Planet 205
As You Read 206
Real WORld apps Switching Gears 206
mOney and finanCial instRuments 206
The Importance of Money 206
ethiCal dilemma 207
The Function of Securities Markets 208
Raising Funds by Issuing Bonds 209
Raising Funds by Selling Stocks 210
thinking CRitiCally Small Businesses Recover with
the SBA’s ARC Loan Program 211
Common Stock 213
Preferred Stock 213
ethiCal dilemma Is He Really a Friend? 214
intROduCtiOn tO aCCOunting 215
What Is Accounting? 215
Table of Contents • ix
9
> Management: Functions
and Styles 237
Learning Outcomes 237
Opening Case The Dworsky Brothers and Consolidated
Container Company 237
As You Read 238
management and tOday’s manageRs 238
ethiCal dilemma 238
the funCtiOns Of management 239
Planning 240
Real WORld apps Becoming the Boss 241
Writing a Mission Statement 241
SWOT and PEST Analyses 242
thinking CRitiCally The World of Sales
Management 244
Forms of Planning 246
Organizing 247
Levels of Management 248
Areas of Accounting 215
Skills at Different Levels of Management 248
Managerial and Financial Accounting 215
Types of Organizational Structures 249
Auditing 216
Staffi ng 252
Tax Accounting 217
Leading 253
Government and Not-for-Profi t Accounting 217
Controlling 253
CaReeR peRspeCtives Becoming an Accounting
Professional 217 What Else Do Managers Do? 254
gOing glOBal Global Accounting Standards? Not So CaReeR peRspeCtives Becoming a Manager 255
Fast 218
management styles 255
The Six-Step Accounting Cycle 219
gOing glOBal The Needs of the Global Economy
finanCial statements 220 Workforce 256
The Accounting Equation 220 Autocratic Leadership 257
The Balance Sheet 221 Participative Leadership 257
Assets 222 Free-Rein Leadership 258
Liabilities 223
The Income Statement 224
Revenue 224
Cost of Goods Sold 224
Operatin penses and Net Profi t or Loss 226
The Statement of Cash Flows 226
Real WORld apps Switching Gears 228
analyZing finanCial statements:
RatiO analysis 228
Liquidity Ratios 229
Leverage (Debt) Ratios 229
Profi tability (Performance) Ratios 230
Basic and Diluted Earnings per Share 230
Return on Sales (Net Profi t Margin) 230
Return on Equity 231
Activity Ratios 231
For Review 232
Key Terms 233
Think and Discuss 233
Internet in Action 233
Self-Assessment Exercises 234
x • BUSINESS NOW