Business Summaries This Chapter Addresses the Reasons Essay

Business Summaries

This chapter addresses the reasons that one should study business and businesses to begin with. The authors make the point that they do not intend for this to be a narrow study that just focuses on particular examples of successive and failed businesses, although it will include case studies too.

But the major point of studying business, the authors write, is to provide a larger sense of what is needed to succeed in today's working world. Unlike previous generous of workers, who could succeed by mastering a few specific skills, today's workers have to be broadly educated, being able to exhibit: "honesty and integrity, willingness to work hard, dependability, time management skills, self-confidence, motivation, willingness to learn, communication skills, professionalism."

The chapter also provides basic definitions that will be used throughout the books, including "business" (the organized work of individuals coming together) and providing a brief overview of how capitalism works. The authors also explain communism, fiscal and monetary policy, the concept of productivity, and the business cycle. It also addresses very briefly the ways in which American legal system both supports and restrains business activity. The chapter ends with a brief description of green business.

These are all basic concepts that must be understood to understand today's competitive business climate and how it will change over the next decades.

Chapter Two

This chapter addresses the complexities of business ethics, a part of the general category of ethics, which the authors define as "the study of right and wrong and of the morality of the choices individuals make." Business ethics is "the application of moral standards to business situations." The authors stress the fact that individuals (and businesses) can have different standards of ethical behavior that are all acceptable if they are all based on such concepts as fairness and honesty.

Among the key ethical concepts that businesses face are conflicts of interest and greenwashing, which is the practice of pretending to be more environmentally conscientiousness than one is. This practice falls under the rubric of social responsibility "is the recognition that business activities have an impact on society and the consideration of that impact in business decision making."

Businesses are more highly regulated now than they were a hundred years ago. Among the regulations that have been added are worker safety protections, the end to child labor, fairer wages, protection of consumer rights, and requirements that companies behave with at least some measure of environmental care.

Government regulation and public pressure are the two most important external pressures for businesses to act ethically. However, there is also a key internal mechanism that creates a sense of business ethics and social responsibility, which is the attitude of the company's management. When managers act ethically, their employees will follow their example.

Chapter Three

This chapter takes up the issue of international trade, which is increasingly important in a globalized world. There are a number of legal issues involved in international trade that do not obtain in domestic business, and the chapter touches on these as well.

International trade, the writers argue, can be seen as an extreme form of specialization, in which different countries contribute what they can do so most cheaply, whether this be raw materials, intellectual capital, or labor. While nations have to trade in this day and age, each government also has to protect its own nation's industries.

Nations restrict trade with other companies in different nations in legal ways with tariffs, which are essentially taxes on the products made in another nation. There are advantages to this in that domestic businesses can make more money and employ more people. However, tariffs can make other countries retaliate and given that all countries have to trade at some point this can be highly problematic.

This chapter also takes up the related issues of trade imbalance, which occurs when one country imports more from another than it exports (or vice versa). This places the country that imports more at a number of disadvantages. One way in which trade imbalances are regulated is through large trade coalitions such as NAFTA.

Finally, the chapter addresses ways in which businesses can enter the international market.

Chapter Four

In this chapter the authors define a number of different forms of business, mostly that exist domestically but that can also do business internationally. Among the different types of businesses that they describe are a range of partnership agreements. Partnerships allow both risk and responsibility to be shared, along with aspirations and fears. Among the types of partnerships are general partners who "are responsible for running the business and for all business debts" while limited partners "receive a share of the profit in return for investing in the business."

The most important single definition that this chapter puts forward is that of a corporation, which is "an artificial person created by law." Corporations as recently re-emphasized by the Supreme Court with almost all of legal rights of an actual person, including the "right to start and operate a business, and to own property."

While (for small businesses) a partnership is the most common form and (for large businesses) a corporation is, the chapter also describes several other important business structures, including the cooperative, which is simply an "association of individuals or firms whose purpose is to perform some business function for its members." Cooperatives can be quite specialized or quite general and can be formed for any period of time. In contrast to this, a joint venture is formed to meet a specific purpose for a limited period of time. Each of these business structure meets different needs.

Chapter Five

This chapter focuses on the nature of small businesses and examines the fields and functions at which small businesses are the optimal structure.

A small business is simply one that is "independently owned" (as opposed to a franchise, for example). Small businesses are never the "dominant" player in their field and yet are run on a for-profit basis. While they are small -- often employing just a few people, small businesses constitute over 90% of the country's 23 million businesses and employ more than half of American workers.

Most small businesses are in retail and services and are started by people who are defined by "independence, desire to create a new enterprise, and willingness to accept a challenge." Many specific factors can compel an individual to start her or his own business. Because many small-business owners have little or no business or management experience and may be under-capitalized as well, many new small businesses fail.

Nevertheless, small businesses (often helped by the federal government through the Small Business Administration) are being opened all of the time. With the advantage of the potential for personalized relationships with customers and the ability to change and adapt quickly, small companies can compete effectively with large firms and succeed because they "provide things that society needs, act as suppliers to larger firms, and serve as customers of other businesses, both large and small."

Chapter Six

This chapter examines the structure and role of management, which is Management is "the process of coordinating people and other resources to achieve the goals of an organization." While management is generally thought of as the management of people, managers are also responsible for ensuring that the material, financial and informational resources and needs of a company are carefully considered and apportioned in the most effective and profitable ways.

Key characteristics of a good manager are the ability to plan both for the short-term and the long-term. This might seem like an all-too-obvious statement, but it is true that many businesses fail because managers are good at one but not the other. The authors note that a key element of good management is the ability to create a good contingency plan. A contingency plan is one that tries to predict the unpredicted, such as the effect of a supplier's going bankrupt, bad weather that disrupts transportation, or a new competitor muscling in on the market. All of these things can happen, and the successful manager is one who can help her company through such shoals.

In addition to the ability to plan well, the successful manager must be able to motivate and inspire his/her workers. Managers at different levels of power and authority have different requirements placed on them, but in general they must have good conceptual and creative skills and vision, good analytic and technical skills, and excellent interpersonal and communication Skills. Managers can deploy their skills through both formal and informal styles of leadership depending on their specific situation.

Chapter Seven

This chapter focuses on the idea of an organization and different possible organizational structures since all businesses, no matter what size, are organizations. The authors define the basic organization as "a group of two or more people working together to achieve a common set of goals." It should be noted that this is true only when organizations work well: Certainly there are many organizations (including many businesses) that do not….....