Introduction to Business

Business plays a major role within our society. It is a creative and
competitive activity that continuously contributes to the shaping of our society.
By satisfying the needs and wants people cannot satisfy themselves, businesses
improve the quality of life for people and create a higher standard of living.
It is a way for individuals to provide goods and services to consumers, and at
the same time, produce a profit for themselves. Businesses are not only
important because they provide goods and services for consumers, but they also
improve the economy and increase jobs for people within society which is an
additional fact producing a higher standard of living. To measure our societies
standard of living, we must look to our "Gross National Product", which is the
complete measure of our nations output. Unfortunately, inflation is a major
problem in our nation which often reduces the Gross National Product. Inflation
occurs when the goods become too high within society and spending decreases.
A central function within our economic system is satisfying the needs of
the consumers with the use of limited supplies. The purpose of a business is to
combine resources such as land, labor, and capital in a way that will make them
more valuable. Operating in a political and economic climate that supports
individual rights, American business has as its guiding principle the right to
private ownership and profit. The amount of goods produced depends upon the
number of resources available for use. This idea is commonly known as "Supply
and Demand". Businesses must attempt to reach an equilibrium between the two
which will directly impact the price of the products produced. If something is
heavily demanded and at the same time, it\'s resources are limited, the price of
the product will rise. This idea of course works both ways. The easier it is
to produce something, the cheaper it will be. All economic systems begin with
the same resources including land, labor, capital and technology. These
resources may be limited at any given time, varying within the world at large,
from country to country. This business cycle explains how business fluctuates
from high to low prosperity, recession, depression and recovery over time. The
major challenges faced by our nation today are the Federal Budget Deficit,
international trade deficit, the Decline of Smokestack America, and the
conservation of energy. The Federal Budget Deficit occurs when our expenditures
are greater then our revenues. International trade deficits occur when a nation
imports more then it exports. The Decline of Smokestack America is when there
is a change from an industrial to a post-industrial economy. Finally, the
conservation of energy is so that there are a sufficient amount of natural
resources necessary to produce goods. General economic growth or stagnation
also has an important influence on business within our society. Many factors
can affect it\'s condition, such as war, new inventions and technology, political
assassinations, the discovery of physical and natural resources, labor
negotiations, government action, and many others. When the economy is strong
and the demand is high, businesses can prosper. Regardless of how great the
economy may become, businesses still must compete with other firms for scarce
raw materials and labor.
A businesses environment creates many opportunities as well as problems
for prospering businesses. The environment determines what a business can do by
shaping and channeling its development. Businesses function within an
environment by allowing entrepreneurs to raise capital and create profits freely.
The supply of money available within a business as well as the economic
stability through times of growth and recession have strong effects on
businesses. Not only is the physical environment, including natural resources,
pollution and energy as discussed previously, important, but many other aspects
within the environment influence business. A business must adapt and overcome
consumerism and ecology, and it has a social responsibility to do so. Cultures
surrounding businesses also play a major role. A business must adapt to a
changing society with age, lifestyle, culture and location. When a business
learns to adapt to these changes, it will be profitable for both the business
and consumers. Economic systems can be classified into three categories. These
include capitalism, socialism and communism. Pure capitalism is an unrestrained
freedom to buy, sell and compete. Private enterprises allow entrepreneurs to
run businesses without central government control and can operate within a free
market. Capitalism is a system of true private enterprise. Some aspects of
capitalism are free choice, private ownership, private profit and free
competition. The only drawback of this type of system is that a company can
operate with no competition thereby creating a monopoly unfavorable for
consumers. Socialism, on