Business
A Changing World
8e
O.C. Ferrell
University of New Mexico
Geoffrey A. Hirt
DePaul University
Linda Ferrell
University of New Mexico
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Welcome
Welcome to the eighth edition of Business: A Ch anging World. The new edition
reflects major changes in the business environment, especially the economy and
information technology. All of these changes are presented in concepts that entrylevel students can understand. Our book contains all of the essentials that most
students should learn in a semester. Business: A Changing World has, since its inception, been a concise presentation of the essential material needed to teach introduction to business. From our experience in teaching the course, we know that the most
effective way to engage a student is by making business exciting, relevant, and upto-date. Our teachable, from-the-ground-up approach involves a variety of media,
application exercises, and subject matter, including up-to-date content supplements,
boxed examples, video cases, PowerPoints, and testing materials that work for entrylevel business students. We have worked hard to make sure that the content of this
edition is as up-to-date as possible in order to best reflect todays dynamic world of
business. We cover major changes in our economy related to sustainability, digital
marketing, social networking, and the most recent financial crisis. The most recent
recession has changed business strategies, and many firms have had to learn how to
manage in a difficult environment.
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Welcome
vii
reuse, and recycle, we believe every business can be more profitable and contribute
to a better world through green initiatives. There is a new Going Green box in
each chapter that covers these environmental changes. Our Entrepreneurship in
Action boxes also discuss many innovations and opportunities to use green business for success.
To make introduction to business relevant and up-to-date, the book has to reflect
our current economic and political environment. The very visible hand of the government creates a constantly shifting business environment, and we pay special
attention to how changes in policies relating to financial and banking markets have
affected the economic business cycle. Fluctuating prices in commodities, such as oil
and agricultural products like corn, wheat, and soybeans, have changed consumer
behavior. In a consumer-driven industry, American automobile companies are
recovering from a decline in sales because they were not making the products that
consumers wanted. While Toyota was ranked third globally in corporate reputation,
it lost this advantage quickly in 2010 with many product recalls and a $16.4 million
fine for hiding safety defects from customers. We address all of these issues in this
text through the use of examples and embedded content in order to help students
better appreciate the dynamic changes in the business world. Success in business
comes from anticipating these changes and being prepared to deal with the business
risks associated with change.
We have been careful to continue our coverage of global business, ethics and
social responsibility, and information technology as it relates to the foundations
important in an introduction to business course. Our co-author team has a diversity of expertise in these important areas. O.C. Ferrell and Linda Ferrell have been
recognized as leaders in business ethics education, and their insights are reflected
in every chapter and in the Consider Ethics and Social Responsibility boxes. In
addition, they maintain a Web site, www.e-businessethics.com, that provides free
resources such as PowerPoints and cases that can be used in the classroom. Geoff
Hirt has a strong background in global business development, especially world
financial markets and trade relationships.
The foundational areas of introduction to business, entrepreneurship, small
business management, marketing, accounting, and finance have been completely
revised. Examples have been provided to which students can easily relate. An understanding of core functional areas of business is presented so students get a holistic
view of the world of business. Box examples related to Responding to Business
Challenges, Think Globally, Going Green, and Consider Ethics and Social
Responsibility help provide real-world examples in these areas.
Our goal is to make sure that the content and teaching package for this book are
of the highest quality possible. We wish to seize this opportunity to gain your trust,
and we appreciate any feedback to help us continually improve these materials. We
hope that the real beneficiary of all of our work will be well-informed students who
appreciate the role of business in society and take advantage of the opportunity to
play a significant role in improving our world. As students understand how our free
enterprise system operates and how we fit into the global competitive environment,
they will develop the foundation for creating their own success and improving our
quality of life.
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Its easy for students taking their first steps into business to become overwhelmed. Longer books try to
solve this problem by chopping out examples or topics
to make ad hoc shorter editions. Business: A Changing
World carefully builds just the right mix of coverage
and applications to give your students a firm grounding in business principles. Where other books have
you sprinting through the semester to get everything
in, Ferrell et al. allows you the breathing space to
explore topics and incorporate other activities that are
important to you and your students.
not ground
down
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Getting a Handle
on Business
Business: A Changing Worlds pedagogy helps your students get
the most out of their reading, from handy outlines at the beginning of the
chapter to a range of questions and exercises at the end of it.
CHAPTER OUTLINE
Introduction
Chapter Outlines
These provide a useful overview of all the topics covered in
the chapter, giving students a
sneak preview of what theyll be
learning.
Chapter Objectives
The Dynamics
of Business
and Economics
OBJECTIVES
After reading this chapter, you will be able to:
Define basic concepts such as business, product, and profit.
Identify the main participants and activities of business and explain
why studying business is important.
Define economics and compare the four types of economic systems.
Describe the role of supply, demand, and competition in a free
enterprise system.
Specify why and how the health of the economy is measured.
Trace the evolution of the American economy and discuss the role of
the entrepreneur in the economy.
E
ll b
OBJECTIVES
After reading this chapter, you will be able to:
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Chapter-Opening
Vignette
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Getting a Handle
on Business
These features, scattered liberally throughout the book,
use real and often familiar companies to highlight various
issues of importance in business today.
Going Green
Businesses are becoming more aware of
how their operations and products affect the
world and environment they operate in. These
boxes highlight companies taking steps to
minimize their carbon footprintor the
measure of the impact their processes have
on the environment.
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Entrepreneurship in Action
Successful entrepreneurs and their endeavors are spotlighted.
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144
Background:
Bush sees an opportunity to start
partnership Ali124
general partnership 124
her own
preferred stock
134 Web site development busiinitial public offering (IPO) 132
ness. Ali has
private corporation
131 just graduated from the
joint venture 137
University of Mississippi with a masters
publicdegree
corporation
131 science. Although she
leveraged buyout (LBO) 141
in computer
quasi-public
corporations
limited liability company (LLC) 138
has many job opportunities outside133
the Oxford area, she
corporation
137to care for her aging parents.
limited partnership 125
wishesSto
remain there
She already
has most of the120
computer equipment necsole proprietorships
merger 139
essary stock
to start130
the business, but she needs additional
nonprofit corporations 133
software. She is considering the purchase of a server to
maintain Web sites for small businesses. Ali feels she has
the ability to take this start-up firm and create a long-term
career opportunity for herself and others. She knows she
can hire Ole Miss students to work on a part-time basis to
7. Compare the liability of the owners of partnerships,
Name five advantages of a sole proprietorship.
support her business. For now, as she starts the business,
sole proprietorships, and corporations.
List two different types of partnerships and describe
she can work out of the extra bedroom of her apartment.
8. Why would
in operating
a business
each.
As secrecy
the business
grows, shell
hire thebeadditional full- and/or
importantpart-time
to an owner?
form
of organization
help What
needed
and
reassess the location of the
Differentiate among the different types of
would
be
most appropriate for a business requiring
business.
corporations. Can you supply an example of each
great secrecy?
type?
Task:
9. Which form of business requires the most
Would you rather own preferred stock or common
1. Using what youve learned in this chapter, decide
specialization of skills? Which requires the least?
stock? Why?
which form of business ownership is most appropriWhy?
ate for Ali. Use the tables provided to assist you in
Contrast how profits are distributed in sole
10. The most common
example
a cooperative
a farm
evaluating
the of
advantages
and is
disadvantages
of
proprietorships, partnerships, and corporations.
co-op. Explaineach
the reasons
decisionfor this and the benefits
Which form of business organization has the least
that result for members of cooperatives.
government regulation? Which has the most?
acquisition 139
articles of partnership 126
board of directors 133
common stock 134
cooperative (or co-op) 138
corporate charter 130
corporation 129
dividends 130
End-of-Chapter
Material
1.
2.
3.
4.
5.
6.
Get Involved
2.
Disadvantages
Dilemma
Solve the
INCORPORATE OR NOT TO INCORPORATE
TO
$5,000
each in startup capital and lease a
2.5-acre tract
of land with a small, portable sales office.
Corporation
Thomas and Bryan are trying to decide what form of
Advantages organization would
Disadvantages
be appropriate. Bryan thinks they
should create a corporation because they would have lim
ited liability and the image of a large organization. Thomas
Discussion Questions
1. What are some of the advantages and disadvantages
of Thomas and Bryan forming a corporation?
2.
3.
Build Your
Business Plan
OPTIONS FOR ORGANIZING BUSINESS
team member involvement in the business, it is imperative to have a written agreement so that all team members
understand what their responsibilities are and what will
happen if the partnership dissolves.
It is not too soon for you and your partners to start
thinking about how you might want to find additional
funding for your business. Later on in the development of
your business plan you might want to show your business
plan to family members. Together you and your partners
will want to develop a list of potential investors in your
business.
1.
145
she can list for you many of these shared values. For New
Belgium, branding strategies are as rooted in their company values as in other business practices.
Having fun and allowing their employees to have fun
has always been an important goal of the company. In
keeping with its fun and eco-friendly attitude, New Belgium gifts all employees with cruiser bikes after one year
of employment. Employees are encouraged to ride to work,
rather than drive. Members of the sales force receive
Toyota Prius hybrids. Recognizing employees value to the
business success, New Belgium has a generous benefits
package. In addition to the usual paid health and dental insurance and retirement plans, employees get a free
lunch every other week as well as a free massage once a
year. They can also bring their children and dogs to work.
Review Your
Understanding
Are your students sometimes
unsure whether theyve
properly absorbed the
chapter material? This feature
resummarizes the chapter
objectives, leaving students
in no doubt of what theyre
expected to remember.
Task
Form into groups of four to six managers and appoint
a group leader who will lead a discussion of the case,
obtain a consensus answer to the case, and be the one to
report the groups answers to the instructor. You will have
five minutes to reach each decision, after which time, the
instructor will give the point values and rationale for each
choice. Then you will have five minutes for the next case,
etc., until all four cases have been completed. Keep track
of your groups score for each case; the winning team will
be the group scoring the most points.
Since this game is designed to reflect life, you may
believe that some cases lack clarity or that some of your
choices are not as precise as you would have liked. Also,
some cases have only one solution, while others have
more than one solution. Each choice is assessed points
to reflect which answer is the most correct. Your groups
task is to select only one option in each case.
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Discussion Questions
1. Explain and demonstrate the relationship between
supply and demand for Mrs. Acres Homemade Pies.
2. What challenges does Shelly face as she considers
the three options?
3. What would you do in Shellys position?
Build Your
Business Plan
Team Exercise
Team Exercise
Major economic systems including capitalism, socialism,
and communism, as well as mixed economies, were discussed in this chapter. Assuming that you want an economic system that is best for the majority, not just a few
have also endowed one percent of ownership to a grantmaking foundation, The Humanity Campaign, aimed at
eradicating extreme poverty and hunger. Houghton and
Allis are also concerned with their impact on the environment. One of the motivating factors behind their business
is that companies switching to online email marketing
often move away from paper-based systems. Eliminating
the production of paper-based marketing materials helps
protect environmental assets such as trees and reduces
the waste produced through paper making.
Today, the company has 180 employees and works with
prestigious clients such as AT&T, ReMax, and Viacom. iContact has been voted number one as an email marketing service provider and resource for web professionals by Website
magazine. Both Houghton and Allis have also received
individual awards and recognition for their work as young
entrepreneurs. For them, however, the goal has never been
to increase the bottom line but to meet a consumer need, to
create jobs and empower employees, and to make enough
money to make a positive difference in both the companys
local community and communities around the globe. They
have come a long way toward achieving their dreams.27
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Instructor Supplements
Everything you need to get the most from your textbook, including:
Instructors Manual
Includes learning objectives; lecture outlines; PowerPoint notes; supplemental lecture; answers to
discussion questions and end-of-chapter exercises; notes for video cases; term paper and project
topics; suggestions for guest speakers; and roles and options for implementing role playing exercises.
Test Bank
Assurance of Learning Ready: Educational institutions are often focused on the notion of assurance of learning, an important element of many accreditation standards. Business: A Changing
World is designed specifically to support your assurance of learning initiatives with a simple, yet
powerful, solution. Weve aligned our Test Bank questions with Blooms Taxonomy and AACSB
guidelines, tagging each question according to its knowledge and skills areas.
Each test bank question for Business: A Changing World also maps to a specific chapter learning objective listed in the text. You can use our test bank software, EZ Test, to easily query for
learning objectives that directly relate to the learning objectives for your course. You can use the
reporting features of EZ Test to aggregate student results in a similar fashion, making the collection and presentation of assurance of learning data quick and easy.
AACSB Statement: McGraw-Hill Companies is a proud corporate member of AACSB International. Understanding the importance and value of AACSB accreditation, the authors of Business:
A Changing World have sought to recognize the curricula guidelines detailed in the AACSB standards for business accreditation by connecting selected questions in the Test Bank to the general
knowledge and skill guidelines found in the AACSB standards.
The statements contained in Business: A Changing World are provided only as a guide for the
users of this text. The AACSB leaves content coverage and assessment clearly within the realm
and control of individual schools, the mission of the school, and the faculty. The AACSB does
also charge schools with the obligation of doing assessment against their own content and learning goals. While Business: A Changing World and the teaching package make no claim of any
specific AACSB qualification or evaluation, we have, within Business: A Changing World, labeled
selected questions according to the six general knowledge and skills areas. The labels or tags
within Business: A Changing World are as indicated. There are, of course, many more within the
Test Bank, the text, and the teaching package which may be used as a standard for your course.
EZ Test Online: McGraw-Hills EZ Test Online is a flexible and easy-to-use electronic testing
program. The program allows instructors to create tests from book specific items, accommodates a wide range of question types, and enables instructors to even add their own questions.
Multiple versions of the test can be created, and any test can be exported for use with course
management systems such as WebCT, BlackBoard, or any course management system. EZ Test
Online is accessible to busy instructors virtually anywhere via the Web, and the program eliminates the need for them to install test software. Utilizing EZ Test Online also allows instructors
to create and deliver multiple-choice or true/false quiz questions using iQuiz for iPod. For more
information about EZ Test Online, please see the Web site at: www.eztestonline.com.
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Instructor Supplements
xvii
PowerPoint Presentations
Developed by Jennifer Jackson, University of New Mexico, the PowerPoints consist of two
formats: a detailed presentation (with additional information, figures, and links) and an outline
presentation (an outline of the chapter). Each chapter contains 2030 slides. Additional figures
and tables from the text may be found on the CD-ROM in the Digital Image Library.
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End of Chapter Video These videos offer a stimulating mix of topical reinforcement and real-world insight to help students master the most challenging business topics with
segments such as Walt Disney Around the World or Rebuilding Americas Trust in Business
or Should Employees Use Facebook at Work? The videos can be found on the Instructor
DVD-Rom and as downloadable files within the Instructor portion of the Web site. Summaries
and discussion questions for the students can be found at the end of each chapter of the text and
quizzes found online.
A Guide for Introducing and Teaching Ethics in
Introduction to Business The guide will be available on the OLC
(Instructor Resources); only a limited number remain in print.
Written by O.C. Ferrell and Linda Ferrell, this is your one-stop guide for integrating this important
issue into all aspects of your course. It helps you to demonstrate how business ethics lead to
business success and offers a wide range of business ethics resources, including university centers,
government resources, and corporate ethics programs. It is located with the Instructor Resources
on the Web Site.
eBooks
eBooks, or digital textbooks, are exact replicas of the print version, and can offer substantial savings
to your students off the cost of their textbook. Business: A Changing World offers:
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Student Supplements
Online Learning Center (OLC) with Premium Content
www.mhhe.com/ferrell8e
More and more students are studying online. Thats why we offer an Online Learning Center (OLC) that
follows Business: A Changing World chapter by chapter. It doesnt require any building or maintenance on
your part, and is ready to go the moment you and your students type in the URL.
As your students study, they can refer to the OLC Web site for such benefits as:
Internet-based activities
Self-grading quizzes
Learning objectives
The site includes an online running video case highlighting entrepreneur Todd McFarlane, who parlayed
his artistic ability (and a passion for sports) into a multimillion dollar business that straddles film and
television production, toys, comic books, sports licensing and games. Students watch and learn as
McFarlane explains how he leads his company across all functional areas of business, illustrating how firms
deal with the problems and opportunities of todays business world. With one video case for each part of
the textbook highlighting this fun and unique company, students and instructors are provided a complete
context for discussing every aspect of introductory business.
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Acknowledgments
The eighth edition of Business: A Ch anging W orld
would not have been possible without the commitment, dedication, and patience of Jennifer Jackson,
Jennifer Sawayda, Harper Baird, and Julie Oliver.
Jennifer Jackson provided oversight for editing and
developing text content, cases, boxes, and the supplements. Alexi Sherrill assisted in developing most of
the boxes in this edition. Doug Hughes, Executive
Editor, provided leadership and creativity in planning
and implementing all aspects of the seventh edition.
Christine Scheid, Senior Developmental Editor, did
an outstanding job of coordinating all aspects of the
development and production process, with the assistance of Jonathan Thornton. Christine Vaughan was
the Project Manager. Greg Bates managed the technical aspects of the Online Learning Center. Others
important in this edition include Sarah Schuessler
(Marketing Manager) and JoAnne Schopler (Design).
Michael Hartline developed the Personal Career
Plan in Appendix C. Vickie Bajtelsmit developed
Appendix D on personal financial planning. Eric
Sandberg of Interactive Learning assisted in developing the interactive exercises found on the OLC.
Many others have assisted us with their helpful
comments, recommendations, and support throughout this and previous editions. Wed like to express
our thanks to the reviewers who helped us shape the
eighth edition:
Brenda Anthony
Tallahassee Community College
Donna Everett
Santa Rosa Junior College
Kent Lutz
University of Cincinnati
Vondra Armstrong
Pulaski Tech College
Gil Feiertag
Columbus State Community
College
Dyan Pease
Sacramento City College
Gene Baker
University of North Florida
Lia Barone
Norwalk Community College
Ellen Benowitz
Mercer County Community
College
Dennis Brode
Sinclair Community College
Margaret Clark
Cincinnati State Tech &
Community College
Jackie Flom
University of Toledo
Kris Gossett
Ivy Tech Community College of
Indiana
Peggy Hager
Winthrop University
Susan Kendall
Arapahoe Community College
Daniel Montez
South Texas College
Peter Dawson
Collin County Community
CollegePlano
Mark Nygren
Brigham Young University
Idaho
Mike Drafke
College of DuPage
Velvet Landingham
Kent State UniversityGeauga
Elaine Simmons
Guilford Technical Community
College
Delores Reha
Fullerton College
Morgan Shepherd
University of Colorado
Kurt Stanberry
University of Houston Downtown
Scott Taylor
Moberly Area Community College
Evelyn Thrasher
University of MassDartmouth
Kristin Trask
Butler Community College
Richard Williams
Santa Clara University
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Acknowledgments
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Acknowledgments
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O.C. Ferrell
Geoffrey Hirt
Linda Ferrell
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Authors
O.C. Ferrell
O.C. Ferrell is Professor of Marketing, Bill Daniels Professor of Business Ethics, and
Creative Enterprise Scholar in the Anderson School of Management at the University of New Mexico. He recently served as the Bill Daniels Distinguished Professor
of Business Ethics at the University of Wyoming and the Chair of the Department of
Marketing and the Ehrhardt, Keefe, Steiner, and Hottman P. C. Professor of Business
Administration at Colorado State University. He also has held faculty positions at
the University of Memphis, University of Tampa, Texas A&M University, Illinois
State University, and Southern Illinois University, as well as visiting positions at
Queens University (Ontario, Canada), University of Michigan (Ann Arbor), University of Wisconsin (Madison), and University of Hannover (Germany). He has
served as a faculty member for the Masters Degree Program in Marketing at Thammasat University (Bangkok, Thailand). Dr. Ferrell received his B.A. and M.B.A. from
Florida State University and his Ph.D. from Louisiana State University. His teaching
and research interests include business ethics, corporate citizenship, and marketing.
Dr. Ferrell is widely recognized as a leading teacher and scholar in business. His
articles have appeared in leading journals and trade publications. In addition to
Business: A Ch anging World, he has two other textbooks, Marketing: Concepts and
Strategies and Business Ethics: Ethical D ecision Making and Cases, that are market
leaders in their respective areas. He also has co-authored other textbooks for marketing, management, business and society, and other business courses, as well as
a trade book on business ethics. He chaired the American Marketing Association
(AMA) ethics committee that developed its current code of ethics. He is past president of the Academic Council for the AMA. Currently he is vice president of publications for the Academy of Marketing Science and a distinguished Fellow.
Dr. Ferrells major focus is teaching and preparing learning material for students.
He has taught the introduction to business course using this textbook. This gives
him the opportunity to develop, improve, and test the book and ancillary materials
on a first-hand basis. He has traveled extensively to work with students and understands the needs of instructors of introductory business courses. He lives in Albuquerque, New Mexico, and enjoys skiing, golf, and international travel.
Geoffrey A. Hirt
Geoffrey A. Hirt is currently Professor of Finance at DePaul University and a Mesirow
Financial Fellow. From 1987 to 1997 he was Chairman of the Finance Department
at DePaul University. He teaches investments, corporate finance, and strategic planning. He developed and was director of DePauls M.B.A. program in Hong Kong
and has taught in Poland, Germany, Thailand, and Hong Kong. He received his
Ph.D. in Finance from the University of Illinois at ChampaignUrbana, his M.B.A.
from Miami University of Ohio, and his B.A. from Ohio-Wesleyan University.
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Authors
Dr. Hirt has directed the Chartered Financial Analysts Study program for the Investment Analysts Society of Chicago since 1987.
Dr. Hirt has published several books, including Foundations of Financial Management published by McGraw-Hill/Irwin. Now in its fourteenth edition, this book
is used at more than 600 colleges and universities worldwide. It has been used in
more than 31 countries and has been translated into more than 10 different languages. Additionally, Dr. Hirt is well known for his text, Fundamentals of Investment
Management, also published by McGraw-Hill/Irwin, and now in its tenth edition
has a 2011 publication date. He plays tennis and golf, is a music lover, and enjoys
traveling with his wife, Linda.
Linda Ferrell
Dr. Linda Ferrell is Associate Professor of Marketing, Bill Daniels Professor of Business Ethics, and Albert and Mary Jane Black Professor of Economic Development
in the Anderson School of Management at the University of New Mexico. She completed her Ph.D. in Business Administration, with a concentration in management,
at the University of Memphis. She has taught at the University of Tampa, Colorado
State University, University of Northern Colorado, University of Memphis, and the
University of Wyoming. She also team teaches a class at Thammasat University in
Bangkok, Thailand, as well as an online Business Ethics Certificate course through
the University of New Mexico.
Her work experience as an account executive for McDonalds and Pizza Huts
advertising agencies supports her teaching of advertising, marketing management,
marketing ethics and marketing principles. She has published in the Journal of Public P olicy a nd M arketing, J ournal o f B usiness Re search, J ournal o f B usiness E thics,
Journal of Marketing E ducation, M arketing E ducation R eview, J ournal of Teaching
Business Ethics, Case R esearch Journal, and is co-author of Business Ethics: Ethical
Decision Making and Cases (8th edition) and Business and Society (4th edition). She
is the ethics content expert for the AACSB Ethics Education Resource Center (www.
aacsb.edu/eerc) and leads a Daniels Fund business ethics initiative at the University
of New Mexico.
Dr. Ferrell is the Vice President of Programs for the Academy of Marketing
Science and a past president for the Marketing Management Association. She is a
member of the college advisory board for Cutco Vector. She frequently speaks to
organizations on Teaching Business Ethics, including the Direct Selling Education Foundations training programs and AACSB International Conferences. She
has served as an expert witness in cases related to advertising, business ethics, and
consumer protection.
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Brief Contents
PA R T 1
PA R T 2
PA R T 3
PA R T 4
117
148
31
175
269
PA R T 5
PA R T 6
335
400
433
496
Notes 542
Glossary 564
Photo Credits 577
Indexes 579
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Contents
PA R T 1
Business in a Changing World
CHAPTER 1
The Dynamics of Business and Economics
Economic Systems
CHAPTER 2
Business Ethics and Social Responsibility
12
Introduction 36
Business Ethics and Social Responsibility
The Role of Ethics in Business 38
13
14
19
Going Green
48
49
20
21
Entrepreneurship in Action
24
Can You Learn Business in a Classroom? 24
So You Want a Job in the Business World 26
Review Your Understanding 26
Revisit the World of Business 27
Learn the Terms 27
Check Your Progress 28
Get Involved 28
NadaMoo! Challenges Traditional Ice Cream
39
19
36
15
34
47
51
53
Entrepreneurship in Action
23
55
Going Green
60
So You Want a Job in Business Ethics and Social
Responsibility 63
Review Your Understanding 63
Revisit the World of Business 64
Learn the Terms 64
Check Your Progress 64
Get Involved 65
Build Your Skills: Making Decisions about Ethical
Issues 65
xxvi
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CHAPTER 3
Business in a Borderless World
84
85
Introduction 86
The Role of International Business
Why Nations Trade 87
Trade between Countries
Balance of Trade 88
86
88
96
97
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110
118
108
Entrepreneurship in Action
Developing Strategies
109
CHAPTER 4
Options for Organizing Business
92
95
91
Technological Barriers
Going Green
PA R T 2
Starting and Growing a Business 117
90
Economic Barriers 90
Ethical, Legal, and Political Barriers
xxvii
103
98
Introduction 120
Sole Proprietorships
119
120
Entrepreneurship in Action
Ukrainian Immigrant Becomes Subway Success
Partnerships
123
124
Going Green
E-Bikes Offers Exercise and Environmental
Consciousness 128
Taxation of Partnerships
Corporations
129
129
108
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Contents
137
Financial Resources
CHAPTER 5
Small Business, Entrepreneurship, and
Franchising 148
Enter the World of Business
149
Introduction 150
The Nature of Entrepreneurship and Small
Business 150
What Is a Small Business? 151
The Role of Small Business in the American
Economy 151
Industries That Attract Small Business 153
Costs
155
155
155
Flexibility
155
Entrepreneurship in Action
Cistercian Monks Take Advantage of Their Hardworking
Culture to Become Entrepreneurs 156
Focus
156
Reputation
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156
157
156
159
Independence
157
138
160
160
162
Going Green
A Small Business That Makes Ethanol from Algae
164
165
165
166
PA R T 3
Managing for Quality and
Competitiveness 175
CHAPTER 6
The Nature of Management
176
177
Introduction 178
The Importance of Management
178
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Management Functions
Planning
179
CHAPTER 7
Organization, Teamwork, and
Communication 206
179
Entrepreneurship in Action
MobileJets Provides a Luxury Travel Experience
Organizing
Staffing
180
183
184
Directing
Controlling
Introduction 208
Organizational Culture
Business Challenges
185
185
Types of Management
186
189
192
Specialization
192
Going Green
194
194
218
Organizational Layers
219
Line Structure
197
198
Span of Management
197
Line-and-Staff Structure
220
Multidivisional Structure
221
222
198
220
220
Matrix Structure
198
199
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217
Entrepreneurship in Action
Analyzing Options
216
Degree of Centralization
194
Developing Options
216
Delegation of Authority
194
213
Assigning Responsibility
193
Analytical Skills
212
Departmentalization
Conceptual Skills
208
Areas of Management
Technical Expertise
207
209
Developing Organizational Structure 211
Assigning Tasks 212
186
Levels of Management
Leadership
xxix
Committees
224
Task Forces
224
Teams
223
224
Communicating in Organizations
Formal Communication
226
226
Going Green
The Rainforest Alliance Uses Teamwork and Organization to
Become a Success 227
228
228
230
230
229
231
231
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Contents
231
232
234
CHAPTER 8
Managing Service and Manufacturing
Operations 236
Enter the World of Business
Toyota: Once Renowned for Excellence, Experiences Growing
Pains 237
Introduction 238
The Nature of Operations Management
The Transformation Process
PA R T 4
Creating the Human Resource
Advantage 269
CHAPTER 9
Motivating the Workforce
238
239
270
271
Introduction 272
Nature of Human Relations 272
Historical Perspectives on Employee Motivation
240
243
244
275
Going Green
244
Entrepreneurship in Action
In a Downturn, Restaurants Have to Stand Out from a
Crowd 246
276
Planning Capacity
246
Planning Facilities
247
277
279
251
252
252
Theory Z
256
Equity Theory
Job Design
262
Behavior Modification
284
284
284
Entrepreneurship in Action
Hudson Valley Fresh Helps Dairy Farmers Thrive
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260
261
283
257
282
283
Expectancy Theory
257
281
281
Variations on Theory Z
Going Green
Inspection
280
253
255
Managing Quality
277
Managing Inventory
Outsourcing
274
263
264
263
288
288
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CHAPTER 10
Managing Human Resources
294
Introduction 296
The Nature of Human Resources Management 296
Planning for Human Resources Needs 297
Recruiting and Selecting New Employees 297
Recruiting
Selection
297
299
Entrepreneurship in Action
Burgerville Makes New Strides in Benefits for Fast-Food
Employees 300
304
304
Assessing Performance
Turnover
303
Benefits
310
PA R T 5
Marketing: Developing
Relationships 335
CHAPTER 11
Customer-Driven Marketing
Enter the World of Business
Target Goes Downstream to Compete with Walmart
338
340
341
Entrepreneurship in Action
Casttoos Make Breaking a Limb a Little More
Fashionable 342
342
318
337
338
316
318
336
313
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321
315
Affirmative Action
320
312
Collective Bargaining
319
Functions of Marketing
309
Financial Compensation
307
Introduction 338
Nature of Marketing
305
xxxi
343
345
345
349
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Contents
Buying Behavior
351
354
355
364
Introduction 366
The Marketing Mix 366
Product Strategy 366
Classifying Products
366
371
371
373
378
Pricing Objectives
379
Going Green
General Mills Breaks into Organic Foods under a
New Name 380
381
Marketing Channels
381
CHAPTER 13
Digital Marketing and Social Networking
400
385
401
Introduction 402
What Is Digital Marketing? 402
Growth and Benefits of Digital Communication 402
Using Digital Media in Business 404
Digital Media and the Marketing Mix 405
Going Green
Social Networking Sites Advance Sustainability 408
Social Networking
379
Distribution Strategy
392
370
Identifying Products
365
390
388
356
388
355
CHAPTER 12
Dimensions of Marketing Strategy
387
354
Going Green
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386
352
Pricing Strategy
Physical Distribution
408
413
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xxxiii
Entrepreneurship in Action
Going Green
Virtual Worlds
416
Mobile Marketing
418
442
Double-Entry Bookkeeping
The Accounting Cycle
Privacy 421
Identity Theft 423
Online Fraud 424
Intellectual Property
441
Financial Statements
443
444
444
446
Entrepreneurship in Action
PayItGreen Helps Consumers Go Online and Save Paper
454
425
Profitability Ratios
CHAPTER 14
Accounting and Financial Statements
434
Introduction 436
The Nature of Accounting
436
Accountants 436
Accounting or Bookkeeping? 438
The Uses of Accounting Information
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458
459
459
460
Industry Analysis
461
463
464
464
463
465
465
433
455
457
PA R T 6
Financing the Enterprise
450
450
465
467
CHAPTER 15
Money and the Financial System
468
469
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Contents
Introduction 470
Money in the Financial System
Functions of Money
Assessing Risk
471
476
477
Types of Bonds
480
Going Green
Bank of America Stakeholders Support Sustainability
Nonbanking Institutions
482
484
510
Stock Markets
514
514
515
490
522
522
522
523
524
Appendix D
Personal Financial Planning
498
498
Going Green
503
521
520
521
CHAPTER 16
Financial Management and Securities
Markets 496
515
Introduction 498
Managing Current Assets and Liabilities
511
512
Entrepreneurship in Action
509
508
510
Investment Banking
fer11757_fm_i-xxxiv.indd xxxiv
506
506
506
473
Banking Institutions
505
470
Characteristics of Money
Types of Money
499
497
525
Notes 542
Glossary 564
Photo Credits 577
Indexes 579
Name Index
Company Index
Subject Index
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