American business

TheWorldofAmericanBusinessTheCharacteristicsofAmericanBusiness1ItisessentialtobecomefamiliarwithtwowordsinordertounderstandthemeaningofbusinesstoAmericans:Theyareprivateandprofit.Businessesaredirectlyorindirectlyownedandoperatedbyprivateindividuals(orgroupsofindividuals)inordertomakeaprofit.Incontrasttotheseprivatelyowned,for-profitbusinesses,therearealso(1)public,government-owned-and-operatedinstitutions,and(2)nonprofitorganizations,suchaschurches,charities,andeducationalinstitutions.Theseorganizationsandinstitutionsshouldnotbeconfusedwithbusinesses.HowBusinessCompetitionReinforcesOtherValues2ThestatementbyPresidentCoolidgeinthe1920s,“ThebusinessofAmericaisbusiness,”stillpointstoanimportanttruthtoday—thatbusinessinstitutionsareattheheatoftheAmericanwayoflife.OnereasonforthisisthatAmericansviewbusinessasbeingmorefirmlybasedontheidealofcompetitionthanmostotherinstitutionsinsociety.SincecompetitionisseenasthemajorsourceofprogressandprosperitybymostAmericans,competitivebusinessinstitutionshavetraditionallybeenrespected.Competitionisseennotonlyasavalueitself;itisalsothemeansbywhichotherbasicAmericanvaluessuchasindividualfreedom,equalityofopportunity,andhardworkareprotected.3Competitionprotectsthefreedomoftheindividualbyensuringthatthereisnomonopolyofpower.Incontrasttooneall-powerfulgovernment,manybusinessescompeteagainsteachotherforprofits.Theoretically,ifonebusinesstriestotakeunfairadvantageofitscustomers,itwilllosetoacompetingbusinesswhichtreatsitscustomersmorefairly.Wheremanybusinessescompeteforthecustomers,theycannotaffordtogivetheminferiorproductsorpoorservice.4Acontrastisoftenmadebetweenbusiness,whichiscompetitive,andgovernment,whichismonopoly.Becausebusinessiscompetitive,manyAmericansbelievethatitmaybeevenmoresupportiveoffreedomthangovernment,eventhoughgovernmentleadersareelectedbythepeopleandbusinessleadersarenot.ManyAmericansbelievethatcompetitionisvitallyimportantinpreservingfreedom.SocloselyiscompetitivebusinessassociatedwithfreedominthemindsofmostAmericansthatthetermfreeenterprise,ratherthanthetermcapitalism,ismostoftenusedtodescribetheAmericanbusinesssystem.5Competitioninbusinessisalsobelievedtostrengthentheidealofequalityofopportunity.Americanscomparebusinesscompetitiontoaraceopentoall,wheresuccessandstatusgototheswiftestperson,regardlessofsocialclass.GainingsuccessandstatusthroughcompetitionisoftenseenastheAmericanalternativetosystemswheresocialrankisbasedonfamilybackground.Businessisthereforeviewedasanexpressionoftheideaofequalityofopportunityratherthanthearistocraticideaofinheritedprivilege.6BusinesscompetitionisalsoseenbymostAmericansasencouraginghardwork.Iftwobusinesspeoplearecompetingagainsteachother,theonewhoworksharderislikelytowin.Theonewhospendslesstimeandeffortsislikelytolose.Becausebusinesspeoplemustcontinuallycompeteagainsteachother,theymustdevelopthehabitofhardworkinordernottofail.7Americansareawarethatbusinessinstitutionsoftendonotliveuptotheidealsofcompetitionandthesupportoffreedom,equalityofopportunity,andhardwork.Americanssometimesdistrustthemotivesofbusinesspeople,believingthattheyarecapableofputtingprofitbeforeproductsafetyoracleanerenvironment.Therefore,mostAmericansbelievebusinessesneedsomegovernmentregulation,althoughtheymaydisagreeonhowmuch.Evenwiththeseflaws,however,mostAmericansbelievethatbusinesscomescloserthanotherinstitutionstoencouragingcompetitionandotherbasicvaluesindailypractice.TheDreamofGettingRich8ThereisasecondreasonwhybusinessinstitutionshavetraditionallyreceivedrespectintheUnitedStates.OneaspectofthegreatAmericanDreamistorisefrompovertyormodestwealthtogreatwealth.IntheUnitedStates,thishasusuallybeenaccomplishedthroughsuccessfulbusinesscareers.Allofthegreatprivatefortunesinthenationwerebuiltbypeoplewhoweresuccessfulinbusiness,manyofwhomstartedlifewithverylittle.Careersinbusinessstillofferthebestopportunityfortheambitiousindividualtobecomewealthy.9AlexisdeTocquevilleobservedthegreatattractivenessofbusinesscareersforAmericansasearlyasthe1830s.HewrotethatAmericansstronglypreferredbusinesstofarmingbecausebusinessofferedtheopportunitytogetrichmorequickly.Eventhosewhowerefarmerswerepossessedwithastrongbusinessspirit.Theyoftenrunsmallbusinessestoaddtothemoneytheymadefromfarming.TocquevillealsonoticedthatAmericanfarmerswereoftenmoreinterestedinbuyingandsellinglandforaprofitthaninfarmingit.Thus,eveninTocqueville’sdaywhenmostAmericanswerestillfarmers,theseedsofabusinesscivilizationhadalreadybeenplanted.10Notonlyisbusinessseenastheeasiestwayforindividualstobecomerich,itisalsoseenasbenefitingtheentirenation.Throughcompetition,morepeoplegainwealth.Bycontrast,agovernment-runsystemofproductionanddistributionofgoodsisseenasinferior.Itisdistrustedbecauseofthemonopolyofpowerheldbythegovernment,whicheliminatescompetition.However,thereisagreatdealofdebateabouttheroleofthegovernmentinprovidingservicessuchashealthcare.TheUnitedStatesisoneofthefewindustrializedcountriesintheworldthatdoesnothaveuniversalhealthcareguaranteedandmanagedbythegovernment,butsomepeoplebelievethatshouldchange.TheEntrepreneurasBusinessHero11BecauseofthemanybeliefsthatconnectbusinesstothewealthandthetraditionalvaluesoftheUnitedStates,peoplewhoaresuccessfulinbusinesshavesometimesbecomeheroestotheAmericanpeople.EntrepreneursprovideexamplesoftraditionalAmericanvaluesintheirpurestformforanumberofreasons.Thefirstreasonisthattheysucceedinbuildingsomethinggreatoutofnothing.Thepeoplewho,morethan100yearsago,builtupthenation’sgreatindustries,suchassteel,railroads,andoilrefining,wereusuallyentrepreneurs.Theystartedwithverylittlemoneyorpowerandendedupastheheadsofhugecompaniesthatearnedenormousfortunes.12ThefactthattheseearlyentrepreneursbuiltgreatindustriesoutofverylittlemadethemseemtomillionsofAmericansliketheheroesoftheearlyfrontierdays,whowentintothevastwildernessoftheUnitedStatesandturnedforestsintofarms,villages,andsmallcities.Theentrepreneur,liketheearlierheroofthefrontier,wasseenasaruggedindividualist.13Entrepreneursoftenbeganascommonpeoplethemselves;withouttheaidofinheritedsocialtitleorinheritedmoney,theybecame“self-made”millionaires.TheywerethusperfectexamplesoftheAmericanideaofequalityofopportunityinaction.14ThestronginfluenceofthesuccessstoriesoftheearlyentrepreneurscanbefoundinthegreatpopularityofthenovelsofHoratioAlger,whichwerepublishedinlate-nineteenth-andearly-twentieth-centuryAmerica.About17millioncopiesofthesebooksweresoldtotheAmericanpublic.ThecentralthemeofAlger’snovelsisthatintheUnitedStatesapoorcityorapoorfarmboycanbecomeawealthyandsuccessfulbusinessmanifheworkshardandreliesonhimselfratherthanothers.ThisisbecausetheUnitedStatesisalandofequalityofopportunitywhereeveryonehasachancetosucceed.15InAlger’sfirstpublishednovel,raggedDick,apoorcityboywhoshinesshoesforalivingbecomesRichardHunters,asuccessfulandwealthybusinessman.Theherorises“fromragstoriches”andfulfillstheAmericanDream.Dicksucceedsonlypartlybecausehelivesinthelandofequalityofopportunity.HissuccessisalsoduetothefactthathepracticestheAmericanvirtuesofself-relianceandhardwork.AccordingtoAlger,Dick“knewthathehadonlyhimselftodependupon,andhedeterminedtomakethemostofhimself…whichisthesecretofsuccessinninecasesoutoften.”Dickwasalsoahardworkingshoe-shineboy,“energeticandonthealertforbusiness.”Thisqualitymarkedhimforsuccess,explainedAlger,becauseinallprofessions,“energyandindustryarerewarded.”16AlthoughfewAmericanstodayreadHoratioAlger’sstories,theycontinuetobeinspiredbytheideaofearningwealthandsuccessasentrepreneurswho“makeitontheirown.”AfinalcharacteristicofentrepreneurswhichappealstomostAmericansistheirstrongdislikeofsubmittingtohigherauthority.ThroughouttheirhistoryAmericanshaveadmiredentrepreneurswhoconducttheirbusinessandtheirliveswithouttakingordersfromanyoneabovethem.Americanshavegreatrespectforthosewhocansay,“Iammyownboss.”MorethanhalfofallAmericanworkersdreamofonedayhavingtheirownbusinessesandbeingtheirownboss.17Inthe1990s,therewerethousandsofindividualswhostartedcompaniestodobusinessontheinternet.Foratime,someofthese“dot-com”start-upbusinesseswerewildlysuccessful.Millionsofdollarsofventurecapitalpouredintonewtechnologycompaniesbecauseoftheirpromise,ratherthantheirperformance.Stockpiecesshotupsuddenlyandyoungmillionaireswerecreatedovernight.Andthenthedot-combubbleburst.Mostofthesecompanieswerenotyetmakingaprofit,andtheywereheavilyindebt.Wheninterestratesrose,theywerenotabletomanagetheirdebt.Investorsquicklywithdrawtheirsupport.Stockpricesfellasfastastheyhadrisen,andfortunesmadeovernightwerelostasquickly.Onlyarelativelyfewcompanies,suchasAmazon.comandYahoo.com,survivedandbecameprofitablelargebusinesses.18Today,manyAmericansarestillwillingtotakethefinancialriskthatisnecessarytostarttheirownsmallbusiness.Althoughhalfofnewcompaniesfailwithinthefirstfewyears,smallbusinessesstillaccountforthemajorityofnewjobscreatedinthemodernAmericaneconomy.ThesecompaniesandtheirentrepreneurleadersplayanimportantroleintheUnitedStates.MorethanhalfofallAmericanworkersareemployedinbusinesseswithfewerthan100employees.SmallbusinessesarealsoanimportantsourceofcreativityandinnovationintheAmericanmarketplace,particularlyinthefieldoftechnology.InspiredbyentrepreneurheroeslikeStevenJobs,whostartedAppleComputerinhisgarage;BillGates,whodevelopedMicrosoftintoaglobalgiant;andRossPerot,aself-madebillionairewhoranforPresidentasanIndependent,risk-takingentrepreneursstilllaunchtheirbusinesseswithhighhopesof“makingitbig.”TheCorporateCEO20Thegreatentrepreneursofthelatenineteenthcenturybuilthugebusinessorganizationsthatneedednewgenerationsofbusinessleaderstoruntheminthetwentiethcentury.Theseleaders,sometimesreferredtoas“organizationalmen(orwomen),”arenowtheCEOs(chiefexecutiveofficers)ofAmericancorporations.Theyacquirepowerandwealth,buttheydonotusuallyhavetheheroimageofentrepreneursbecausetheyaremanagingbusinessesthatsomeoneelsestarted.AlthoughmostAmericansadmiretheearningpowerofentrepreneursandwouldprobablynotwanttoputalimitontheirincome,theyarelessgenerousintheirviewofCEOs,Indeed,manyhighlypaidCEOshavecomeundersevereattackfortheirmulti-million-dollar-a-yearsalariesandtheirself-servingmanagementdecisions.21InherbookPigsattheTrough:HowCorporateGreedandPoliticalCorruptionAreUnderminingAmerica,AriannaHuffingtondetailshowCEOstookhugesumsofmoneyfromthecorporationstheyweremanagingandspentitonthemselves.ShedescribeshowJohnRigas,theCEOofAdelphia,alargecablecompany,borrowed$3.1billionfromthecompanywhenitwasinfinancialtroubleandspentitoutrageously:Hespent$13milliontobuildagolfcourseinhisbackyard,$150milliontobuytheBuffaloSabreshockeyteam,$65Milliontofundaventurecapitalgrouprunbyhisson-in-law,thousandstomaintainhisthreeprivatejets,and$700,000foracountry-clubmembership.22Unfortunately,Rigaswasnotalone.Forexample,BernieEbbers,formerWorldComCEO,managedtoget$408millioninloanswhilehehidmorethan$7billionincompanylossesanddestroyedthevalueofthestock.Theearly2000ssawanumberofothercorporatescandals,whenCEOsandothercorporateofficersreceivedhugesumsofmoneyfromcompaniesthatwerefailing.OneoftheworstexampleswasEnron,whichleftthousandsofemployeesoutofworkanddestroyedtheirretirementsavings.WhatangeredAmericanswasnotonlytheoutrageousgreedofthecorporateexecutives,butalsotheirliestothestockholders,theircriminalmismanagementofthebusiness,andtheircrueltreatmentoftheirownemployees.23Americans’respectfortheirbusinessinstitutionsrisesandfallsincycles,goingbacktotheIndustrialRevolutionofthe1800s.Attimes,businessleadersareseenasgreedyandcorruptvillains;atothertimestheyarehailedasheroes.Inthelate1800s,forexample,somebusinessleaderswereknownas“robberbarons”becauseoftheircorruptpracticesandtheirdisregardforothers.Thiscausedthegovernmenttopasslawstoregulatebusinesspractices.Whentherearebusinessscandals,thegovernmentrespondswithmorerulesandregulations.Traditionally,Republicanshavebeeninfavorofalaissez-faire,orhands-offpolicy,andDemocratshavefavoredmoreregulationandsafeguards.Therehavealsobeeninstancesofbusinessleaderssavingimportantcorporations.Inthe1980s,LeeLococcaledChryslerfromnearbankruptcyintoprofitability,savingthousandsofjobsandhelpingtheUnitedStatescompeteintheglobalmarket.Inthe1990s,GordonBethunebroughtContinentalAirlinesoutofbankruptcyintoapositionasoneofthenation’sstrongestairlines,ratedoneofthebestAmericancompaniestoworkfor.AmericanBusinessintheGlobalMarketplace24Untilthelatterpartofthe1900s,theoperationofAmericanbusinesstookplacealmostentirelyintheUnitedStates.Forexample,inthe1950s,someonewhoboughtacarfromGeneralMotorsCorporationknewthattheentirecarwasbuiltintheUnitedStates.Bythe2000s,thiswasnolongertrue.Americancompaniesnowmanufactureorimportautomobilepartsfromaroundtheworld,andforeigncompaniesmanufacturemanyoftheircarsintheUnitedStates.Today,themoneyspenttobuyaGeneralMotorscarmightgotoanumberofothercountries:toSouthKoreaforlabor;toJapanforadvancedparts;toGermanyfordesignandstyling:toTaiwan,Singapore,andJapanforsmallparts;toBritainforadvertising;andtoIreland,Barbados,orIndiafordataProcessing.SomeAmericancompanieshavealsostartedtooutsourcetheircustomerserviceandtechnicalsupportservicestocountriessuchasIndiaandIreland.Americanbusinesshasbecomeapartofmuchlargerglobaleconomy.25TheUnitedStatesisthesinglelargestmarketintheworld:aconsumersocietylookingforgoodsfromallovertheworld.Itisalsoacountrywithproductstosell,andmuchattentionisbeinggiventocompetingsuccessfullyintheglobalmarketplaceofthetwenty-firstcentury.TheWorldBankestimatesthatexportsmakeupaboutone-quarteroftheglobaleconomicoutput.TheUnitedStatescannotcompetewiththeabundantsupplyofcheaplaborthatexistsinthecountriesofthePacificRimandLatinAmerica,andthereforemanyU.S.companiesaremovingtheirmanufacturingoperationstoAsiaorLatinAmerica.ThenumberofmanufacturingjobsintheUnitedStateshasbeendecliningeversincethelate1990s.Old,giantcorporationssuchasIBMhavelaidoffthousandsofworkers,downsizingtobecomemoreefficientandcompetitive.SomeAmericansarealarmedbythelossofthesejobs;othersseenewopportunities.Newsmallbusinessesprovidetemporaryworkerstocompaniesthatoutsource,andindividualsfindnewwaystodobusinessovertheInternet.Americanbusinessnowunderstandsthatitmustbehighlyefficientifitistocompetesuccessfullyintheglobalmarketplace.ThechangingAmericanWorkforce26Traditionally,whitemaleshavedominatedAmericanbusiness—earningthehighestsalaries,achievingthegreatestsuccesses,andcertainlywieldingmostofthepower.Theyhavebeenthe“bosses,”settingthestandardsandtheworkingconditionsfortherestoftheworkingpopulation.Buttimesarechanging.27Thepercentageofwomenenteringtheworkforcerosesteadilyfromthe1960sthroughthe1980s,levelingoffinthe1990s.Womennowmakeupaboutone-halfoftheworkforce.Moreandmorewomenhavereachedmiddle-managementpositions,butveryfew(lessthan10or15percent)arethechiefexecutivesoflargecorporations.Inthepast,womenwerepreventedfrommovingallthewaytothetopbywhatsomecall“theglassceiling,”asubtleformofdiscrimination.Themenabovethemoftendidnotofferwomentheopportunitiestheyneededtoadvanceinthecompany.However,womenarenowearningmoreundergraduatecollegedegreesthanmen,andmanyarereceivingMBAs(mastersofbusinessadministrationdegrees)aswell.Manyoftheyoungwomennowintheworkforcefeelthatthe“glassceiling”nolongerkeepsthemfromadvancing.Otherwomenwouldarguethatitisstillthere.Today,womenholdabouthalfoftheprofessionalspecialty,executive,administrative,andmanagerialoccupationsintheUnitedStates.However,manywomenstilldonotreceiveashighsalariesasmendo.28ManyjobsincorporateAmericaare“fast-track,”requiringthatbothwomenandmenputtheirjobfirstandtheirfamilysecond.Studiesshowthatanemployeeperceivedtobeonthe“mommytrack”orthe“daddytrack”willnotearnasmuchmoneyorbegivenasmuchresponsibilityastheonewillingtosacrificetimeathomefortimeattheoffice.Somefamiliesarenowbeginningtoquestionwhethersuccessisreallyworththeprice.Somebusinessesprovideflexibleworkinghoursanddaycarecentersinthebuilding,butmostdonot.Anumberofwomenarechoosingtodropoutoftheworkforceandstayhomewiththeirchildren.Somefindworktheycandoathome—workingonacomputerlinkedtotheiroffice(telecommuting),forexample.Interestingly,morethantwiceasmanywomenasmennowtrytheirhandatstartingtheirownsmallbusiness,followingthedreamoftheentrepreneur.Manyofthesesmallbusinessesareoperatedoutoftheirownhomes.29OneoftheworstproblemsfacingAmericanwomenisthatoveralltheyearnaboutseventy-eightcentsforeverydollarearnedbyAmericanmen.Inspiteoftheidealofequalityofopportunity,womensometimesearnlessmoneythanmendoforthesamework.Minoritiesoftenfacesimilardiscriminationintheworkplace,earninglessmoneythanwhiteworkerswithsimilarjobswouldearn.30However,inthefuture,thewhiteAmericanmalemaynolongerhaveadvantagesoverotherworkers.TherecentarrivalofmillionsofnewimmigrantsischangingthemakeupoftheAmericanworkforce.Traditionally,withintenortwentyyearsoftheirarrival,immigrants(ortheirchildren)willearnasmuchasormoremoneythanpeoplebornintheUnitedStateswhoareofsimilarage,educationlevel,andskills.SomebusinessesnowprovideEnglishasaSecondLanguagecoursesattheworkplace,andothersconductdiversitytrainingtopromoteunderstandingamongthedifferentracialandethnicgroupswhonowworktogether.ManybelievethatthismulticulturalworkforcewillultimatelyhelptheUnitedStatescompeteintheglobalmarketplace,sinceAmericanworkerswillrepresentamicrocosmoftheworld.31AlthoughtheinstitutionofAmericanbusinesshasundergoneenormouschangesinrecentdecades,ithasremainedoneofthemostimportantinstitutionsintheUnitedStates.Inmanyways,thebusinessofAmericaisstillbusiness.7