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Atkinson - DK, Richard Gilbert: The Business Book

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Atkinson DK, Richard Gilbert: The Business Book
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London New York Melbourne Munich and Delhi Senior Editor - Sam Atkinson - photo 1
London New York Melbourne Munich and Delhi Senior Editor - Sam Atkinson - photo 2
London, New York, Melbourne, Munich, and Delhi
Senior Editor - Sam Atkinson
Project Art Editor - Amy Child
Editors - Scarlett OHara, Alison Sturgeon
Us Editors - Margaret Parrish, Jane Perlmutter
Picture Researcher - Sumedha Chopra
Managing Editor - Esther Ripley
Managing Art Editor - Karen Self
Publisher - Sarah Larter
Art Director - Phil Ormerod
Associate Publishing Director - Liz Wheeler
Publishing Director - Jonathan Metcalf
Jacket Designer - Laura Brim
Jacket Editor - Manisha Majithia
Jacket Design Development Manager - Sophia Tampakopoulos
Illustrations - James Graham
Producer, Pre-Production - Rebecca Fallowfield
Producer - Gemma Sharpe
original styling by - STUDIO8 DESIGN
produced for DK by - COBALT ID
Art Editors - Darren Bland, Paul Reid
Editors - Richard Gilbert, Diana Loxley, Sarah Tomley, Marek Walisiewicz
First American Edition, 2014
Published in the United States by DK Publishing 375 Hudson Street New York, New York 10014
11 12 13 14 15 10 9 8 7 6 5 4 3 2 1 001 - 192364 - Feb/2014
Copyright 2014 Dorling Kindersley Limited
All rights reserved
Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.
Published in Great Britain by Dorling Kindersley Limited.
A catalog record for this book is available from the Library of Congress.
ISBN: 9781465415851
This digital edition published 2014 - ISBN: 9781465438386
Printed and bound in China by Leo Paper Products Ltd
Discover more at www.dk.com
INTRODUCTION From the time that goods and services began to be traded in early - photo 3
INTRODUCTION

From the time that goods and services began to be traded in early civilizations, people have been thinking about business. The emergence of specialized producers and the use of money as a means of exchange were methods by which individuals and societies could, in modern terms, gain a business edge. The ancient Egyptians, the Mayans, the Greeks, and the Romans all knew that wealth creation through the mechanism of commerce was fundamental to the acquisition of power, and formed the base on which civilization could prosper.

The lessons of the early traders resonate even today. Specialism revealed the benefits of economies of scalethat production costs fall as more items are produced. Money gave rise to the concept of value addedselling an item for more than it cost to produce. Even when barter was the norm, producers still knew it was advantageous to lower costs and raise the value of goods. Todays companies may use different technologies and trade on a global scale, but the essence of business has changed little in millennia.

"The art of administration is as old as the human race."

Edward D. Jones

US investment banker (18931982)

An era of change

However, the study of business as an activity in its own right emerged relatively recently. The terms manager and management did not appear in the English language until the late 16th century. In his 1977 text The Visible Hand, Dr. Alfred Chandler divided business history into two periods: pre-1850 and post-1850. Before 1850 local, family-owned firms dominated the business environment. With commerce operating on a relatively small scale, little thought was given to the wider disciplines of business.

The growth of the railroads in the mid-1800s, followed by the Industrial Revolution, enabled businesses to grow beyond the immediate gaze of friends or family, and outside the immediate locale. To prosper in this newand increasingly internationalenvironment businesses needed different, and more rigorous, processes and structures. The geographic scope and ever-growing size of these evolving businesses required new levels of coordination and communicationin short, businesses needed management.

Managing production

The initial focus of the new breed of manager was on production. As manufacturing moved from individual craftsmen to machinery, and as ever-greater scale was required, theorists such as Henri Fayol examined ever-more-efficient ways of operating. The theories of Scientific Management, chiefly formulated by Frederick Taylor, suggested that there was one best way to perform a task. Businesses were organized by precise routines, and the role of the worker was simply to supervise and feed machinery, as though they were part of it. With the advent of production lines in the early 1900s, business was characterized by standardization and mass production.

While Henry Fords Model T car is seen as a major accomplishment of industrialization, Ford also remarked why is it every time I ask for a pair of hands, they come with a brain attached? Output may have increased, but so too did conflict between management and staff. Working conditions were poor and businesses ignored the sociological context of workproductivity mattered more than people.

Studying people In the 1920s a new influence on business thinking emergedthe - photo 4
Studying people

In the 1920s a new influence on business thinking emergedthe Human Relations Movement of behavioral studies. Through the work of psychologists Elton Mayo and Abraham Maslow, businesses began to recognize the value of human relations. Workers were no longer seen as simply cogs in the machine, but as individuals with unique needs. Managers still focused on efficiency, but realized that workers were more productive when their social and emotional needs were taken care of. For the first time, job design, workplace environments, teamwork, remuneration, and nonfinancial benefits were all considered important to staff motivation.

In the period following World War II, business practice shifted again. Wartime innovation had yielded significant technological advances that could be applied to commerce. Managers began to utilize quantitative analysis, and were able to make use of computers to help solve operational problems. Human relations were not forgotten, but in management thinking, measurability returned to the fore.

Global brands

The postwar period saw the growth of multinationals and conglomeratesbusinesses with multiple and diverse interests across the globe. The war had made the world seem smaller, and had paved the way for the global brand. These newly emerging global brands grew as a result of a media revolutiontelevision, magazines, and newspapers gave businesses the means to reach a mass audience. Businesses had always used advertising to inform customers about products and to persuade them to buy, but mass media provided the platform for a new, and much broader, fieldmarketing. In the 1940s US advertising executive Rosser Reeves promoted the value of a Unique Selling Proposition. By the 1960s, marketing methods had shifted from simply telling customers about products to listening to what customers wanted, and adapting products and services to suit that.

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