Page 31 - Introduction to Business
P. 31

CHAPTER 1   What Is Business?   5


                 ate goods and services that they hope consumers will buy. Risk is nothing but the  Goods donated by businesses and
                 probability that the business will fail. When a person takes a risk by investing his  the public are sorted out by volun-
                                                                                          teers, who also tag and price these
                 or her money and time setting up a business, he or she expects to be rewarded for
                                                                                          items for sale at Salvation Army
                 it. The reward, which is profit, is never guaranteed. Why? Well, it depends on the
                                                                                          stores.
                 consumer. If the consumer
                 does not see the need for the
                 product (or service) or does
                 not like the product for what-
                 ever reason, then the con-
                 sumer will not buy it. Con-
                 sumers all over the world
                 behave in a similar fashion,
                 although for cultural reasons
                 they may have dissimilar
                 tastes. If consumers do not
                 purchase goods and services
                 provided by businesses, prof-
                 its will not be realized and
                 businesses will crease to grow
                 or they may even fail. Only
                 when people see the potential
                 to make profits will they be
                 willing to invest their savings
                 in these firms so that the company may grow and generate even greater profits for
                 investors. This growth helps the whole country, since when business grows, more
                 people (including high school and college graduates) will be hired to take on the
                 new jobs being generated. As employment increases, tax (federal and state income
                 taxes, state sales tax, and property taxes) collection increases, and that will lead to
                 more or better public services (schools, roads, and police). In addition, as employ-
                 ment increases, people will want to buy houses, cars, and other necessities and
                 luxuries of life. This in turn will boost the economy even further. That’s one of the
                 main reasons why a country’s economic and financial managers and professional
                 investors pay such close attention to corporate profits. The level and rate of growth
                 of corporate profits is a bellwether that indicates the health of business and the
                 economy as a whole.
                   reality      What are the major not-for-profit organizations in your community?
                  CH ECK        Do you think they play an important role in the community?




                 The Evolution of Business in the United States

                    LEARNING OBJECTIVE 2
                    Summarize the evolution of business in the United States and explain the key
                    issues that are impacting its outlook for the future.
                 The origin of business in the United States is fascinating and can be traced to the
                 time when settlers from Europe crossed the Atlantic Ocean. The business climate
                 reflected a combination of different government policies, the availability of abun-
                 dant land and diverse natural resources, and a constant and growing inflow of
                 migrants and capital, initially from Europe. All these factors helped fuel the growth
                 of American cities and founded and developed important industries. (The whole
                 evolution of U.S. business is summarized in Exhibit 1.1 on p. 6.)


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