Unit 1: Businesses, Competition, and New Ideas

A business is any organization that makes and delivers goods or services, from one person selling online to a global chain. It creates value when it solves a customer's problem, need or want. It captures value when it can charge more than the product cost to make. The customer is whoever pays and the consumer is whoever uses the product, and they aren't always the same person.

A market is any place, in person or online, where sellers and buyers meet. Sellers want higher prices and buyers want lower ones, and in a competitive market that push and pull settles on a market price. Competitive advantage means beating rivals in the same market. A business can chase it with the lowest price, a better or different product, or barriers to entry, such as patents, that keep new competitors out.

PESTEL is a checklist of the outside forces that shape a market: political, economic, social, technological, environmental and legal. You use it to judge whether a market is attractive or risky for a business idea. The same forces decide which jobs and careers are available in a place, and a change in any one of them can shift both.

An entrepreneur starts a new business and takes on its risks and possible rewards. People take that risk for the chance of profit, the reward of fixing a real problem, or to follow a passion. Design thinking starts by observing, interviewing and surveying customers to confirm the problem is real. Then you develop a solution and test its simplest version, a minimum viable product (MVP), with potential customers.

Core values are the beliefs that guide choices, and core competencies are the skills that help you beat rivals. Both shape which opportunities a business chases, and which careers you choose. A vision statement sums up a business's values and hopes; a mission statement says what it does and how it will reach its long-term goals. Businesses aim for profit, social enterprises for profit plus a social goal, and nonprofits for the public good, putting any surplus back into the organization.

Unethical behavior, like hiding information or misusing company property, can happen at any level of a business, often because incentives reward it. Businesses push back with codes of conduct, training, consequences and leaders who set a good example. An ethical dilemma is a clash between core values, or between a value and a business goal. Leaders weigh the costs and benefits of each response for internal stakeholders (owners, managers, employees) and external ones (customers, government, the community).

The four main business types are sole proprietorship, partnership, limited liability company (LLC) and corporation. Sole proprietors and partners keep control and profits but are personally liable for business debts; an LLC keeps control with the owners and protects them from that liability. A corporation can usually raise more money and grow bigger, but owners give up control to shareholders and a board of directors. As a business grows, it splits work into specialized departments (such as marketing, operations, accounting, finance and human resources) run by managers who report to executives, and it may outsource some work to other firms.

A supply chain links everyone who helps turn raw materials into a product in a customer's hands. Services have supply chains too: the staff, tools and systems it takes to deliver them. Businesses choose artisan production (skilled, detailed work) or mass production (machines and assembly lines), and pick suppliers by weighing cost, quality, efficiency, convenience and risk. These choices follow the business's strategy: competing on low price, on high quality or on barriers to entry.