To understand how successful businesses provide products that are either better or less expensive than those of their competitors, consider the market for home video: As more manufacturers and retailers jumped into the high-definition television (HDTV) market a number of years ago, the prices for HDTV sets fell sharply. This created a market of people hungry for Blu-ray players so they could watch high-definition programs on the new sets. As a result, the sales of Blu-ray players—once the sole dominion of high-end retailers and manufacturers—rose dramatically as the players became a staple in people’s home entertainment systems. The prices of Blu-ray players dropped too. Customers could find moderately priced ones at a variety of retailers, such as Amazon.com, Costco, and Best Buy. These companies are able to turn over merchandise quickly and in high volumes, which allows them to lower the prices they pay for products as well as what their customers pay for them.

Later as the market continued to evolved, streaming media became an option through companies like Comcast and Verizon as well as via Netflix and Google Play. Disc sales plummeted, as did the sales of disc players. Other companies like Amazon and Hulu began offering streaming media services as well, and television manufacturers began integrating streaming players for Netflix, Amazon.com, and Hulu into their television sets. Competition is what made this all happen.

Websites like Pinterest, Facebook, Twitter, and many others are examples of social networking sites. Social networking sites are websites that make it easier for people to connect with one another online for the purposes of building and supporting social relationships. Facebook and Twitter are examples of social networking sites, each with over a billion users.

What do social media have to do with business competition? Today more than ever, customers are connected to each other through a great variety of media—e-mail, texting, blogs, and social networking sites. Companies are therefore increasingly using social networking to connect to their customers. Through these sites, they can promote their products, offer discounts, and build relationships with people interested in their companies.

Individuals can use social networking sites to quickly spread the word about good (or bad) services or products. If a customer is dissatisfied, word can spread at the speed of light. As discussed in this text, a happy customer base can be a powerful marketing tool for a company.

Other social networking sites are specialized for the needs of businesses. LinkedIn, for example, has more than 400 million users. LinkedIn users exchange résumés and build networking contacts by connecting with old acquaintances, former employers, and coworkers. Companies also use the site to find job candidates and get them interested in their firms.

In a competitive environment, it is essential for a company to empower workers to feel free to deal with customer needs. This means employers seek workers who have interpersonal, communication, and decision-making skills. Companies today need to be more reactive to customers’ needs to retain their competitive advantage. Therefore, more companies are giving employees greater decision-making responsibilities rather than having decisions trickle down through layers of management. This also leads to greater satisfaction and more career advancement opportunities for employees.

Not only are older Americans living longer, healthier lives, but they are also better educated, are wealthier, and have achieved higher living standards than previous generations. Baby boomers, the generation born between 1946 and 1964, make up the majority of the aging population in the United States. Not only do the 78 million baby boomers make up one of the largest population groups in the United States, but they are also the wealthiest. Baby boomers, who in 2016 were between the ages of 52 and 70, have an estimated spending power of more than $2 trillion per year. This makes baby boomers a large and lucrative target for businesses. For example, the cosmetics company Garnier is eager to make a profit from the aging population with its anti-aging beauty line called UltraLift, which is aimed at baby-boomer women. Garnier released the line in an effort to keep its product offerings aligned with the shift in demographics.

Although an aging population presents many opportunities for businesses, it also presents challenges for the U.S. economy. Many analysts have warned that the nation will be faced with difficult choices as baby boomers continue to reach retirement age. Some potential problems include the government having to raise taxes to fund entitlement programs such as Social Security and Medicare, reduce the benefits of these programs, or face higher federal budget deficits.

Why does this matter to businesses? As shown in Figure 1.1, in 2050, there will be more than 80 million Americans age 65 or older. Today, almost 40 percent of the total personal income for senior citizens comes from Social Security payments. Together these trends imply that there will be a decrease in the number of workers and an increase in the demand for social services. Longevity is another aspect of this demographic shift; the last U.S. census found there were more than 53,000 centenarians (people age 100 or older) in the United States.3 Projections place that number at 580,000 by 2040. The health care programs and services required to care for this population will need to be in place.

Figure 1.1

U.S. Population Age 65 and Older: 1990–2050

Along with these challenges, as we noted, caring for the needs of an older population will present businesses with opportunities for growth, especially retirement centers, health care and pharmaceutical companies, and the travel industry. A bigger population translates to a larger market for these goods and services.

In business, there is no one-size-fits-all way to manage employees and appeal to customers because every person is different. As the United States becomes more diverse, it is important for businesses to mirror that diversity in their workforce. Firms that don’t are at risk for losing touch with their new, more diverse customer base. According to the latest data available, the U.S. Census Bureau reports that the minority population in the United States is about 35 percent, making one in three residents a minority. In some companies, minorities account for the majority of the workforce. At the hotel chain Four Seasons, for example, minorities represent 64 percent of the company’s 12,400 employees.4

However, in today’s business climate, increasing and managing a company’s diversity involves more than just employing an ethnically diverse workforce. Companies must also develop a diversity initiative that outlines their goals and objectives for managing, retaining, and promoting a diverse workforce. A diversity initiative might include a nondiscrimination policy, a minority network, or diversity education. To increase diversity within a business, the company must treat it as a business-critical goal.

Although the inclusion and advancement of racial minorities in the workplace is an important step in establishing a diverse workforce, it is only part of the process. Today, the term minority applies to more than just people of different ethnicities. Minority groups might represent a person’s gender, culture, religion, sexual orientation, or disability. Companies must include these minority groups in their diversity initiative to ensure that all minority employees are treated fairly by their managers and coworkers.

The public’s increasing anxieties about global warming and climate change have motivated businesses to become involved in a green economy—one that factors ecological concerns into business decisions. Because their customers are concerned about the environment, businesses that manufacture products that contribute to higher emissions of carbon dioxide and consume inordinate amounts of fossil fuels must adapt to this new environmental awareness to remain competitive.

In the automotive industry, for example, hybrid vehicles, which run on a combination of electricity and gasoline, have not only become hot sellers but also are critical to meeting national objectives. New fuel economy standards5 in the United States will require cars to get almost 55 miles per gallon by 2025. Almost every major car manufacturer—including Toyota, Honda, and BMW—now offers hybrid models. Vehicles that run on other types of energy sources are appearing as well, such as the Tesla Model S and the Nissan Leaf, which are all-electric vehicles. The Leaf has a range of up to 126 miles on a single charge—and not a tailpipe to be seen.

A focus on environmental issues also opens up a brand-new market that will be increasingly important in the future. The demand for more green products presents new opportunities for entrepreneurs to meet those needs. These “green-collar” jobs can revitalize large swaths of the U.S. manufacturing economy that have been decimated. Creating wind energy turbines, installing solar panels, and landscaping designs that make your microclimate (the climate immediately surrounding your home) energy efficient will be necessary businesses of the twenty-first century.

As a prospective employee, any one of these social issues will probably affect the company for which you end up working. Because workers are increasingly retiring at later ages, the competition for certain jobs and career advancement might be fiercer than in years past. On the other hand, the culture of business is constantly shifting to meet the ever-evolving needs of U.S. demographics. This means more opportunity for employees who can navigate a diverse environment. In addition, jobs aimed at responding to the needs of the growing green economy will also likely present new opportunities for job seekers. Entrepreneurial possibilities always exist for those who have the vision and desire to succeed and are willing to take risks.

E-commerce consists of three different kinds of business trade: business to consumer (B2C), business to business (B2B), and consumer to consumer (C2C). B2C interactions are the ones you’re probably most familiar with, such as buying books at Amazon.com or songs or movies from iTunes. B2C interactions take place between a business and a consumer. B2B interactions involve the sale of goods and services, such as personalized or proprietary software, from one business to another. Although both are fairly similar in many ways, the ways in which they differ are significant. B2B e-commerce often involves large transactions to few customers and customized products and pricing, with numerous managers from both businesses making sure that the transaction is beneficial to both parties. This process is obviously more involved than typical B2C transactions, such as downloading a new ring tone for your cell phone or buying an item from Amazon. C2C transactions have become possible through consumer-driven storefronts like Etsy.com, where individuals can offer their handmade crafts directly for sale to customers.

Every year, e-commerce becomes a more significant element of the overall economy. E-commerce has been growing rapidly since the new millennium, forcing many businesses to either adapt or be left in the dust. For example, the CEO of Procter & Gamble (P&G) Bob MacDonald, has announced plans to expand electronic sales of its products from $500 million to $4 billion annually, using Amazon.com and the firm’s own websites.10 P&G even allowed Amazon to set up shop in P&G’s warehouses so that they could fill orders for Pampers and other P&G products more quickly. With the increase of ecommerce happening on mobile devices, this trend shows no sign of stopping. As it becomes easier for consumers to find even the most obscure items at competitive prices, e-commerce will continue to be a driving force in our economy.

It is important to note that the commercialization of the Internet has been around only less than two decades. The Internet, as a medium for sales, has yet to reach its full potential. As the Internet and its influence continue to grow, so will its economic importance and necessity for businesses. This growth will also affect the dangers and concerns associated with the Internet.

The widespread access to information that the Internet affords affects businesses in a variety of ways. Personal information, such as Social Security numbers, credit card numbers, addresses, and passwords, are all accessible online. This sensitive information, even when it is secured, can be vulnerable to hackers. Unfortunately, online data breaches have become commonplace. Target, Sony, and several universities have all been hacked, exposing either customers’ credit card information or private details. Figure 1.3 shows some of most infamous hacking attacks on businesses. New forms of identity theft are emerging as well, such as taking someone’s identity for the purpose of getting medical care.11 The need for more awareness of personal online security and better tools to ensure corporate online security is clear.

Figure 1.3

How Secure Is Your Credit Card?

Privacy is another important issue for businesses. E-mails, internal documents, and chat transcripts all contain private information that is not intended for public viewing. Nevertheless, many of these documents can be accessed online because online storage in the “cloud” has become so convenient. With all this universal access, it is increasingly difficult to ensure that information remains private. Cloud-based storage and services offer many benefits to business. Yet privacy and security concerns cannot be overlooked. Over time, technology will continue to introduce challenges.