American business merit badge

For the Merit Badge University at LCJVS Nov. 16, 2019

1. American Business Mr. Ed Powell , MSHRM Troop 447 (370) [email protected] 440-420-1645

2. Requirement 1 - a Explain four features of the free enterprise system in the United States. Describe the difference between freedom and license Tell how the Scout Oath and Scout Law apply to business and free enterprise.

3. Private Property Individuals own their own business not the government. Business owners must maintain capital resources. Price System As people make voluntary exchanges, they establish the price of goods and services The price the business is willing to sell The price the customer is willing to buy Market Competition People engage in competition to consume scarce resources, there are 2 types: For Resources – Buyers compete for productive resources, while sellers compete to find these buyers For Products – Buyers compete for goods and services. When people want more widgets, they are willing to pay more for them. If price goes up they might buy less. Entrepreneurship Seeing an opportunity to make money by taking a chance. Introducing new products or services into the market

4. Freedom The ability to do something without permission. Not needing permission to do or use a product or service. A U.S Citizen has the legal right to have, use and dispose of assets in whatever legal way the person chooses. License The permission to do operate in an area or use a product or service. To be able to exercise some aspects of freedom may require a license from your state. Examples would be to opetate a business, or work as a teacher, electrician, paramedic, or physician.

5. Scout Oath On my honor I will do my best to do my duty to God and my country and to obey the Scout Law; to help other people at all times; to keep myself physically strong, mentally awake, and morally straight.

6. Scout Law A Scout is: TRUSTWORTHY.   Tell the truth and keep promises. People can depend on you. LOYAL.   Show that you care about your family, friends, Scout leaders, school, and country. HELPFUL.   Volunteer to help others without expecting a reward. FRIENDLY.   Be a friend to everyone, even people who are very different from you. COURTEOUS.   Be polite to everyone and always use good manners. KIND.   Treat others as you want to be treated . Never harm or kill any living thing without good reason. OBEDIENT.   Follow the rules of your family, school, and pack. Obey the laws of your community and country. CHEERFUL.   Look for the bright side of life. Cheerfully do tasks that come your way. Try to help others be happy. THRIFTY.   Work to pay your own way. Try not to be wasteful. Use time, food, supplies, and natural resources wisely. BRAVE.   Face difficult situations even when you feel afraid. Do what you think is right despite what others might be doing or saying. CLEAN.   Keep your body and mind fit . Help keep your home and community clean. REVERENT.   Be reverent toward God. Be faithful in your religious duties. Respect the beliefs of others.

7. Requirement 1 - b Describe the Industrial Revolution and tell about the major developments that marked the start of the modern industrial era in the United States. Discuss three people who had a great influence on business or industry in the United States and describe what each did.

8. The structural change from agriculture to industry is widely associated with the First Industrial Revolution. The Industrial Revolution was the transition to new manufacturing processes in Europe and the United States, in the period from about 1760 to sometime between 1820 and 1840. Developments after 1870 are known as the Second Industrial Revolution. These new innovations included new steel making processes, mass-production, assembly lines, electrical grid systems, the large-scale manufacture of machine tools and the use of increasingly advanced machinery in steam-powered factories. Around 1969, the Third Industrial Revolution happened with the emergence of a new type of energy whose potential surpassed its predecessors: nuclear energy. This revolution witnessed the rise of electronics—with the transistor and microprocessor—but also the rise of telecommunications and computers. This new technology would open doors, most notably to space research and biotechnology. The Fourth Industrial Revolution is unfolding before our eyes with the emergence of the Internet. This is the first of the industrial revolutions rooted in a new technological phenomenon—digitalization—rather than in the emergence of a new type of energy. This digitalization enables us to build a new virtual world from which we can steer the physical world.

9. Henry Ford (1863-1947) The pioneer of the Model T launched more than just engines, but, through his Model T assembly line, a more efficient means of working. This approach to production lowered the cost of materials and the final product, which changed American vehicle accessibility and the world around him; changing the course of history. Steve Jobs (1955 – 2011) He didn’t necessarily invent the wheel, but he sure did reinvent it—the computer, that is—to become more accessible and exciting to the entire world. Steve Jobs, the iconic face of Apple Inc., is a name known by millions whose technology affects millions more. Sam Walton (1918 – 1992) Walton opened the first Wal-Mart in 1962, after years in the retail management business. The discount chain expanded internationally over the next 30 years, growing into the world’s largest company by 2010. Walton stepped down as CEO in 1988, at the age of 70, but remained active in the company until his death in 1992.

10. Requirement 1 - c Identify and describe to your counselor the five primary areas of business.

11. Value Creation  - Discovering what people need or want, then creating it. Marketing  - Attracting attention and building demand for what you’ve created. Sales  - Turning prospective customers into paying customers. Value Delivery  - Giving your customers what you’ve promised and ensuring that they’re satisfied. Finance  - Bringing in enough money to keep going and make your effort worthwhile. Take away any one of these five parts, and it’s not a business.

12. Requirement 1 - d Explain the history of labor unions in the United States and the importance of labor unions and employers working together. Identify two major labor unions currently in existence.

13. What is a labor union? A labor union is a group of employees that decide to bargain collectively (as opposed to individually) about their terms and conditions of employment. Unions are democratic organization. Workers, under the National Labor Relations Act (NLRA) have the right to vote, by law, for collective representation by a labor union. Workplaces that are represented by labor unions generally have higher salaries and better benefits packages than their non-union counterparts (i.e. those that are not unionized within the same occupation).

14. Office and Professional Employees International Union (OPEIU) Clerical unions began forming in the early 1900s. By 1920, the American Federation of Labor (AFL) had issued charters to more than 50 clerical unions. In 1942, the locals banded together to form the International Council of Office Employee Unions. In 1945, this union received a charter from the AFL as the Office Employees International Union. In 1965, the union adopted its current name as it expanded its membership beyond office and clerical workers into other professional occupations. Today OPEIU membership also includes Workers in the Health Care Industry and Major League Baseball Umpires. Transport Workers Union of America (TWU) Is a United States labor union that was founded in 1934 by subway workers in New York City, then expanded to represent transit employees in other cities, primarily in the eastern U.S. TWU began representing airline employees in 1945, TWU represents ground service employees, maintenance workers, flight attendants and other employees at a number of different airlines, including American Airlines, United Airlines, Southwest Airlines, and Alaska Airlines. It also represents employees of Amtrak, Conrail and several small short line carriers. TWU began representing railway employees in 1954.

15. Requirement 1 - e Discuss with your counselor how business impacts the local, national, and global economy.

16. Local Economy One impact of businesses in the local economy is the boost in employment in the region. Employment levels influence the community’s standard-of-living. Having more businesses in the local economy can boost tax income for local governments, bringing in more money to repair roads, develop schools and improve public services. National Economy Business contribute to the Country’s growth. Americans have jobs and are able to provide for themselves and families. This creates more jobs as American workers buy homes, cars, and consumer goods.   Global Economy Business helps with the global economy by trading goods, services, and raw materials with other countries. This helps builder better relationships with other countries.

17. Requirement 2 - a Explain the three basic types of financial statements (income statement, balance sheet, and statement of cash flows). Discuss with your counselor how each statement can help business leaders make better decisions. Every company that sells and offers its stock to the public must file financial reports and statements with the Securities and Exchange Commission (SEC). 

18. Income Statement The income statement is an important part of a company’s performance reports that must be submitted to the Securities and Exchange Commission (SEC). The income statement focuses on the four key items - revenue, expenses, gains, and losses. It does not cover receipts (money received by the business) or the cash payments/disbursements (money paid by the business). It starts with the details of sales, and then works down to compute the net income and eventually the earnings per share (EPS). Essentially, it gives an account of how the net revenue realized by the company gets transformed into net earnings (profit or loss).

19. Balance Sheet The balance sheet is a snapshot representing the state of a company's finances at a moment in time. By itself, it cannot give a sense of the trends that are playing out over a longer period. For this reason, the balance sheet should be compared with those of previous periods. It should also be compared with those of other businesses in the same industry since different industries have unique approaches to financing.

20. Statement of Cash Flows A cash flow statement is a financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources. It also includes all cash outflows that pay for business activities and investments during a given period. A company's financial statements offer investors and analysts a portrait of all the transactions that go through the business, where every transaction contributes to its success.

21. Requirement 2 - b Explain how changes in interest rates, taxes, and government spending affect the flow of money into or out of business and industry.

22. Interest Rates When consumers pay less in interest, this gives them more money to spend, which can create a ripple effect of increased spending throughout the economy. Higher interest rates mean that consumers don't have as much disposable income and must cut back on spending. Taxes  Business are affected by government policy. Taxation policy affects business costs. The government sets the minimum wage, environmental standards, and safety requirements. Government Spending The increased government spending may create a multiplier effect. If the government spending causes the unemployed to gain jobs, then they will have more income to spend leading to a further increase in aggregate demand. In these situations of spare capacity in the economy, the government spending may cause a bigger final increase in GDP than the initial injection. However, if the economy is at full capacity, the increase in government spending would tend to crowd out the private sector leading to no net increase in Aggregate demand from switching from private sector spending to government sector spending

23. Requirement 2 - c Explain how a sole proprietorship or partnership gets its capital. Discuss and explain four ways a corporation obtains capital.

24. How a Sole Proprietorship or Partnership gets Capitol Ask friends and family to invest in a business. This is the most common route for sole proprietorship business owners. Even if each individual cannot invest a large amount, with enough resources a perspective business owner can raise a healthy amount of money to get a company started. Seek out angel investors. While banks and venture capital firms may not be willing to take a risk on the owner of a sole proprietorship, angel investors who can become passionate about your business may supply you with the funding you need.   Apply for a Small Business Administration Loan. The SBA offers guaranteed loan programs to small business owners. Their micro-loan program is a common option for start-ups and it offers low interest rates and easy payment terms. Look for business grants. Grants are ideal for a sole proprietorship. They are typically not based on credit worthiness and they never have to be paid back.  Open a business line of credit.

25. Ways a Corporation gets its Capital Issuing Bonds A bond is a written promise to pay back a specific amount of money at a certain date or dates in the future. In the interim, bondholders receive interest payments at fixed rates on specified dates. Holders can sell bonds to someone else before they are due. Issuing Preferred Stock   A company may choose to issue new "preferred" stock to raise capital. Buyers of these shares have special status in the event the underlying company encounters financial trouble.  Selling Common Stock If a company is in good financial health, it can raise capital by issuing common stock. Typically, investment banks help companies issue stock, agreeing to buy any new shares issued at a set price if the public refuses to buy the stock at a certain minimum price.  Borrowing Companies can also raise short-term capital -- usually to finance inventories -- by getting loans from banks or other lenders. Using Profits As noted, companies also can finance their operations by retaining their earnings. Strategies concerning retained earnings vary. Some corporations, especially electric, gas, and other utilities, pay out most of their profits as dividends to their stockholders.

26. Requirement 2 - d Name five kinds of insurance useful to business. Describe their purposes.

27. 5 kinds of Insurance useful to Business Business Liability Insurance  Can help protect you, your employees and customers in the case of an accident. Commercial Property Insurance  Can help protect your company’s physical assets, such as your building, furniture, equipment and inventory.  Crime Insurance   Can protect your business from crime-related losses such as theft and forgery.   Workers’ Compensation Insurance   Can protect your employees in the instance of a work-related accident.   Business Interruption Insurance  Can pay for lost income and help keep your business afloat if external forces cause you to close for a short time.

28. Requirement 3 Do the following: Explain the place of profit in business. Describe to your counselor green marketing and sustainable business practices. Explain how ethics plays a role in business decision making. Discuss the differences between operating a brick-and-mortar business versus an online business.

29. Place of Profit in Business The ability to earn profits is what set our American Business system apart from countries who have a government-controlled economic system. Profits motivate people to improve their quality of life and buy products they need and want. When a business makes a profit, it benefits the people who work there, those who have invested in the company. This also adds to the consumer confidence in a business.

30. Green Marketing and Sustainable Business Practices Green Marketing The process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly or produced in an environmentally friendly way. Green marketing is typically practiced by companies that are committed to sustainable development and corporate social responsibility.    Sustainable Business Practices Are characterized by environmentally friendly practices initiated by a company for the purposes of becoming a more sustainable organization. These companies aim to reduce their environmental footprint through initiatives that cut down on waste, poor environmental stewardship and unethical environmental practices that offer a reduced level of sustainability within company practices.

31. Business Ethics Business ethics is a tool companies use to ensure managers, directors, or executive officers act responsibly in various business situations. Ethical decision-making attempts to promote the company, rather than letting one individual profit from business decisions. Individuals who consistently make decisions based on their personal benefit may create legal liabilities for a company that can lead to bankruptcy. Business ethics concerns the duties and obligations an organization has to its stakeholders, including employees, customers, suppliers, and communities. Ethical behavior is a good business practice, but it is voluntary.

32. Brick-and-Mortar Business vs. Online Business Brick-And Motar Need to strategically open a location Customers can take their purchase immediately Customers can pay with cash, check or credit Advertise on TV, Radio, and Billboards One on one customer interaction experience On average higher start up coast Online Can operate Business from just about anywhere Item purchased need to be shipped to the customer Customers can only use credit cards or online services like PayPal to pay. Advertise online with Social Media and or digital ads Call or text a customer support representative On average lower start up costs

33. Requirement 4 Describe the role of the U.S. Department of Labor. Discuss two of the following topics with your counselor: Fair Labor Standards Act (FLSA) Occupational Safety and Health Act (OSHA) Family and Medical Leave Act (FMLA) Employee Retirement Income Security Act (ERISA)

34. United States Department of Labor (DOL) https://www.dol.gov/ Is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics; many U.S. states also have such departments. The department is headed by the U.S. Secretary of Labor. The purpose of the Department of Labor is to foster, promote, and develop the wellbeing of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights. In carrying out this mission, the Department of Labor administers and enforces more than 180 federal laws and thousands of federal regulations.

35. Fair Labor Standards Act (FLSA) The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments. The FLSA creates two classifications of employees for purpose of minimum wage and overtime purposes. The two classifications are exempt employees and non-exempt employees. FLSA minimum wage and overtime requirements apply differently to employees depending on how they are classified. It is also important to note that the FLSA standards may not be the only legal standards that apply to employers and employees regarding minimum wage, overtime, and child labor. 

36. Occupational Safety and Health Act The Occupational Safety and Health Act of 1970 is a US labor law governing the federal law of occupational health and safety in the private sector and federal government in the United States. It was enacted by Congress in 1970 and was signed by President Richard Nixon on December 29, 1970. Its main goal is to ensure that employers provide employees with an environment free from recognized hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, or unsanitary conditions. The Act created the Occupational Safety and Health Administration (OSHA) and the National Institute for Occupational Safety and Health (NIOSH).

37. Family and Medical Leave Act (FMLA) The Family and Medical Leave Act of 1993 (FMLA) is a United States labor law requiring covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons. The FMLA was a major part of President Bill Clinton's first-term domestic agenda, and he signed it into law on February 5, 1993. The FMLA is administered by the Wage and Hour Division of the United States Department of Labor. The FMLA allows eligible employees to take up to 12 work weeks of unpaid leave during any 12-month period to care for a new child, care for a seriously ill family member, or recover from a serious illness. Certain categories of employees, including elected officials and highly compensated employees, are excluded from the law or face certain limitations. In order to be eligible for FMLA leave, an employee must have worked for the employer for at least 12 months, have worked at least 1,250 hours over the past 12 months, and work for an employer with at least fifty employees.

38. Employee Retirement Income Security Act (ERISA) The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. ERISA requires plans to provide participants with plan information including important information about plan features and funding; sets minimum standards for participation, vesting, benefit accrual and funding; provides fiduciary responsibilities for those who manage and control plan assets. ERISA does not cover plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.

39. Requirement 5 Choose a business and research how it applies each of the primary areas of business (accounting, finance, economics, marketing, and management). Share what you have learned with your counselor.

40. Requirement 6 Do ONE of the following: Choose one of the primary areas of business and identify three career opportunities. Select one and research the education, training, and experience required for this career. Discuss this with your counselor and explain why this interests you. Select a business leader and interview this individual to learn more about his or her company and career path. Discuss the role ethics plays in making business decisions. Share what you have learned with your counselor.

41. Questions