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

1. American BusinessMr. Ed Powell, MSHRM
Troop 447 (370)
recruiter.ed@gmail.com 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. 1. Private Property
a. Individuals own their own business not the government.
b. Business owners must maintain capital resources.
2. Price System
a. As people make voluntary exchanges, they establish the price of goods and services
i. The price the business is willing to sell
ii. The price the customer is willing to buy
3. Market Competition
a) People engage in competition to consume scarce resources, there are 2 types:
I. For Resources – Buyers compete for productive resources, while sellers compete to
find these buyers
II. 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.
4. Entrepreneurship
a. Seeing an opportunity to make money by taking a chance.
b. 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. 1. Value Creation - Discovering what people need or want, then
creating it.
2. Marketing - Attracting attention and building demand for what
you’ve created.
3. Sales - Turning prospective customers into paying customers.
4. Value Delivery - Giving your customers what you’ve promised and
ensuring that they’re satisfied.
5. 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).

16. 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.

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

18. 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.

19. 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).

20. 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).

21. 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.

22. 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.

23. 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.

24. 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

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

26. How a Sole Proprietorship or Partnership gets Capitol
1. 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.
2. 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.
3. 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.
4. 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.
5. Open a business line of credit.

27. Ways a Corporation gets its CapitalIssuing 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.

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

29. 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.

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

31. 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.

32. 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.

33. 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.

34. 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

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

36. 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.

37. 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.

38. 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).

39. 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.

40. 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.

41. 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.

42. Requirement 6
Do ONE of the following:
a) 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.
b) 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.

43. Questions