So far Kroger has met the challenge posed by Wal-Mart because its
managers were aware of the changes taking place in the supermarket
business; in June 2005 Kroger reported a much bigger than expected increase in
profit. Many of its managers have risen through the ranks; many more have business
degrees, and they all have wide experience of the supermarket business. This made
them alert to the threat posed by Wal-Mart's fast growth and low prices. They also
knew it was necessary to build attractive new supermarkets, offer a better shopping
experience and superior produce. Many people, however, have not had much contact
with the world of business and are not familiar with the way it operates.
Take the "business" of babysitting, for example. What do potential babysitters
think about when they are deciding how much to charge a new family for their services?
Do they think about the number of children involved or their ages when setting
the price? Do they consider the kinds of activities they will be expected to perform
such as preparing food or doing laundry? What about the time and gas it takes
to drive to and from the family's house? Does a babysitter include these costs in
deciding upon the price to charge? Suppose the parents guarantee they will be home
by 10:30 p.m., and then don't get back at 11:00 p.m. Should they pay a higher "overtime"
charge? Plumbers or electricians would factor all these kinds of things into the
price they charge for their services, but do babysitters?
One reason that people may not understand what being "in business" means is
that they often don't appreciate the way business operates around them. At a supermarket,
for example, we take for granted that there will be a wide selection of fresh
meat and produce and plenty of checkers and baggers to get us through the checkout
process quickly. Often, it is only when supermarkets don’t work as we expect - when
there are too few checkers so we have to wait in line, or when we find that the food
we bought is old or stale, that we wonder why the business is not working properly.
In this chapter, we start the process of building an appreciation of what business is
and how it affects us in so many ways. First, we identify the three main meanings of the
term: business as commerce, business as an occupation, and business as an organization.
We describe the nature of business commerce and trade, along with how the forces
of supply and demand determine the price of a product. We then discuss the way business
occupations develop because of the process of specialization and the division of
labor. Then, the way business organizations emerge to provide a stable platform on
which people can engage in business commerce is described.
Finally, the relationship between the chapters in this book and the way they work
together to provide an overview of how business creates value for people or the
"value-creation process" is outlined. By the end of this chapter, you will understand
what business is about and why business has always been a crucial factor in determining
the occupations, wealth, morality, and culture of people and society.
