Under what type of marketing does kliptech operate

William M. Pride Texas A&M University

Robert J. Hughes Dallas County Community Colleges

Jack R. Kapoor College of DuPage

Foundations of Business

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

5e

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Foundations of Business, Fifth Edition William M. Pride, Robert J. Hughes, and Jack R. Kapoor

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Printed in the United States of America Print Number: 01 Print Year: 2015

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To Nancy, Allen, Carmen, Mike, Ashley, Charlie, J.R., and Gracie Pride

To the memory of my wife Peggy and to my mother Barbara Hughes

To my wife Theresa; my children Karen, Kathryn, and Dave; and in memory of my parents Ram and Sheela Kapoor

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Part 1 the Environment of Business 2 Chapter 1 Exploring the World of Business and Economics 2 Chapter 2 Being Ethical and Socially Responsible 37 Chapter 3 Exploring Global Business 68

Part 2 Business Ownership and Entrepreneurship 104 Chapter 4 Choosing a Form of Business Ownership 104 Chapter 5 Small Business, Entrepreneurship, and Franchises 132

Part 3 Management and Organization 164 Chapter 6 Understanding the Management Process 164 Chapter 7 Creating a Flexible Organization 188 Chapter 8 Producing Quality Goods and Services 210

Part 4 Human resources 244 Chapter 9 Attracting and Retaining the Best Employees 244 Chapter 10 Motivating and Satisfying Employees and Teams 272

Part 5 Marketing 304 Chapter 11 Building Customer Relationships Through Effective Marketing 304 Chapter 12 Creating and Pricing Products That Satisfy Customers 329 Chapter 13 Distributing and Promoting Products 362

Part 6 Information, accounting, and Finance 400 Chapter 14 Exploring Social Media and e-Business 400 Chapter 15 Using Management and Accounting Information 433 Chapter 16 Mastering Financial Management 466

Glossary G-1 Name Index NI-1 Subject Index SI-1

The following appendixes appear on the companion site www.cengage.brain.com Appendix A: Understanding Personal Finances and Investments A-1 Appendix B: Careers in Business B-1 Appendix C: Enhancing Union–Management

Relations C-1 Appendix D: Risk Management and Insurance D-1 Appendix E: Business Law, Regulation,

and Taxation E-1

Brief Contents

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About the Author xii Acknowledgments xiii

PArT 1 The Environment of Business 2 Chapter 1: Exploring the World of Business and Economics 2

5 Inside Business: Visa’s Vast Global Payments Empire 3 Your Future in the Changing World of Business 4

Why Study Business? 5 • Special Note to Business Students 8 Personal App: Be the employee you’d like to hire! 7 Business: A Definition 10

The Organized Effort of Individuals 10 • Satisfying Needs 11 • Business Profit 12

Types of Economic Systems 12 Capitalism 14 • Capitalism in the United States 15 • Command Economies 17

Measuring Economic Performance 18 The Importance of Productivity in the Global Marketplace 18 • The Nation’s Gross Domestic Product 19 • Important Economic Indicators That Measure a Nation’s Economy 20

The Business Cycle 21 Career Success: Career Moves and the Business Cycle 22 Types of Competition 23

Perfect Competition 23 • Monopolistic Competition 25 • Oligopoly 26 • Monopoly 26

Entrepreneurial Success: Meet the Teenaged Founder of Fish Flops 26

American Business Today 27 Early Business Development 27 • Business Development in the 1900s 28 • A New Century: 2000 and Beyond 29 • The Current Business Environment 29 • The Challenges Ahead 31

Social Media: Government Agencies Go Social 30 Summary 32 Key Terms 34 Discussion Questions 34 Video Case: KlipTech Turns Recycled Paper into Products

and Profits 34 Building Skills for Career Success 35

Endnotes 36

Chapter 2: Being Ethical and Socially Responsible 37

5 Inside Business: Tesla Motors 38

Business Ethics Defined 39 Ethical Issues 39

Fairness and Honesty 39 • Organizational Relationships 40 • Conflict of Interest 40 • Communications 41

Factors Affecting Ethical Behavior 41 Individual Factors Affecting Ethics 42 • Social Factors Affecting Ethics 42 • Opportunity as a Factor Affecting Ethics 43

Encouraging Ethical Behavior 43 Government’s Role in Encouraging Ethics 43 • Trade Associations’ Role in Encouraging Ethics 44 • Individual Companies’ Role in Encouraging Ethics 44 • Social Responsibility 46

The Evolution of Social Responsibility in Business 47 Historical Evolution of Business Social Responsibility 47 • Two Views of Social Responsibility 49 • The Pros and Cons of Social Responsibility 49

Ethical Success or Failure Businesses Feel Pressure Over Conditions in Suppliers’ Factories 50

Public Responsibilities of Business 51 Consumerism 51 • Public Health 53

Personal App: Do you always know what you’re buying? 52 Social Media: The FTC Blogs and Tweets Too 53 Employment Practices 55

Affirmative Action Programs 56 • Training Programs for the Hard-Core Unemployed 57 • Programs to Reduce Sexual Harassment and Abusive Behavior 57

Environmental Concerns 58 Pollution 59 • Effects of Environmental Legislation 59 • Business Response to Environmental Concerns 60

Career Success: Aiming to Be a Chief Sustainability Officer? 59

Implementing a Program of Social Responsibility 62 Commitment of Top Executives 62 • Planning 62 • Appointment of a Director 62 • The Social Audit 62

Summary 63 Key Terms 64 Discussion Questions 64 Video Case: PortionPac Chemical Is People-Friendly,

Planet-Friendly 65 Building Skills for Career Success 65

Endnotes 66

Contents

Contents v

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Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

vi Contents

Chapter 3: Exploring Global Business 68

5 Inside Business: Walmart’s Global Business Strategy 69 The Basis for International Business 70

Absolute and Comparative Advantage 70 • Exporting and Importing 71

Methods of Entering International Business 73 Licensing 73 • Exporting 74 • Joint Ventures 76 • Totally Owned Facilities 77 • Strategic Alliances 77 • Trading Companies 77 • Countertrade 77 • Multinational Firms 78

Entrepreneurial Success: Advice from Global Entrepreneurs 75 Personal App 76 Restrictions to International Business 78

Types of Trade Restrictions 79 • Reasons for Trade Restrictions 81 • Reasons Against Trade Restrictions 82

The Extent of International Business 83 The Economic Outlook for Trade 83

International Trade Agreements 86 The General Agreement on Tariffs and Trade and the World Trade Organization 86 • International Economic Organizations Working to Foster Trade 88

Career Success: Aiming for an Overseas Job? 87 Sources of Export Assistance 90 Financing International Business 91

The Export-Import Bank of the United States 91 • Multilateral Development Banks 91 • The International Monetary Fund 93 • The Challenges Ahead 93

Social Media: The IMF Goes Social Around the World 93 Summary 94 Key Terms 95 Discussion Questions 95 Video Case: Keeping Brazil’s Economy Hot 95

Building Skills for Career Success 96 Running a Business: Part 1: Let’s Go Get a Graeter’s! 98 Building a Business Plan: Part 1 100

Endnotes 102

PArT 2 Business Ownership and Entrepreneurship 104

Chapter 4: Choosing a Form of Business Ownership 104

5 Inside Business: GoPro’s Global Growth Began by Bootstrapping 105

Sole Proprietorships 106 Advantages of Sole Proprietorships 107 • Disadvantages of Sole Proprietorships 108 • Beyond the Sole Proprietorship 109

Social Media: Small Business Resources 109 Partnerships 109

Types of Partners 110 • The Partnership Agreement 111 Advantages and Disadvantages of Partnerships 112

Advantages of Partnerships 112 • Disadvantages of Partnerships 113 • Beyond the Partnership 114

Corporations 114 Corporate Ownership 115 • Forming a Corporation 115 • Corporate Structure 118

Entrepreneurial Success: Should Your Company Be a Benefit Corporation? 116

Personal App: Are you a stockholder? 117 Advantages and Disadvantages of Corporations 119

Advantages of Corporations 119 • Disadvantages of Corporations 120

Special Types of Business Ownership 121 S Corporations 121 • Limited-Liability Companies 122 • Not-for-Profit Corporations 123

Joint Ventures and Syndicates 123 Joint Ventures 124 • Syndicates 124

Ethical Success or Failure Tough Decisions for Entrepreneurs in Tough Situations 124

Corporate Growth 125 Growth from Within 125 • Growth Through Mergers and Acquisitions 125 • Merger and Acquisition Trends for the Future 127

Summary 128 Key Terms 129 Discussion Questions 129 Video Case: Project Repat Gives Old T-Shirts New Life 130

Building Skills for Career Success 130 Endnotes 131

Chapter 5: Small Business, Entrepreneurship, and Franchises 132

5 Inside Business: Bark & Co. Provides for Pampered Pooches 133

Small Business: A Profile 133 The Small-Business Sector 134 • Industries That Attract Small Businesses 135

Social Media: Small Business Saturday 135 Personal App: Have you worked for a small

business? 136 The People in Small Businesses: The Entrepreneurs 136

Characteristics of Entrepreneurs 137 • Other Personal Factors 137 • Motivation 138 • Women as Small-Business Owners 138 • Teenagers as Small-Business Owners 139 • Why Some Entrepreneurs and Small Businesses Fail 139

Career Success: Plan Now for an Entrepreneurial Venture Later 138