Acknowledgments  xii

About the Authors  xiii

Chapter 1: Exploring the World of Business and Economics  2

Inside Business: Tesla Races Ahead of the Competition  3

1-1 Your Future in the Changing World of Business  4

1-1a Why Study Business?  5

Exploring Careers: Gen Z Seeks Workplace Diversity  6

1-1b Special Note to Business Students  8

1-2 Business: A Definition  9

1-2a The Organized Effort of Individuals  9

1-2b Satisfying Needs  10

1-2c Business Profit  11

1-3 Types of Economic Systems  12

Entrepreneurial Success: The Next Wave of Entrepreneurs Is Here  14

1-3a Capitalism  14

1-3b Capitalism in the United States  15

1-3c Command Economies  17

1-4 Measuring Economic Performance  18

1-4a The Importance of Productivity in the Global Marketplace  18

1-4b The Nation’s Gross Domestic Product  19

1-4c Other Important Economic Indicators That Measure a Nation’s Economy  20

1-5 The Business Cycle  20

1-6 Types of Competition  22

1-6a Perfect Competition  23

1-6b Monopolistic Competition  24

1-6c Oligopoly  25

1-6d Monopoly  25

1-7 American Business Today  26

1-7a Early Business Development  26

1-7b Business Development in the 1900s  27

1-7c A New Century: 2000 and Beyond  28

1-7d The Current Business Environment  28

Technology and Innovation: Today’s Biggest Tech Trends  30

1-7e The Challenges Ahead  31

Summary  32

Key Terms  33

Discussion Questions  33

Case 1: The Keys to Zoom’s Success  34

Building Skills for Career Success  35

Chapter 2: Ethics and Social Responsibility in Business  36

 Inside Business: Marketing Tactics at Purdue Fueled the Opioid Crisis  37

2-1 Business Ethics Defined  38

2-2 Ethical Issues in Business  38

2-2a Fairness and Honesty  38

2-2b Organizational Relationships  39

2-2c Conflicts of Interest  40

2-2d Communications  41

Entrepreneurial Success: Building a Healthy Relationship with Social Media  41

2-3 Factors Affecting Ethical Behavior  42

2-3a Individual Factors Affecting Ethics  42

2-3b Social Factors Affecting Ethics  42

2-3c Opportunity as a Factor Affecting Ethics  43

2-4 Encouraging Ethical Behavior  43

2-4a Government’s Role in Encouraging Ethics  43

2-4b Trade Associations’ Role in Encouraging Ethics  44

2-4c Individual Companies’ Role in Encouraging Ethics  44

Exploring Careers: The Rise of the Chief Ethics Officer  46

2-5 Social Responsibility  47

2-5a The Evolution of Social Responsibility in Business  48

2-5b Two Views of Social Responsibility  49

2-5c The Pros and Cons of Social Responsibility  50

2-6 Public Responsibilities of Business  51

2-6a Consumerism  51

Ethics and Social Responsibility: Google Sued for Antitrust Violations  52

2-6b Public Health  53

2-7 Responsibilities to Employees  55

2-7a Affirmative Action Programs  55

2-7b Training Programs for the Hard-Core Unemployed  56

2-7c Programs to Reduce Sexual Harassment and Abusive Behavior  57

2-8 Responsibilities to the Environment  58

2-8a Environmental Issues  58

2-8b Effects of Environmental Legislation  59

2-8c Business Response to Environmental Concerns  60

Sustaining the Planet: Is Sustainability Profitable?  61

2-9 Implementing a Program of Social Responsibility  62

2-9a Commitment of Top Executives  62

2-9b Planning  62

2-9c Appointment of a Director  62

2-9d The Social Audit  63

Summary  63

Key Terms  64

Discussion Questions  64

Case 2: Inside Whole Trade at Whole Foods  65

Building Skills for Career Success  65

Chapter 3: Global Business  67

Inside Business: Starbucks Goes Global for Growth  68

Entrepreneurial Success: Alibaba Provides Guidance to Help Entrepreneurs  69

3-1 The Basis for International Business  69

3-1a Absolute and Comparative Advantage  69

3-1b Exporting and Importing  70

3-1c Balance of Trade  70

3-1d The Economic Outlook for Trade   73

Technology and Innovation: Spotify Makes a Play for Global Dominance  75

3-2 Methods of Entering International Business  76

3-2a Exporting  76

3-2b Licensing and Franchising  78

3-2c Contract Manufacturing  79

3-2d Joint Ventures and Alliances  79

3-2e Direct Investment  80

3-2f Multinational Firms  80

Sustaining the Planet: IKEA Opens Its First Second-Hand Store  81

3-3 International Business Challenges  81

3-3a Trade Restrictions  81

3-3b Economic Challenges  84

Ethics and Social Responsibility: Opening the Gates to Digital Payments  85

3-3c Legal and Political Climate  85

3-3d Social and Cultural Barriers  85

3-4 Facilitators of International Trade   86

3-4a The General Agreement on Tariffs and Trade and the World Trade Organization 86

3-4b International Trade Agreements and Alliances  86

3-5 Sources of Export Assistance  89

3-6 Financing International Business  90

3-6a The Export-Import Bank of the United States  90

3-6b The World Bank  91

3-6c The International Monetary Fund  91

Summary  92

Key Terms  93

Discussion Questions  93

Case 3: Honda’s Strategy Is Electrifying  93

Building Skills for Career Success  94

Running a Business: Let’s Go Get a Graeter’s!  96

Building a Business Plan  97

Chapter 4: Exploring Social Media and e-Business  101

Inside Business: Netflix Tops the Competition in Customer Retention   102

4-1 Why Is Social Media Important?  103

4-1a What Is Social Media and How Popular Is It?  103

4-1b Why Businesses Use Social Media  103

4-2 Social Media Tools for Business Use  105

4-2a Business Use of Blogs  105

Exploring Careers: HBO Max Interns Rock TikTok  106

4-2b Photos, Videos, and Podcasts  106

4-2c Social Media Ratings  107

4-3 Achieving Business Objectives Through Social Media  108

4-3a Social Media Communities  108

4-3b Crisis and Reputation Management  109

4-3c Listening to Stakeholders  110

Technology and Innovation: VW’s April Fools’ Day Prank Backfires  110

4-3d Targeting Customers  111

4-3e Social Media Marketing for Consumers  111

4-3f Social Media Marketing for Other Businesses  112

4-3g Generating New Product Ideas  113

4-3h Recruiting Employees  114

4-4 Developing a Social Media Plan  114

4-4a Steps to Build a Social Media Plan  114

4-4b Measuring and Adapting a Social Media Plan  116

4-4c The Cost of Maintaining a Social Media Plan  118

4-5 Defining e-Business  118

4-5a Organizing e-Business Resources  119

4-5b Satisfying Needs Online  119

Entrepreneurial Success: Why Small Businesses Like Shopify  120

4-5c Creating e-Business Profit  121

4-6 Fundamental Models of e-Business  122

4-6a Business-to-Business (B2B) Model  122

4-6b Business-to-Consumer (B2C) Model  123

4-7 The Future of the Internet, Social Media, and e-Business  124

4-7a Internet Growth Potential  124

4-7b Ethical and Legal Concerns  125

Ethics and Social Responsibility: California Ups the Ante on Privacy Protection 126

4-7c Future Challenges for Computer Technology, Social Media, and e-Business  127

Summary  128

Key Terms  130

Discussion Questions  130

Case 4: Target’s Big Bet on Digital  130

Building Skills for Career Success  131

Chapter 5: Using Management and Accounting Information  133

Inside Business: What It’s Like to Work for the Big Four  134

5-1 How Can Information Reduce Risk When Making a Decision?  135

5-1a Information and Risk  135

5-1b Information Rules  136

5-1c The Difference Between Data and Information  136

5-1d Knowledge Management  136

Technology and Innovation: The IRS Uses Artificial Intelligence and Technology to Improve Tax Collection  137

5-2 What Is a Management Information System?  138

5-2a A Firm’s Information Requirements  139

5-2b Costs and Limits of the System  140

5-3 How Do Employees Use a Management Information System?  140

5-3a Step 1: Collecting Data  141

5-3b Step 2: Storing Data  141

5-3c Step 3: Updating Data  141

5-3d Step 4: Processing Data  142

5-3e Step 5: Presenting Information  142

5-4 Why Accounting Information Is Important  144

5-4a Why Audited Financial Statements Are Important  144

Ethics and Social Responsibility: KPMG Caught in Widespread Cheating Scandal  145

5-4b Accounting Fraud, Ethical Behavior, and Reform  145

5-4c Different Types of Accounting  146

5-4d Careers in Accounting  147

Exploring Careers: Forensic Accounting Is on the Rise  148

5-5 The Accounting Equation and the Balance Sheet  148

5-5a The Accounting Equation  149

5-5b The Balance Sheet  149

5-5c Assets  151

5-5d Liabilities and Owners’ Equity  152

Sustaining the Planet: Accountants Grow Concerned About Social and Environmental Issues 153

5-6 The Income Statement  153

5-6a Revenues  154

5-6b Cost of Goods Sold  155

5-6c Operating Expenses  156

5-6d Net Income  156

5-7 The Statement of Cash Flows  156

5-8 Evaluating Financial Statements  158

5-8a Comparing Financial Data  158

5-8b Financial Ratios  158

Summary  161

Key Terms  162

Discussion Questions  162

Case 5: How Larry Ellison and Oracle Plan to Win the Cloud Wars  162

Building Skills for Career Success  163

Chapter 6: Mastering Financial Management  165

Inside Business: Southwest Navigates Financial Management During Pandemic   166

6-1 Why Financial Management?  167

6-1a The Need for Financial Management  168

Ethics and Social Responsibility: Goldman Sachs Fined Billions for Foreign Bribery 169

6-1b Careers in Finance  169

6-2 The Need for Financing  170

6-2a Short-Term Financing  170

6-2b Long-Term Financing  171

6-2c The Risk–Return Ratio  171

6-3 Planning—The Basis of Sound Financial Management  172

6-3a Developing the Financial Plan  172

Exploring Careers: How to Become a CFO  174

6-3b Monitoring and Evaluating Financial Performance  175

6-4 Financial Services Provided by Banks and Other Financial Institutions  175

6-4a Traditional Banking Services for Business Clients  175

Technology and Innovation: Mastercard Advances Its Open Banking Strategy  177

6-4b Debit and Credit Card Transactions and Mobile Pay  177

6-4c Electronic Banking Services  178

6-4d International Banking Services  179

6-5 Sources of Short-Term Debt Financing  180

6-5a Sources of Unsecured Short-Term Financing  180

6-5b Sources of Secured Short-Term Financing  182

6-5c Factoring Accounts Receivable  183

6-5d Cost Comparisons  183

6-6 Sources of Equity Financing  183

6-6a Selling Stock  184

6-6b Retained Earnings  186

6-6c Venture Capital, Angel Investors, and Private Placements  186

Entrepreneurial Success: How Can Small Businesses Secure Financing?   187

6-7 Sources of Long-Term Debt Financing  188

6-7a Long-Term Loans  188

6-7b Corporate Bonds  189

6-7c Cost Comparisons  191

Summary  191

Key Terms  193

Discussion Questions  193

Case 6: DoorDash Delivers an IPO  193

Building Skills for Career Success  195

Running a Business: Graeter’s Recipe for Growth: New Systems, Social Media, and Financing  196

Building a Business Plan  197

Endnotes  199

Glossary  203