Welcome everybody. This is John Crabill, your instructor for Principles of Business 1101, BMGT 1101. We are going to get started really quickly on chapter one. The title of chapter one is Taking Risks and Making Profits.
the dynamic business environment. If you just read that title, it's extremely vague. Who knows exactly what we're talking about when you just read that title.
We're going to try and break it down into a couple key areas, things that I want you to be able to take away. If you go back and listen to the lecture for the introduction for this class, I take out a lot of different slides. I take out a lot of things that we're not going to cover.
And so when you listen to these lectures, really pay special attention to what we do go over. And also from my standpoint, I'm not going to spend my time just reading the slides for you here. I want to give a little context to what we're talking about. So be able to put all your answers, all your thought processes in context as well. So let's get started with chat.
chapter one you know if you just read about goods and services and and you go through your daily life uh... you interact with these things on a day-to-day basis on a minute to minute basis but it also think about it very few times of were are really purchasing things now are from a good standpoint very few things are manufactured the are are tangible uh... the united states is increasingly going towards a service based economy and that's because it's easier replicate uh...
there's a lot there's a lot of different things uh... involved with that but if you go in and you want to make you know it gives example of a thousand computers well there's a process to be able to do that there's machinery there's uh... labor there's insurance that you have to pay for that however if you can be a consultant uh... computer systems if you can be a computer repair person all those different things associated with the actual computer actual technology then you're not you don't have to replicate you don't have to manufacture all that knowledge all that information is contained in inside you or inside the business. And what we really get from that is that we get a lot more bang for our buck.
We get a lot more from our personal standpoint. And we're going to talk a little bit about risks and things like that. We don't have to set so much out when we're actually doing consulting work. Obviously, from a business, from an entrepreneur standpoint.
I think we all know what an entrepreneur is. But when you really look at that definition there of who risks time and money. to start a manager business well what does that really mean i mean what does that risk me you know if you're go out uh...
we go back to the computer example you were put a lot of money on the line just to start a computer company and who knows if you're going to be successful or not uh... but when you are able to become a consultant when you're able to provide a service to people uh... they are not necessarily putting as much money as much risk out on the line and uh... you can replicate that business you can replicate that that process over and over and over again if you look at revenue and profit and loss obviously very straightforward from that standpoint but I also want you to be able to bring these things down to a personal level right what does revenue mean what does loss mean what do costs mean for you you know whatever income you bring in as a person you know if you can't balance your budget and you spend way too much then you're losing money from from a personal standpoint from a network standpoint every time if you look at the definition of risk and I don't know why they have have the Olsen twins there. But, you know, it's how willing are you to push yourself out there?
Do you really believe in this process? Do you have a business plan? Do you have a feasibility study that kind of backs that up?
Look at standard of living as well. One of the things that I really like to talk about with standard of living is everybody likes to complain, right? I mean, I really like Twitter.
And one of the things that, one of the hashtags you always see going around on Twitter are the, the. the hashtag first world problems and you know standing in line too long starbucks coffee is way too hot hashtag first world problems well we really have a pretty darn good if you look at it from that perspective uh if you look at at how much money we earn what that money can buy we are way ahead of the world in a lot of different areas uh we'll look at that you know if you get into some of the different classes here and you investigate how much people earn in other countries i know nike has had problems with this i know apple has had problems with this We are in the top 2%, top 1% of the entire world in terms of the money we make. What we can buy with that, what our purchasing power is with that, is extraordinary. It also goes to what our quality of life is going to be.
Do you have the ability to make decisions on your own? Do you have the ability to start a business if you want to? We'll talk a little bit about entrepreneurship here and in future chapters. Do you even have access to all these key things?
A lot of... places if you talk to your fellow classmates you don't have that whether it's political freedom whether it's the ability to make choices about your future about your education some of those things aren't going to be in place whenever we make decisions whenever an entrepreneur makes decisions whatever a business makes decisions most of the time they take into account stakeholders these stakeholders are going to be people who are impacted by any decision you make so I want to take this from a personal standpoint again right When you make the decision to come back to school, people are impacted by that. Columbus State gets some type of revenue from you coming back to school. Whether you get financial aid or not, they get some sort of revenue. If you look at your local gas station, they're going to get more money from you if you're driving down to campus or not.
The babysitter, if you have kids, is going to get money because you're going back to school. Your family may have less income in the short term, but more income in the future. So, that's a good thing. So when we look at these things from a personal standpoint, it's kind of easy to see who all gets impacted from that. But if you also look at it from a business standpoint, and let's look at Zettler Hardware up in Worthington.
They've been in business for, I don't know, maybe like 60, 70, 80 years, but they just went out of business here in the last month or so. You look at all the people that that business reached, right, banks, insurance people. uh...
suppliers vendors customers employees government taxes schools all these different people get impacted by the decisions of uh... of people to go into business go out of business hire people fire people and so we start thinking about state or just think about all those different people that impacted by decision that you make or decision that other people can make when we look at outsourcing and sourcing uh... i was like uh... Seinfeld reference. He outsources, I believe, or he imports exports.
He imports mashed sticks and potato chips or something like that. But anyway, if you look at what this kind of means, can we get rid of operations that don't make us a lot of money, that don't have a lot of value, but that cost us money? If you look at some big companies recently, Burger King, I believe, just bought Tim Hortons. But Burger King, I believe, just bought Tim Burger King decided to move their operations to Canada.
Now there's a lot of reasons why they do that, but they outsourced all that. And they did it primarily for the tax advantages. But that is huge outsourcing.
Burger King is not a Canadian company. Tim Hortons is not an American company. But there's certain reasons why they go to all those different locations. There's certain reasons why they bring business in, why they take business out of local economies.
I don't know. most of you people aren't going to recognize who Muhammad Yunus is. He started Grameen Bank probably 30 years ago, actually probably longer than that, and he won a Nobel Prize.
He actually went to school here in the United States, went back to his native land. I want to say it's India, but I don't think that's right, Bangladesh. What he did is he started a bank, and he started a bank that was based upon lending money to people.
people who didn't have collateral to pay that loan back. And if you think about that concept, no bank here in the United States would do that, right? You go to the bank for a loan and it doesn't matter what it's for.
It's for a car loan, it's for a home equity loan, it's for a business loan. They're going to say, okay, well what can you put up in the case that this goes bad? In Muhammad Yunus'case, he went to a lot of local and rural villages, tribes, and said, okay, you know.
who can i who can i loan money to that's gonna hire more people that's gonna make a profit that's gonna change the way they live uh... there's a lot of great stories i encourage you to to google uh... muhammad unis and figure out more about grameen bank but it's it's really s turning the the concept of profits and and why you'd be an entrepreneur on its head if you look at some american examples it's gonna be your time shoes uh...
it's gonna be uh... people that are start their businesses that were started just that help solve a problem in society they can still be for profit they can still make money it doesn't have to be a non-profit but there's a different reason why people are getting into business if you look at a little bit about just the five factors production I'm not gonna go into this a whole whole heck of a lot but you do have to have these concepts when you want to go and start making money what I do wanna focus on is going to be more of your business environment what are those impacting decisions that influence your decision-making right So if you just look at business management and job creation what really impacts that what's going to be the economic and legal environment what's going on from a local from a national from a global environment standpoint that's going to impact your ability to to make decisions or impact the decisions that you do make Look at the competitive environment, customer service, stakeholder recognition, employee service, concern for the environment. These are generally things, if you look at stakeholders and concern for their environment, that's not why you go into business, right?
But customer service. service in a service oriented industry is huge nowadays. Most of the time when you buy a product, an actual physical product, it's not just that gallon of milk that you want. It's what all goes into it, how it's sold to you, how it's portrayed. If you look at the social environment, diversity, demographic changes, family changes, what are we talking about with that?
If you look at the 1950s and you have the nuclear household and you have the mom and the dad and the two and a half kids and the dog and all those types of things, there's That's not what the United States looks like anymore. Even if you look at it from some of the demographic shifts, and we'll look at that here in a couple slides, everything is changing. How does that impact your decision-making from a business standpoint?
The technological environment, if you look at, what's a good way to explain this? How you pay for things, how that's changed within the past 15 years. PayPal didn't exist 15 years ago.
If you look at the data, you look at credit cards and all the technology that goes into a credit card, there's going to be little key so you can just wave your wallet across and it'll record the payment. All these different things are supposed to increase efficiency, increase production, increase sales. So you look at barcodes, you look at quick read codes, and you look at QSRs and all those types of things that you can scan with your phone.
How is technology making us more productive and even less productive as well? Alright, one of the things that we talked about earlier is going to be that service based economy. If we aren't manufacturing as many products anymore, if we're going more towards customer service or providing consulting or whatever it may be from a service standpoint, what what does empowerment really mean if you look at some of your your past jobs a job you had a nice goals serving ice cream working at kohl's working at target or you know whatever it may be it's all customer service right uh...
so from an empowerment standpoint We want our managers, we want our management, we want our bosses to be able to give us the ability to make decisions on the fly. So there's a couple things that you have to worry about with that. One, you have to train people in the right system so they're not going off script and damaging that brand, damaging that name too much. But it also gives people a sense of satisfaction, workers a sense of satisfaction.
It gives workers a sense of being able to take pleasure out of their job. And if they can can go to work and they know that their boss trusts them, man, it makes the entire experience that much better. When you do that and those front line employees can impact the decisions made by your customers, then everybody starts getting better results, more productive results.
You get returning customers. You get referrals. That sense of empowerment really goes back and forth. What you need to do from the empowerment standpoint is look at your previous jobs where your boss didn't let you do anything. You had to check with them no matter what question came across.
And then flip the script a little bit. What are those instances and what did you take away when your boss said, okay, just handle this for me? And you did a good job, right?
They believed in you. So we're going to look at that. The next couple slides, I believe if you look at slides 15 through 19 that I have uploaded here, it's demography. It's the changing demographics. If you just look at this, it's a study of how populations.
change but what we really want to look at is well what does that population change mean if you look at within the past 30 years there's been a huge population shift from northern states to southern states and I think we all know why that is the economy has suffered the weather isn't that great up here as I sit in January talking about this but there's different reasons why people move and change you're not you're not only look at how people change from north to south you look at the types of people right? Are there more men? Are there more women? Are there more minorities?
What age groups? What different nationalities are represented? And so you start to see all these changing things and it impacts, it's a very big stakeholder group of what businesses try to do, how they make their profits.
Businesses in the next 20 years are going to be appealing more towards a Hispanic culture that they never had to in the past 20 years. And so you're going to start to see a lot of different changing things here in Ohio or wherever you may be. based upon what the demographics of the United States and the local region actually say.
If you look at the demography of the United States by age, you have a quarter of the people here in 2011-2012 that were under 18 years old. Well, that means... college is going to be a huge deal over the next 10 years.
All those people going. If you look at the baby boomers, unfortunately, those 65 years and older, they're not going to be around forever. And so how is that going to shift the changing demographic of the United States.
You look at race by 2050, whites make up the minority at this point in time, right? Hispanic 29, black 13, Asian 9. So you start to see more and more races, more and more ethnicities coming into the United States and altering what the United States actually looks like. If you look at how this is viewed by a lot of people, it's going to have a lot of different pieces and parts. Population shifts, opportunities for.
some and limiting others growth of single-parent households you know what does that mean you know what when those single or when those kids get to a uh... and more advanced age high school college how does that change their buying habits as well these are all going to be things uh... that they're really impact the future of the united states in your future as well no matter where you're going to be working you also have to look at how uh... how prevalent how ready to buy how ready to purchase things you can get across the world right you look at Amazon you look at Alibaba that went public over in China and you see huge market share marketplaces, e-commerce platforms, websites, or databases that you can buy anything from anywhere. With Amazon, you can get it at any point in time with all the drones that they're going to have.
So you start to see all the different things. All these changing things come in and it's not just what is happening here in Columbus, Ohio, but it's what's happening in Tampa, Florida, what's happening in Bangladesh and all these different places that impact your buying. The last part that we're going to talk about today is the evolution of business.
We are very much in the information age right now. We get information from the time we wake up in the morning to the time we go to bed at night. It's at our fingertips.
But that's not always the way it was. What I want to do is I want to run through these real quick, but then I want to go to Caterpillar Incorporated because I think it's a great example of this progression. So if you look at it, Caterpillar, if you don't know what they do, they make the big, heavy machinery. Where do they start? Did they start just making those big bulldozers and excavators and things like that, or did they have a growth from some other area?
But we're going to look at that real quick. So you look at the 1800s, the agriculture area. You know, farmers. Farming, that's what the United States was. Cotton gin, all these things to make those farmers more and more productive.
If you look at more technology advances, this led to fewer farmers with larger farms because everybody had the ability to get in here and do some of the things that they were doing. If you look at the manufacturing, industrialization in the 19th and 20th centuries moved jobs from farms to factories. You saw a lot of people move from rural areas into cities. That's why you saw Cleveland and Pittsburgh and Detroit and New York and all these places get overpopulated Because that's where the jobs were that's where the factories were It's technology improved productivity fewer workers were needed in factories well, that's what you see now as well you see more robots taking the auto lines and and You see things that are more automated even factories even warehouses become more automated and And what happens to manufacturing as far as that goes you look at service?
makes up about seventy percent right now the US economy so we already talked a little bit about that it's not just computers all the things that go into the actual making of the computer generated almost all increases in a point more high-paying jobs and in service industries right so if you think about what this what this really means is we're gonna pay more to consult on how to build a computer than we are actually paying the people who build the computers you look at engineers and what they make versus the people who are actually out there working the general laborers things like that that's what we're talking about and lastly information technology this isn't so much a a change uh... from service based it's just another layer on top of it you look at agriculture look at industry look at service we're taking all this information and we're adding it on top of everything we do already uh... so if you look at issh arts if you look at progressive if you look at any of those online insurance companies right they're still a service based industry That's all that they ever are. Because they have so much information right on their fingertips about... uh...
who makes the best client what their premium should be what type of insurance they should have they just get her all this information at once and are able to make better decisions based upon that so let's go back real quickly to caterpillar right so we're gonna open this up and if you open up any of the the revised copies of powerpoint that that i provide to you you will be able to see these as well you'll be able to go out to the links as well so let's just look really quickly uh... at what caterpillar uh... has been natural resource, all these types of things.
So we're going to go down to history, like what they have to say here. Now you look at that, you say, okay, that's not necessarily agriculture, that's going to be more manufacturing, right? That's what they're trying to do.
A whole steam traction engine works on the construction of a... of a section of San Francisco's cable car system. You look at all the different key pieces and parts about why they were doing these types of things. If you look at Caterpillar originally, they were wood wagons, they were wood tractors.
Well, wood wagons and tractors were because of agriculture. That's why these things started, right? And you look and you see how they grow and you see how they kind of reinvent themselves.
You look at the 1950s, they're building railways. uh... diesel engine structures as good as play roll the recovery efforts following it is that disastrous flood uh... hope construction operate air force base at full uh... mission construct a ten and a half mile long stopia superhighway for the indies mountains lessen agriculture anymore is it now as manufacturing and that's what and what they're they're still known to do if you look at uh...
where it comes into play with Service based, right? Well, Caterpillar in and of itself, and this is just like every other manufacturer out there, they're going to sell it to you, right? They're going to have a sales force.
They're going to have a service if something breaks down. If you actually look at how Caterpillar is structured. You have Maine Caterpillar in Illinois.
And then all the different branches are actually franchises, right? They're operated separately. You have OhioCat.
And at OhioCat in Cleveland, you have all these different branches throughout Ohio and Indiana and places like that. They're going to have finance. So, if you buy a car from Gmac, if you buy a Chevy, you can get financing through GmacAC.
You can get financing through Ally or any of these other banks. So, they're making money a lot of different ways now. It's very much a service-based industry. And then lastly, if you look at information, right? If you look at what does that really mean?
How do we apply information to Caterpillar? Well, one thing is now that they've they put on their tractors or bulldozers, I mean whatever it is, right? It's GPS. Everything is GPS.
Why? Why does a tractor need GPS? Well, the concept is if you sell that tractor, you sell that seeder or whatever it may be to the farmer, if they use GPS, they can get more seeds, more rows, more plants, more profit in, and therefore you have more information making those decisions and driving those decisions.
It is very much an industry. or information-based industry now. And so we're going to start to see how all these things really come together and play when we have to make those decisions. And last, if you look at it, no, I already got out of it.
Hold on one second. You look at how it impacts agriculture. You look at how it impacts industry. You look how it impacts service, all those different things.
And caterpillar is a great example, because when you go and you start making wooden tractors, right, you can't do that forever. And so you start to progress. us through and how we make ourselves better how do we stay in business and that last part is you have to provide value to your customers those farmers need more money and if you look at the type of equipment the type of things that will make them more money it's got to be more information base it's got to be driven from that standpoint so that is chapter one I covered a lot of different areas don't just listen to this dive into it from your from your own standpoint as well but I appreciate your taking the time to listen to it it and I'll see you again for chapter 2 and in the future thanks for your time guys