The Business Environment Essay Sample

A business is any activity that provides good and services in an effort to earn profit. Profit is the financial reward that comes from starting and running a business. When a business brings in less money than it needs to cover expenses it incurs a loss (McGowan, 2012, p.1). The economy of the country depends upon the employment provided by big and small businesses. The supply of goods and the services is what we rely in our daily lives. Business drives up the standard of living for people worldwide, which contributes to a higher quality of life. Businesses also help raise the standard of living through taxes, which the government spends on projects that range from streetlights to environmental cleanups (McGowan, 2012, p.4).
The factors of production play a major role in business. The four factors of production are natural resources, capital, human resources, and entrepreneurship. The first factor of production is natural resources which consist of land, water, wind and minerals. Natural resources have to be extracted or purified, but cannot be created. The cost of all natural resources tends to be increase with high demand, low supply, or both. The second factor is capital which includes tools, machines, and technology for the business to produce goods or services. The usage of computers and telecommunications has become a crucial element of capital across different industries, from financial services to professional sports. Capital does not include money but, businesses use money to obtain, maintain, and advance their capital (McGowan, 2012, p.6).
The third factor of production is human resources which include physical, intellectual, and creative contributions of everyone who works within an economy. Since technology replaces a number of manual labor jobs, education has become gradually more important to human resource development (McGowan, 2012, p.6).The last factor of production is Entrepreneurship. Entrepreneurs are people who take the risk of making and operating their own businesses, in response to the profit incentive. They tend to see opportunities where others don’t, and they use their own resources to capitalize. The main component is economic freedom: freedom of choice (McGowan, 2012, p.6).
Profit is the financial reward that comes from starting and running a business. More specifically, a profit is the money that a business earns in sales (or revenue), minus expenses such as the cost of goods and the cost of salaries. Nonprofit organizations provide programs and services that benefit the public nonprofit organizations play a critical role in the economy, often working together with businesses to improve the quality of life in our society. Nonprofit mainly focus on health, human services, education, art, religion, and culture. However, nonprofits are still businesses in every other senses they employee people, they take in revenue, produce goods and services and contribute in significant ways to our region’s economic stability and growth. (McGowan, 2012, p.3-p.6).
The economic system of the United States is called capitalism, also known as a “private enterprise system” or a “free market system. Capitalism is based on private ownership, economic freedom, and fair competition. A core capitalist principle is the paramount importance of individuals, innovation, and hard work. In a capitalist economy, individuals, businesses, or nonprofit organizations privately own the vast majority of enterprises where the government controls only small portion. (McGowan, 2012, p.23) The American system of private enterprise has given strength and prosperity to the United States and has enabled us to be the most economically powerful nation in the world today.
The market economy has four degree of competition: Pure competition, Monopolistic competition, Oligopoly, Monopoly. Pure competition is a market structure where people can enter the market with goods and services to sell with little competition. Without large corporate entities dictating market prices with their additional advantages, enterprises can hypothetically sell based on the on the quality of their service. Monopolistic competition is a market which product could be sold with little competition as long its marketed different price range. Oligopoly is a market which product effectively is control by small amount of enterprises, Characterized by extremely competitive prices. Monopoly is a market which single enterprise controls marketing of the product to the point where is virtually impossible for others to compete.
The global economy has impacted the US in a number of ways. The best-known impact of the global economy has been on manufacturing in the US. The US has lost huge numbers of manufacturing jobs because these jobs can be done much more cheaply in other countries where workers do not get paid as much as American workers do. On the more positive side, the global economy helps US consumers by allowing us to get the things we want for less money (because they can be made more cheaply in other countries).
In the current state of the economy many companies are now going global by expanding into other foreign markets. The best example is the general motors’ company which has expanded their markets on all parts of the world. The three strategies apply in entering of foreign markets this includes direct exports, licensing/franchising and foreign direct investment. Direct exporting entails the sale of products made by entrepreneurial firms in their home country to customers in other countries. Licensing refers to a firm’s agreement with another to use their proprietary technology such as patent or trademark. Franchising represents the same idea except it is typically used in service industries. Another mode of entry is the foreign direct investments which entails strategic alliances with foreign partners, foreign acquisitions or wholly owned subsidiaries.
Stakeholders designate the individuals or groups that can directly or indirectly affect or be affected by firm’s activities. A company like Johnson and Johnson that produces baby friendly products may require having good social responsibility towards its consumers. This means that the values and norms associated with marketing the product must be adhered to. Social responsibility in this case will require the company to dutifully report any incidences in which the product maybe harmful. The main objective of any stakeholder group is to make sure that the company conducts itself in an ethical manner. The company social responsibility does not stop in the products but their involvement in community activities regularly. Engaging in corporate social marketing through the development and implementation of a behavior change campaign intended to improve child nutrition and safety. Committing through donations or contributing of percentage revenues to a specific cause by partnering with nonprofit charities thus creating a mutual beneficiary.