Page 26 - Bus101FlipBook

1-14 Business and Economic Environments [CH 1

Work assignments became specialized. Assembly lines, invented by John Olds,
and perfected by Henry Ford, became common. Owners hired a class of managers
who specialized in operating established businesses rather than in starting new ones.
Marketing tended to be viewed strictly as selling. Business did not yet accept
disciplines like consumer research. Marketers were those individuals responsible for
distribution after the product had been produced. Business was internally oriented
rather than consumer oriented.

Pent-up Demand needs Mass Marketing
Because of consumer product rationing during World War II, the average
consumer had the financial resources saved and a pent-up need for consumer goods.
Owners and managers were influenced by an important new concept in business, the
marketing concept. This became the prevalent business philosophy, and advocated
that all activities and functions of the organization be directed toward the
identification and satisfaction of consumer wants. A consumer orientation became the
principal goal of companies.
Business organizations throughout the United States formed marketing research
departments to analyze what the consumer would buy before the company produced
the item. This concept stood in marked contrast to the earlier philosophy of producing
a product, then trying to sell it to the consumer. Business began to look at finding a
need and filling it. Some needs were only product improvements. Others began
advertising campaigns to create wants. Advertising reached ever-larger numbers of
consumers and increased the efficiency of firms' promotional efforts. Today, firms
must have a strong consumer orientation if they are to remain competitive in the
marketplace.

The Current Business Environment
A business climate is the economic environment surrounding an industry or
group of business enterprises. This includes the government and political attitude to
which firms, labor organizations, and the financial market stability is affected.
When evaluating a business climate for a particular firm or its industry the
following are considered:
 Effects of inflationary policies
 Taxation legislation and its effect.
 Where labor is influenced by unionization then the relation between
employers and union.
 The relationship of financial institutions to business.
 The current political attitudes toward business and free enterprise.

In 1916, workers on Ford
Motor Company's first
assembly line at the Highland
Park, Michigan, plant
performed specialized tasks.
During the production era, the
moving assembly line helped
Ford management realize its
goal of moving a finished
Model T off the line every ten
seconds. Ford has since
adopted the marketing
concept. Today, the company
uses consumer research to
produce cars that satisfy the
needs and wants of different
buyers. This consumer
orientation has helped Ford
become the world's most
profitable car company.

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