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Business is an organization or economic system that provides goods and services which involves financial and commercial link. Businesses provide people with opportunities to become richer. A business has factors that affect how business itself operates. Factors that affects within the business is called as internal environmentwhereas factors that are external to the organization but has impact on business is called as external environment.
Introduction to Business provides the foundation of business knowledge that allows us to utilize our talents in the business world. It also gives an overview of many different business topics, allowing us to choose the specific field of business that we wanted to pursue.
2.0 THE BUSINESS ENVIRONMENT
FIGURE 1 - TODAY'S DYNMIC BUSINESS ENVIRONMENT
The business environment consists of the surrounding factors that may do good or bad in the development of businesses. The success of a business is naturally dependent on the business environment. Businesses grow and prosper in a healthy environment. The outcomes are jobs growth and the wealth which made it possible to have a high standard of living and a high quality of life. By creating the right business environment is the foundation for social progress of different kinds, which also includes good schools, clean air and water; good health care and low rates of crime.
2.1 THE ECONOMIC AND LEGAL ENVIRONMENT
When there is low risk in losing money, so many people will be willing to start new businesses. The other risk that they should be concerned of is the involvement of the economic system and government interference whether working with or against the businesses. Government also strongly promotes entrepreneurship is to allow private ownership of businesses. One of the best things that developing countries' governments can do is to reduce interruption with the free exchange of goods and services. The government reduces the risk of entrepreneurship by passing law that enables business-people to write contract that acceptable in court. The Universal Commercial Code, as a example, covers things like contracts and warranties. Countries that do not have such law cause higher risk of starting a business.
The government can also establish a currency that can be trade in the world markets. This happens when we can buy and sell goods and services anywhere in the world using that currency. Last but not least, the government helps to reduce corruption in business and its own ranks. In poorer countries, it's hard to do business because the government itself is corrupted. There are some companies that are corrupt and have illegal activities which affects the business community the economy as well.
2.2 THE TECHNOLOGICAL ENVIRONMENT
Many years back, humans felt that they need to create things to make their jobs easier. May different types of tools and machines were created throughout history that has changed the business environment greatly. But some technological changes have a more comprehensive and lasting impact on businesses than the emergence of information technology (IT) such as computers, mobile phones and many more. The greatest development among these is the Internet. The Internet is a major force in business today.
2.2.1 How Technology Benefits Workers and Business
One of the advantages is when you work for others; the company will provide the tools and technology to make your job more productive. Technology is everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make businesses processes more effective, efficient and productive. Effectiveness is about producing the desired result. Efficiency is about producing goods and services using the least amount of resources. Productivity is the amount of output you generate given the amount of input. The more you can produce in a particular time, the more money you are worth for the companies.
2.2.2 The Growth of E - Commerce
Managing changes is one of the most important themes. There are special boxes known as Dealing with Change which involves rapid changing business environment and these changes needed to be adjusted. Another important change in recent years is the growth of e-commerce.There is 2 major types of e-commerce transactions: business-to-consumer (B2C) and business-to-business (B2B). The rise of Internet marketing grew so fast that it impacts hundreds of competitors into the fray.
2.2.3 Using Technology to Be Responsive to Customers
We can know when businesses will successes or fail is on how they treat their customers. If the businesses are very responsive to the customer's needs and wants, the business will to success. A database is an electronic storage file where information is kept. One use of databases is to store vast amounts of information about consumers. Unfortunately, gathering of personal information about people has also led to identify theft. Identify theft is the obtaining of private information about a person, such as Social Security number or credit card number and using the information for illegal purposes.
2.3 THE COMPETITIVE ENVIRONMENT
Today competition has become greater than it is before. Some companies have found a competitive edge by focusing on quality. Simply making a high-quality product isn't enough to allow a company to stay competitive in the market world.
Delight the customer
Customer and stakeholder orientation
Profit and social orientation
Quality and service orientation
FIGURE 2 (William, 2008, p.16) show how competition has changed business.
2.3.1 Competing by exceeding Customer Expectations
We have learned that today's customers are very demanding. They want a good quality at low prices and they want a good service also. Business is becoming customer-driven and not management-driven as in the past. This means customers' wants and needs is the first priority.
2.3.2 Competing by Restructuring and Empowerment
To meet the needs and wants of the customers', companies must provide frontline workers the responsibility, authority, freedom, training, and equipment which they need to respond quickly to customers requests and prepared to make any decisions essential to production of goods and providing good services. This is what we called as empowerment. To implement this policy, managers must train the frontline workers to make decisions with the consultation of managers.
2.4 THE SOCIAL ENVIRONMENT
Demography is the statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income. Furthermore, tremendous population shifts are leading to new opportunities for some firms and to decline opportunities for others.
2.4.1 Managing Diversity
Many more groups are now included in diversity efforts. Companies have responded to a diverse customer by hiring a wide diverse workforce to serve them. In short, companies are taking diversity management very serious. They are also changing voting ballots and making every effort possible to adapt.
2.4.2 The Increase in the Number of Older Americans
People ages 45 to 54 are the richest group in U.S. society now. They spent more on everything except healthcare. Think of the products and services the middle age and elderly will need and you can see opportunities for successful businesses of the 21st century. Businesses that cater to older consumers will have the opportunity foe exceptional growth in the near future. On the other side, retired people will be draining the economy of wealth. In short, paying Social Security to senior citizens in the future will draw huge amounts of money from the economy.
2.4.3 Two-Income Families
There are some factors that led to a dramatic growth in two-income families in the United States. The high costs of housing and maintaining a comfortable lifestyle, high level of taxes have made it difficult but not impossible for many households to live on just 1 income. Many women today also simply want a career outside the home.
2.4.4 Single Parents
The rapid growth of single-parent households has a bi impact on businesses as well. Its a heavy task to work a full time and then raise a family by self. Single parents have encouraged businesses to implement programs such as family leave and flex time.
2.5 THE GLOBAL ENVIRONMENT
This environment is so important as it can influence the whole environment surrounding. Two important environmental changes recently is the growth of international competition and the increase of free trade among nations. Two more things that led to more trade are improvements in transportation and communication. World trade has greatly improved living standards around the world. World trade has its benefits and costs.
In conclusion, the business environment is very important in our economy system. It is divided into five main environments which are the economic and legal environment, the technological environment, the competitive environment, the social environment and the global environment. Each of these environments played an important role to our economy system.
4.0 INTRODUCTION TO BUSINESS OWNERSHIP
To start a new business, we should understand on how to get the resource that we need. We may need a partner or find other ways to obtain money. To stay in business, we may need help from expertise than we have in certain areas or we may need to raise the money to expand. This is a long-term success. We can business in one of several ways. The 3 major forms of business ownership are (1) sole proprietorship, (2) partnership and (3) corporations.
Documents Needed to Start Business
None; may need permit or license
Partnership agreement (oral or written)
Written agreement; must file certificate of limited partnership
Ease of Termination
Easy to terminate: just pay debts and quit
May be hard to terminate, depending on the partnership agreement
Same as general partnership
Length of Life
Terminates on the death of owner
Terminates on the death or withdrawal of partner
Same as general partnership
Transfer of Ownership
Business can be sold to qualified buyer
Must have other partner(s) agreement
Same as general partnership
Limited to owner's capital and loans
Limited to partners' capitals and loans
Same as general partnership
Risk of Losses
Taxed as personal income
Taxed as personal income
Same as general partnership
Owner manages all areas of the business
Partners share management
Can't participate in the management
Usually fewer benefits and lower wages
Often fewer benefits and lower wages; promising employee could become a partner
Same as general partnership
FIGURE 3 (William, 2008, p. 131) shows the differentiation of forms of business ownership.
5.0 DEFINITION OF SOLE PROPRIETORSHIP AND PARTNERSHIP
Sole Proprietorship is a business that is owned and usually manages by one person. Sole Proprietorship is also known as 'Sole Trader'. This is the most common form of business ownership. It can be easy to start your own business. Sole Proprietorship makes up 72 %of all businesses in the United States. This ownership is the easiest kind of businesses for us to explore in our quest for an interesting career.
Partnership is the legal form of business with two or more owners. There are several types of partnerships: (1) general partnership, (2) limited partnership and (3) master limited partnership. A general partnership is a partnership in which all owners share in operating the business and in assuming liability for the business's debts. It is an owner (partner) who has unlimited liability and is active in managing the firm. A limited partnership is a partnership with one or more general a partners and one or more limited partners. It is an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment. Limited liability defined as limited partners that are not responsible for the debts of the business beyond the amount of their investment- their liability is limited to the amount they put into the company. Master limited partnership looks more like a corporation and acts like a corporation, but it is taxed like a partnership and thus avoids the corporate income tax. Another newer type of partnership was created to limit the disadvantages of unlimited liability and that is limited liability partnership (LLP).
5.1 SOLE PROPRIETORSHIP AS MY CHOICE
Sole Proprietorships are the easiest kind of businesses for us to explore in our quest for an interesting career. Most will mention the benefits of being their own boss and setting their own hours. Every town has sole proprietorships. The advantages of sole proprietorship are as below:
5.1.1 Ease of starting and ending the business
All I have to do is buy or lease the needed equipment and put up some announcement saying I am having a business. It is easier this way because I can decide when I want to start and when I want to end my business. It would affect anyone as it is already known as sole proprietorship. I also don't have to consult anyone or to disagree with other decisions that against me and my business. I may need to have a permit or license from the local government but should not be a problem to me.
5.1.2 Being your own boss
Working for others may not have much fun or excitement rather than I am the boss of my own company. That is how most sole proprietorship feels. If I made mistakes, I will take the responsibility fully. There will also be many other victories other days too.
5.1.3 Pride of ownership
Usually people who own and manage their own businesses are rightfully proud of their work. They deserve all the credit for taking the risks and providing needed goods and services.
5.1.4 Leaving a legacy
Business owners usually have something to leave behind for future generations. So, I can past my business under my child when she or he is at rightful age.
5.1.5 Retention of company profit
Other than having the joy of being my own boss, there is nothing like the pleasure of knowing that I can earn as much as I want and not have to share with anyone else except the government, in taxes.
5.1.6 No special taxes
All the profits of my business are taxed as the personal income of mine, and I can pay the normal income tax with that money. In order to do this, I still will have top estimate their taxes and make quarterly payments to the government or suffer penalties for non-payment.
5.2 WHY PARTNERSHIP WAS NOT MY CHOICE
There is more than one person in a partnership business. Anytime two people must agree and there are possibilities of conflict and tension. Partnership has caused splits among families, friends and marriages. The disadvantages of partnership are as below:
5.2.1 Unlimited liability
Each general manager is liable to pay the debts of the firm, no matter who was really responsible for causing those debts. So, I may need to pay the debts on behave of my partner's mistakes as well as my own.
5.2.2 Division of profits
Sharing risk mean I have to share my profits as well and this can be a conflict between me and my partner. There is no set system for dividing profits in a partnership, so profits are not always divided evenly. Each of may argue that each of us deserve the highest profit and that will eventually cause a conflict between us.
5.2.3 Disagreements among partners
Disagreement over money is just one example of potential conflict in a partnership. Other potential conflicts are many more than we have not identified. Because of this, all terms of partnership should be spelled out in writing to protect all parties and to minimize misunderstanding.
5.2.4 Difficulty of termination
One we are committed into the business as partners, it is not easy to get out of it. Sure, we will end quitting our partnership because of this. It is best to decide such questions up front in the partnership agreement.
As in the ownership, sole proprietorship and partnership are two strong ownership. So, both have their own advantages and disadvantages. I rather choose sole proprietorship because it is suitable for my style. I don't like to get other people involve in my conflict because it may just be more complicated.
7.0 OVERALL CONCLUSION
Overall, this course has taught me a lot that I need to know. I have also learnt many new things that I may need to apply someday in my business life. Introduction to Business really provides detail information that I need to know and practice for my daily use.