By MA, Tran Cam Tu

For EBBA & EBDB K62

INTRODUCTION TO
BUSINESS
by M.A. Tran Cam Tu

Chapter 1:
BUSINESS, PROFITS & BUSINESS
ENVIRONMENT
 Business & Profits

• Business: organization that provides goods or services to

consumers to earn profits
• Profits: difference between a business’s revenues and its
expenses
 Characteristics of Business

• To satisfy human wants

• Buyer and Seller
• Exchange of goods and services
• Deals in numerous transactions
• Profit is the main objective
• Business skills for economic success
• Risks and Uncertainties
• Social responsibility
• Connected with production
So, What are the Benefits Of Business?
• They employ most working people
• They create most innovations and provide a vast
range of opportunities for new businesses, which
serve as their suppliers
• Contributes to the quality of life and standard
of living of people in a society
• Business profits enhance the personal incomes
of millions of owners and stockholders,
• Business taxes help to support governments at
all levels
However, some businesses also harm the
Earth’s environment, and their decision
makers sometimes resort to unacceptable
practices for their own personal benefit.
A Benefit
corporation (B
corp) is a for-profit
corporation that
must have a goal to
benefit the
community or the
environment.
Human
Resources
Function
 External Environment of
Business
External environment factors are the factors which are beyond
the control of the company/ business. It includes:
ØMicro Environment: The environment which is close to
organization and affects its capacity to work.
ØMacro- Environment: The major external and uncontrollable
factors that influence an organization's decision making, and
affect its performance and strategies. The factors that create
opportunities and threats for the organization.

**Note: In this course, only Macro-environment is covered

The External
Environments
of Business
The External Environments of Business
The External Environments of Business
Political Environment

Political environment consists of laws, government agencies, and

pressure groups that influence or limit various organizations and

individuals in a given society.

Question:
- What happens when two countries are in a “cold war” (eg: China
and USA)
 Economic Environment
Economic environment consists of factors that affect
consumer purchasing power and spending patterns
Economic Cycle
 Economic Environment

Economic factors:
• Rate of growth (measured by GND)
• Rate of inflation
• Level of unemployment
• Interest rates
• Level of personal savings
• Exchange rate
• Income (video HongKong)
 Trending now: Gig economy

• The gig economy describes the growing number of people

going their own way through freelance and contract work
– any situation where the individual is paid per job, or ‘gig’,
as opposed to receiving a regular salary or wage from an
employer.
• “gig” workers represent 34% of the workforce, and will grow
to be 43 percent by 2020.
 Trending now: Gig economy
The good…

• Freedom to work when and where they want, flexibility

• Economic gain: lots of small, part-time jobs are available, even
non-full-time employed workers can find gigs to help make ends
meet.
• Experience and Opportunities: easier for millennials to
experiment, gain more experiences, and build bigger networks at a
faster rate.
• Values and Independence: more control over the work they do,
and over their careers; allows them to choose business partners,
clients, and vendors whose values agree with their own.
 Trending now: Gig economy
The Bad…
• Because gigs and contracts are more affordable for employers, it’s
also harder to find the full-time jobs people crave—despite loving the
internet and being open to nontraditional career opportunities,
millennials are still traditionally minded, with 91% still wanting full-time
jobs.
• In the absence of a steady salary, paid sick leave and other benefits, the
chances of financial insecurity are much higher.
• How much a gig worker makes depends on the skills they have and the
value that they bring. This is similar to full-time work, but much more
direct, and without the safety net of basic employee rights – there is no
minimum wage, just the value of the gig.
Macro-environment
Socio-cultural Conditions
 Socio-cultural Environment :
Demography
Demography is the study of human populations in
terms of size, density, location, age, gender, race,
occupation, and other statistics
• Demographic trends include age, family structure,
geographic population shifts, educational
characteristics, and population diversity
• Demographic environment is important because
it involves people, and people make up markets
 Socio-cultural Environment :
Demographic trends
• The world’s population rate is growing at an
explosive rate.
• Most important trend: Changing age
structure of population. The population is
aging because of a slowdown in birth rate
and life expectancy is increasing.
• People are more educated and
the work force is be-coming more white-collar
 Socio-cultural Environment :
Demographic trends

More people are: Markets are becoming

more diverse
• Divorcing or separating
– International
• Choosing not to marry – National
• Choosing to marrying later • Includes:
• Marrying without – Ethnicity
intending to have children – Gay and lesbian
– Disabled
• Increased number of
working women
• Stay-at-home dads
 Socio-cultural Environment :
Demographic trends in Vietnam
Vietnam population is at its “peak” time with:
•Average age: 29 years old
•25% people from 10-24 years old
•Working/ Retired people ratio: 7/1
•Fastest growing middle working class in South East Asia
•In
big cities, most people are tech-savvy and literate in
English.
•Vietnam is in top 3 Markets for investment in Pacific Asian
region beside China and Indonesia.
 Socio-cultural Environment:
Cultural
What is culture?
 Socio-cultural Environment:
Cultural

• Men are products of their culture: their

representations, their visions of what is good and what
is wrong, their behavior at work…
• Marketers must pay attention to the culture of the
society. It will determine what they can sell and how
they should sell it.
• Some trends in socio-cultural: Organic and green
product consumption; less consumption on fast-food..
IMPACT OF COVID-19 ON PESTEL
One year into the
pandemic, almost half
of the world’s students
are still affected by
school closures. Millions
of girls in some
countries might not be
going back at all,
putting them at risk of
adolescent pregnancy,
child marriage and
violence.
 Millions of people have already fallen below the poverty line. In just a
few months of Covid-19, extreme poverty went up for the first time in
20 years.
 Technological Environment

• Most
dramatic force in changing the
marketplace
• Creates new products and opportunities
• Every new technology replaces an older one.
Thus, marketers must watch the
technological environment closely and adapt
in order to keep up. Otherwise, the products
will soon be outdated, and the company will
miss new product and market opportunities.
 Natural Environment

Natural environment involves the natural

resources that are needed as inputs by marketers
or that are affected by marketing activities
(water, forests, oils, coal, minerals)
• Natural environment trends:
– Shortages of raw materials => Increased price
– Increased pollution
– Increase government intervention
– Environmentally sustainable strategies

The Body shop video

 Legal Environment

• Legal factors include - health and safety, equal opportunities,

advertising standards, consumer rights and laws, product
labelling and product safety. It is clear that companies need to
know what is and what is not legal in order to trade
successfully.
• If an organization trades globally this becomes a very tricky
area to get right as each country has its own set of rules and
regulations.
Business’s External Environments
 Trends Influencing Business

1-38
Trend #1: Globalization
v Globalization: is the worldwide interdependence of resource flows,
product markets and business competition.
v Firms’ tendency to extend their sales, ownership, and/or
manufacturing to new markets abroad.
v National boundaries of world business have largely disappeared.
v Creates workforce diversity
WILL COVID-19
END
GLOBALIZATION?
or
WILL
GLOBALIZATION
SURVIVE COVID-
19?
 Trends Influencing Business
Trend #2: Workforce Diversity

ØWorkforce diversity reflects ØHow diversity bias can occur

differences with respect to in the workplace:
gender, age, race, ethnicity,
religion, sexual orientation.. – Prejudice

– Discrimination
ØA diverse and multicultural
workforce both challenges and
offers opportunities to
employers.
 “Compared
to men, in
most
professions
, women
make 80
cents to the
dollar. In
Hollywood,
we are
making 30
cents to
the
dollar.”
Natalie
Portman
10 mil vs 20 mil
 Trends Influencing Business

1-43
Trend #3: Technological
advances:
- Recruitment

- Training

- Communication

- Data storage

- Company reputation and images

 Trends Influencing Business

1-44
Trend #3:
Change in Nature
of work:
Service jobs
Knowledge workers
 Trends Influencing Management
Trend #4:
Ethics
ØEthics: set
moral
standards of
what is
“good” and
“right” in
one’s
behavior.