Page 31 - Introduction to Business

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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