Page 20 - Business Principles and Management

Chapter 1 • Characteristics of Business

1.2 Changes Affecting Businesses

Goals Terms
• Describe how innovations affect • innovation • foreign goods
businesses. • global competition • output
• Identify the impact global competi- • effectiveness • productivity
tion has had on U.S. businesses. • efficiency • downsize
• Discuss ways in which businesses can • domestic goods • empowerment
improve their business practices.

n important characteristic of business is that it is dynamic, or constantly chang-
ing. To be successful, businesses must react quickly to the changing nature of
Asociety. For instance, horses were the principal means of transportation until
the invention of steam power. Then, with the emergence of the first cross-country
railroad in 1869, goods and services traveled mainly by rail for about 50 years.
When the gasoline engine arrived, travel patterns shifted from train to car, bus,
and truck. Shortly thereafter, airplanes glided along at 100 miles an hour but
were soon replaced by jets, crisscrossing countries and oceans and carrying
people and products to their destinations in a matter of hours.

Innovation

An innovation is something entirely new. Innovations affect the kinds of prod-
ucts and services offered for sale by other businesses. For example, clothing used
to be made from only natural fibers, such as cotton and wool. Then chemical
researchers developed synthetic fibers, such as rayon, nylon, and polyester. Now
consumers have more choices in clothing and other fabric products.
Innovations also affect business operations. For example, since Apple Com-
puter built one of the first personal computers about 35 years ago, computers
operated by individual employees have increasingly influenced the way businesses
do business. Computers help businesses design and manufacture products as well
as keep track of billing, inventory, and customer information. Computers are
now involved in most key business functions. The Internet is an innovation that
has literally changed the relationships between businesses and their customers.
Customers have 24-hour access to businesses without leaving their homes. Small
businesses can compete with large businesses for customers from all over the coun-
try and even around the world.

CHECKPOINT

What are two ways that innovations affect businesses?

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