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Business Basics – 101

Part 2, Business and Wealth Building

Standard of Living and Quality of Life

Entpreneurs such as Sam Walton (Walmart), Bill Gates (Microsoft), Jeff Bezos (Amazon) and Sara Blakely (Spanx) not only became wealthy themselves, they also provide employment for many other people.

Businesses and their employees pay taxes that the federal government and local communities use to build hospitals, schools, libraries, playgrounds, roads and other public facilities. Taxes also help keep the environment clean, support people in need, and provide police and fire protection. Thus, the wealth businesses generate and the taxes they pay help everyone in their communities. A nation’s businesses are part of an economic system that contributes to the standard of living and quality of life for everyone in the country.

Standard of living refers to the amount of goods and services people can buy with the money they have. The United States enjoys a high standard of living largely because of the wealth created by its businesses.

Quality of life refers to the general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide. Maintaining a high quality of life requires the combined efforts of businesses, non-profit organizations, and government agencies. Remember, there is more to quality of life than simply making money.

Responding to the Various Business Stakeholders

Stakeholders are the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address. These include customers, employees, stockholders, suppliers, dealers (retailers), bankers, people in the surrounding community, the media, environmentalists, competitors, unions, critics and elected government leaders.

A primary challenge for organizations in the 21st century is to recognize and respond to the needs of their various stakeholders. For example, the need for the business to be profitable may be balanced against the needs of the employees to earn sufficient income or the need to protect the environment. Ignore the media and they might attack your business with articles that hurt your sales. Oppose the local community and it may stop you from expanding.

Staying competitive may call for outsourcing. Outsourcing means contracting with other companies to do some or all of the functions of the company, like its production or accounting tasks. Insourcing is the opposite side of that coin, which can create many new jobs to help offset those jobs being outsourced. While it may be legal and profitable to outsource, is it best for all stakeholders? Business leaders must make outsourcing decisions based on all factors; pleasing stakeholders is not easy and often calls for trade-offs.

Using Business Principles in Non-Profit Organizations

Despite their efforts to satisfy their stakeholders, business can’t do everything needed to make a community all it can be. Non-profit organizations, such as public schools, civic associations, charities, and groups devoted to social causes, also make a major contribution to the welfare of society. A non-profit organization is an organization whose goals do not include making a personal profit for its owners or organizers. Non-profit organizations often do strive for financial gains, but they use them to meet their social or education goals rather than for personal profit.

Your interests may lead you to work for a non-profit organization. You will still need to learn and understand business skills such as information management, leadership, marketing and financial management.