Introduction to Business

Units

1. 1

   The business environment

   4 lessons

   1. What a business isDefine a business, revenue, expenses, profit and loss, the four factors of production and stakeholders, and compute a business's monthly profit and break-even point from revenue minus expenses.
   2. Economic systems and the circular flowCompare who makes bakery decisions in different economic systems, then trace bread, labor, and their payments through product and factor markets.
   3. Supply, demand and market priceFind a market’s equilibrium price and quantity, identify surpluses and shortages, and predict the effects of demand and supply shifts.
   4. The business cycle and economic indicatorsDraw the business cycle and name its phases, compute GDP, the unemployment rate and CPI inflation from given numbers, and explain how fiscal and monetary policy respond to a recession.
2. 2

   Ethics and social responsibility

   4 lessons

   1. Business ethics frameworksApply the utilitarian, rights, justice and virtue approaches to a conflict of interest and a bribe, use a short decision test, and explain codes of ethics and whistleblower protection.
   2. Carroll's pyramid of social responsibilityName and order the four layers of Carroll's pyramid of corporate social responsibility, classify a firm's actions into them, and contrast Friedman's shareholder view with Freeman's stakeholder theory using a budget example.
   3. Responsibilities to stakeholdersState what a firm owes customers, employees, investors and the environment, and compute a recall decision, an adverse impact test, a misstatement and a triple bottom line comparison.
   4. Corporate governanceDescribe the board of directors and the separation of ownership and control, explain the agency problem and how executive pay can align or misalign interests, and trace how audit committees and the Sarbanes-Oxley Act followed Enron.
3. 3

   Business in a global economy

   4 lessons

   1. Absolute and comparative advantageCompute opportunity costs from a two-country, two-good production table, tell absolute advantage from comparative advantage, and show that specializing and trading leaves both countries with more than either could make alone.
   2. Balance of trade and exchange ratesDefine exports, imports, the balance of trade and the balance of payments, and use an exchange rate to price a foreign good in home money and to show how a stronger or weaker currency changes what exports and imports cost.
   3. Trade barriers and trade agreementsShow with numbers what a tariff and a quota do to prices, quantities, consumers, producers and government revenue, define embargoes, dumping and protectionism, and place the WTO, USMCA and the European Union on the ladder of trade blocs.
   4. Ways to enter global marketsRank the entry modes (exporting, licensing, franchising, contract manufacturing, strategic alliance, joint venture, wholly owned subsidiary) by commitment, control and risk, compare them by investment and return in numbers, and choose one for a given market.
4. 4

   Forms of business ownership

   4 lessons

   1. Sole proprietorships and partnershipsCompare a sole proprietorship, a general partnership and a limited partnership on formation, personal liability, taxation, financing and continuity, and explain what a partnership agreement settles.
   2. Corporations and LLCsExplain a corporation as a legal entity with limited liability, shareholders, a board and officers, work out double taxation with numbers, and compare C corporations, S corporations and limited liability companies on liability, tax, ownership and flexibility.
   3. FranchisingDescribe the franchisor and franchisee, work out the fees and royalties each side pays and earns with a worked profit and payback, weigh the advantages and drawbacks for each side, and name what the franchise disclosure document must tell a buyer.
   4. Mergers and acquisitionsDistinguish a merger from an acquisition and horizontal, vertical and conglomerate combinations, value a deal by comparing the premium paid with the synergy gained, explain hostile takeovers, and show with numbers how a leveraged buyout multiplies returns and risk.
5. 5

   Entrepreneurship and small business

   4 lessons

   1. Entrepreneurs and opportunitiesDefines entrepreneurship and its risks and rewards, entrepreneurial traits, and how opportunities arise from unmet needs, using the lean startup build, measure, learn loop.
   2. Writing a business planWalks through the sections of a business plan: executive summary, company description, market analysis, marketing plan, operations, management team and financial projections.
   3. Financing a new ventureCompares sources of startup capital: personal savings, friends and family, bank loans, SBA guaranteed loans, crowdfunding, angel investors and venture capital, with equity dilution examples.
   4. Why small businesses succeed or failExplains SBA size standards, the role of small business in jobs and innovation, and common causes of failure such as undercapitalization, poor management and weak cash flow.
6. 6

   Management and operations

   4 lessons

   1. The four functions of managementExplains planning, organizing, leading and controlling, the three levels of management, and the technical, human and conceptual skills each level needs.
   2. Organizational structuresDraws organization charts for functional, divisional, matrix and team structures, and explains chain of command, span of control and centralization versus decentralization.
   3. Operations and production managementExplains the transformation process from inputs to outputs, facility location and layout, capacity planning, just in time and lean production.
   4. Quality and supply chain managementExplains total quality management, Six Sigma, ISO 9000 and the supply chain from suppliers to customers, including outsourcing and inventory control.
7. 7

   Human resources and motivation

   4 lessons

   1. Theories of motivationDraws Maslow's hierarchy of needs and Herzberg's hygiene and motivator factors, and contrasts McGregor's Theory X and Theory Y assumptions about workers.
   2. HR planning, recruiting and selectionCovers human resource planning, job analysis, job descriptions, recruiting channels, the selection process and equal employment law such as Title VII and the ADA.
   3. Training, appraisal and compensationExplains orientation, on the job training, performance appraisal methods, and compensation forms: wages, salary, commission, bonuses, profit sharing and benefits.
   4. Labor unions and labor relationsExplains why unions form, the Wagner and Taft-Hartley Acts, collective bargaining, grievance procedures, strikes, lockouts, mediation and arbitration.
8. 8

   Marketing fundamentals

   4 lessons

   1. The marketing conceptDefines marketing, the exchange process, customer value and the marketing concept, and introduces the marketing mix of product, price, place and promotion.
   2. Market segmentation and target marketsExplains segmentation by demographic, geographic, psychographic and behavioral variables, choosing a target market, and consumer versus business markets.
   3. Products, brands and the product life cycleDraws the product life cycle (introduction, growth, maturity, decline) with sales and profit curves, and explains branding, packaging and product lines.
   4. Pricing, distribution and promotionExplains cost-based and competitive pricing, skimming and penetration, distribution channels with intermediaries, and the promotion mix of advertising, personal selling, sales promotion and PR.
9. 9

   Accounting and finance basics

   4 lessons

   1. The accounting equation and financial statementsBuilds the accounting equation, assets equal liabilities plus owners' equity, and reads a simple balance sheet, income statement and statement of cash flows.
   2. Reading financial ratiosComputes the current ratio, debt to equity ratio, net profit margin, return on equity and inventory turnover from a small set of statements and interprets each.
   3. Money, banks and the Federal ReserveExplains the functions of money, commercial banks and credit unions, fractional reserve banking, the FDIC and the Federal Reserve's monetary policy tools.
   4. Stocks, bonds and securities marketsExplains how firms raise money with debt and equity, common and preferred stock, bonds and their ratings, stock exchanges, mutual funds and the risk return tradeoff.