Introduction to Business Essay

1488 Words Sep 10th, 2013 6 Pages
Review Questions

1. What factors contribute to the rapid pace of change in business? Is the pace likely to accelerate or decrease over the next decade? Why?
Factors that contribute to the rapid pace of change in business are Natural Resources, Capital, Human Resources, and Entrepreneurship. It is said that it will likely accelerate over the next decade because of the economic stimulus package designed to not only create jobs, but also to build infrastructure.

2. What role does entrepreneurship play in the economy? Who stands to gain from the success of individual entrepreneurs? How do other parties benefit?
The role of entrepreneurship in the economy of a country is to inspire new business ventures that support wealth
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The competitive environment can affect revenue in two ways: First, a small business may not be able to increase prices if it is in a very competitive market; second, a business may have to change its product mix and product designs to respond to the competition.
Cost
Cost and revenue are important dimensions because they determine profitability. During economic downturns, businesses reduce costs to maintain profitability. During periods of strong economic growth, a small business may experience increases in input costs, such as raw materials prices and wages. However, during economic downturns, input cost pressures may ease as businesses scale back manufacturing operations and lay off staff. Supply contracts may also affect cost. For example, if a restaurant owner can negotiate discount prices for flour and eggs, operating costs would drop and profits would rise.
Assets and Liabilities
Assets include cash and inventory, while liabilities include short-term and long-term debt. Small businesses that have too much debt may lose operational flexibility because of interest expenses, especially in a period of rising rates. Although significant cash balance acts as a safety cushion during downturns, companies with too much inventory and accounts receivable may risk cash flow shortfalls.
Strategy
Successful businesses anticipate and embrace change. They know how to balance day-to-day operational

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