End-of-Chapter Questions / Chapter 1

Chapter One Business Now: Change Is the Only Constant
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?

2. What role does entrepreneurship play in the economy? Who stands to gain from the success of individual entrepreneurs? How do other parties benefit?

3. When did American business begin to concentrate on customer needs? Why?

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End-of-Chapter Questions / Chapter 1 4. How do nonprofit organizations compare to businesses? What role do nonprofits play in the economy? How do they interact with businesses?

5. What are the factors of production? How can economies grow when one or more of the factors is weak?

6. What are the 5 dimensions of the business environment? Discuss the key elements in each area as they relate to U.S.-based businesses. Dimension of Business Environment Key Elements

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End-of-Chapter Questions / Chapter 1

7. What are some key strategies for developing a competitive edge in today’s competitive global market? How important is customer satisfaction?

8. How has the rise of the World Wide Web changed business practices? What are the benefits and drawbacks for business? For consumers?

9. How has the definition of diversity changed over time? Can a diverse workforce help a company compete more effectively? How?

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

End-of-Chapter Questions / Chapter 1 10. How has the global free trade movement impacted business? Who benefits? Why?

Application Questions
1. Take a moment to jot down 5 things that you love to do. Think broadly (but keep it clean). Your list could include anything from posting pictures on Facebook to listening to your favorite music. Then brainstorm a list of business careers that could encompass two or more of your passions. A position in nightclub marketing, for instance, could include surfing on Facebook and listening to great music. What skills would you need to succeed in each position? Which skills do you have and which would you need to develop?

2. Most successful businesses today actively develop loyal customers who buy their brands again and again. After all, getting current customers to buy more is much easier than constantly seeking new customers. Think of three brands that you buy on a regular basis. Why do you stick to these products? How could another company dislodge you?

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

End-of-Chapter Questions / Chapter 1 3. Entrepreneurship has clearly transformed the world economy. Choose 3 successful entrepreneurs, and use research to compare and contrast their management styles and philosophies. While you can certainly use local entrepreneurs—or even family members—some higher profile (and rather colorful) entrepreneurs include: Jeff Bezos, founder of Amazon; Debbi Fields, founder of Mrs. Fields Cookies; Richard Branson, founder of the Virgin Group; Anita Roddick, founder of The Body Shop; and Vishal Gondal, founder of Indiagames. If you were an entrepreneur, what approach do you think would be most effective for you? Why?

4. Brainstorm a list of industries that the Internet has transformed. What are the reasons behind the changes? How do you anticipate that technology will transform business in the future?

5. Use research to develop a list of companies where you believe you would like to work. What qualities do these companies have in common? Does a great work environment lead to success, or does success create a great place to work? When employees enjoy the work environment is a company more likely to succeed? Why or why not?

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End-of-Chapter Questions / Chapter 1

Team Project
Companies that constantly innovate are clearly more likely to succeed in today’s hypercompetitive, global environment. Breakthrough ideas tend to come from business owners and employees who regularly exercise their creativity. This team project is meant to help you work with your classmates to flex your creative muscles. Break into groups of 3 to 5 people. Choose a product or service that you’re all familiar with and that you all agree is headed downhill. (Possibilities could include anything from a movie studio to a local pizza place.) Write a brief description of how the product is positioned in the marketplace relative to its competition. Then work together to figure out how you can change the product so that it better meets customer needs. Consider changing everything from the product features to the advertising venues. Write a paragraph that describes the revamped product, and draft a new slogan. Share your results with the class.

Case Connections
Walmart: Angel or Demon? You Decide . . . For better or for worse, Walmart dominates the retail industry. With annual revenue of more than $379 billion, Walmart ranked No. 1 in 2008 on the Fortune 500 list of the largest U.S. corporations. Walmart is also the largest corporate employer in the nation, with more than two million people on its payroll (only the federal government employs more people). On the global front, Walmart operates more than 3,600 international stores, and generates nearly 25% of its sales from abroad. Given Walmart’s aggressive expansion plans, those numbers are only likely to grow. But beyond the basic facts, general agreement about Walmart ends. Supporters portray Walmart as a solid corporate citizen that fuels economic growth, while detractors criticize every dimension of Walmart operations. The key arguments:

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

End-of-Chapter Questions / Chapter 1 Walmart supporters: • Walmart boosts the standard of living for its customers by offering a plethora of quality products at the lowest possible prices. And by forcing its suppliers to become more efficient, Walmart drives greater productivity and competitiveness throughout the economy. Walmart boosts employment in every community where it operates, offering excellent opportunities from the entry level through management. Demonstrating the appeal of its jobs, a Walmart that recently opened near Chicago received more than 25,000 applications for 325 positions. Walmart revitalizes communities by building stores in economically depressed areas. In an interview with PBS, Walmart VP Bob McAdam cites the example of Panorama City, CA: “When we came into that location, the mall that we're associated with there was basically boarded up and closed. Every storefront is full today with little businesses that are adjacent to the Walmart store.” Walmart has made an impressive commitment to the environment by slashing energy use in its stores and trucking fleet, eliminating waste in operations and product packaging, and promoting environmentally friendly products . . . even when they’re less profitable. Walmart contributes more than $170 million to the community each year, which translates to $18,000 an hour, or $5 a second. Walmart was especially visible in the wake of Hurricane Katrina, prompting an official to comment on Meet the Press that if “the American government would have responded like Walmart, we wouldn’t be in this crisis.”

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Walmart detractors: • Walmart has destroyed both the livelihood and the unique flavor of local communities by wiping out small local businesses that just can’t compete. Richard Moe, president of the National Trust for Historic Preservation, says, “We know the effects that these superstores have. They tend to suck the economic and social life out of these downtowns, many of which wither and die as a result.” Walmart offers low prices in part because of huge tax savings and government subsidies. Across the United States, Walmart has received more than $1 billion in development aid from local governments. Both the subsidies and the tax breaks come from the pockets of local consumers, so in a certain sense, the dollars have simply shifted—the customers indirectly pay Walmart for those low prices. Walmart has highly questionable labor practices. The giant retailer has been accused of cheating workers of overtime pay, fined for child labor violations, charged with sex discrimination in a class action lawsuit, criticized for buying

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End-of-Chapter Questions / Chapter 1 goods from foreign sweatshops, charged with hiring undocumented cleaning workers, and accused of closing stores whose workers voted for unionization. • Walmart does not provide its workers with adequate healthcare. The company healthcare plan covers less than 55% of its employees. Walmart does offer insurance, but requires its employees to cover a big chunk of the cost—too much for many low-wage workers to afford. Not only that, full-time workers must wait 6 months for healthcare eligibility and part time workers must wait 1 year. . . tough given the high employee turnover. A number of critics have accused Walmart of encouraging their employees to turn to federal and state assistance programs, such as Medicaid, to cover their healthcare needs.

You Decide • After reading the arguments of Walmart supporters and detractors, which do you find more compelling? Why?

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Walmart has attracted far more criticism than competitors with similar records, such as Target. Why? Can you think of other industry leaders who have been magnets for criticism while their competitors operate unscathed?

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

End-of-Chapter Questions / Chapter 1 • Do you think Walmart is responding effectively to the barrage of criticism? What other strategies would you recommend? Consider the upside and downside of at least two different approaches.

Sources: “One, Two, Three, Four…We Don’t Want Your Superstore,” Frontline, PBS website http://www.pbs.org/wgbh/pages/frontline/shows/walmart/transform/protest.html, accessed May 2, 2006; “Walmart’s Healthcare Struggle is Corporate America’s Too,” by Reed Abelson, New York Times, October 29, 2005, http://www.nytimes.com/2005/10/29/business/businessspecial2/29health.html?ei=5088& en=448a18530a8d6220&ex=1288238400&partner=rssnyt&emc=rss&pagewanted=all; “Thousands Apply for Jobs at New Walmart,” by Leslie Baldacci, Chicago Sun-Times, January 26, 2006, http://www.suntimes.com/output/news/cst-nws-walmart26.html; Some Uncomfortable Findings for Walmart by Aaron Bernstein, BusinessWeek Online, October 25, 2005, “Disaster as Relief: How Walmart Used Hurricane Katrina to Repair Its Image,” by Philip Mattera, Corporate Research Project E-Letter, September-October 2005, http://www.corp-research.org/archives/sep-oct05.htm; Walmart Corporate website, http://www.walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=316, accessed May 2, 2006/ Walmart International, Walmart website, http://walmartstores.com/AboutUs/246.aspx, accessed July 27, 2009; At Walmart, a Health-Care Turnaround by Ceci Connolly, February 13, 2009, Washington Post website, http://www.washingtonpost.com/wpdyn/content/article/2009/02/12/AR2009021204096.html?sid=ST2009021300507&s_pos =, accessed July 27, 2009.

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.