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156 Cards in this Set

  • Front
  • Back
Business
Any organization that strives for profits by providing goods and services that meet customer needs.
Successful business
Any business that excels over a long period of time.
Vision
A broad statement of what a business would like to achieve.
Mission
A statement that spells out why a business exists and what the business will do.
The Path toward a Successful Business
Vision and Mission
Indicators of business success
Assessing the environment and its impact
Providing excellence in product/service
Evaluating results and making changes
--> back to Indicators
Indicators of Success
Achieving financial performance
Meeting customer needs
Building quality products and services
Encouraging innovation and creativity
Gaining employee commitment
revenue
The amount customers pay for the goods and services they purchase.
expenses
the money a business must pay out to make its products and provide its services
profit
the amount of money left over after the business records all its revenues and subtracts all its expenses
productivity
the ratio of goods and services provided to resources used
customer sensitivity
the awareness of customer desires and needs
customer serviced
the actions a business takes to meet customer needs and preferences
creativity
new and different patterns of thinking and behaving
innovation
new approaches and options that are the result of creative activities
quality management
a company's unique approach to ensuring quality
continous improvement
the efforts byy a business to provide steadily higher quality throughout all phases of its operation
learning organizations
organizations that adapt to change and search creatively for new and better ways to operate and meet the needs of their employees and customers
empowerment
the process of giving more decision-making authority and responsibility to workers throughout the organization
environment of business
those factors or influences that affect the business but over which the firm has little control
Assessing the Environment and its Impacts
diversity trends and issues
economic forces
financial markets and processes
global influences
legal and regulatory forces
Providing Excellence in Products and Services
thinking strategically
acquiring and using resources
-providing value through quality products and services
-enhancing value through communicatin with customers
-integrating activities and encouraging commitment
-using technology in a competitive environment
franchise
a business that grants the exclusive right to another individual or business to use its name and sell its products or services
The Three Primary Business Sectors
Manufacturing
Distribution
Service
industry sectors
major groupings of industries with similar characteristics
manufacturing sector
the broad group of companies and industries that produce tangible objects
manufacturing firms
companies that convert raw materials or componenets into products that may be sold to consumers or to other businesses
distribution sector
the wholesale and retail firms that move products from the manufacturer to the ultimate customers or users
service sector
the broad group of companies that provide some sort of service to customers
original equipment manufacturer (OEM)
a company that makes components for another product
capital goods
the machinery and equipment used in the production process
capital intensive
relying heavily on equipment and machinery to produce products
vertical integration
the degree to which a firm operates in more than one level of the overall production chain
outsourcing
acquiring components or services from outside the firm rather than providing them using company resources
strategic alliances
long-term agreements between firms to work together for the benefit of both
the three destinations of manufactured goods
1. individual consumers
2. components
3. capital goods
characteristics of manufacturing firms
capital intensive
vertical integration
outsourcing
strategic alliances
exclusive distribution
the distribution of a product to only a single outlet in a market area
selective distribution
the distribution of a product to a limited number of dealers or stores
intensive distribution
the distribution of a product to every possible venue
wholesalers
businesses that serve as intermediaries between manufacturers and retailers
manufacturer's representative
a company or person that sells products to wholesalers or retailers on commission
retailers
stores that sell directly to consumers
category killers
large chain stores that specialize in a narrow line of products
contract carriers
trucking companies that specialize in carrying a particular kind of good for a few customers
common carriers
trucking companies that transport a wide variety of products for many clients
labor intensive
relying heavily on people as the key to supplying products and services
industry concentration
the number of firms in an industry and their relative size; often calculated by the C-4 ratio (the percentage of total industry sales by the top four firms).
board of directors
the individuals elected by the stockholders to oversee the management of the firm
inside directors
directors who are also company employees
outside directors
directors who are not company employees
top management
the officers of a business who make major decisions for the company and are responsible for the company's performance
chief operating officer
the individual responsible for a company's internal day-to-day operations
chief executive officer
the individual responsible for the long-range, strategic direction of the company
chief financial officer
the individual responsible for the overall financial health and strategy of a company
chief information officer
the individual in charge of policy relating to the gathering, use, and storage of company information
vice president
a top manager who is responsible for a specific area of the company
middle managers
managers below vice presidents down to just above first-line supervisors; they are responsible for translating broad policies into doable tasks
professional staff
employees who make decisions within their area of specialty that assist others in doing their jobs
first-line supervisors
the lowest level of management; they are directly responsible for overseeing the work of employees who produce products or provide services.
nonmanagerial employees
employees in a business who are actually involved in producing or selling products and providing services
self-directed work team
a group of employees who supervise their own work and are given broad discretion over the direction of their work
cross-functional team
a group of employees who are selected from various areas of the business and brought together to make collective decisions
chain of command
the line of authority in a business that determines the movement of official commands down through the hierarchy
Types of decisions
1. Strategic decisions
2. Operational decisions
3. Problem-solving decisions
strategic decisions
decisions that have a major impact on the general direction of the firm
operational decisions
decisions that affect the day-to-day actions of the business
problem-solving decisions
decision making aimed at correcting an adverse situation that has developed
Basic Decision-Making Model
1. Define the decision issue.
2. Gather and analyze information about the issue and the people involved.
3. Develop alternative solutions or strategies.
4. Evaluate and select the best alternative.
5. Implement the solution.
6. Evaluate the results.
creative decision-making
the process of developing new or different ways to solve problems or capture opportunities
Creative-Decision Making Model
1. Preparation Stage
2. Incubation Stage
3. Illumination (insight) stage
4. Verification stage
Crisis Decision Making
decision making that requires a bold response to a unique, unexpected, and potentially devastating situation
stakeholder
a person or group that has some claim on or expectation of how a business should operate
primary stakeholders
those stakeholders whom a business affects and interacts with most directly.

-owners
-customers
-employees (and their union, if the firm is unionized)
secondary stakeholdes
those stakeholders whom a business affects in an indirect or limited way

-business partners
-suppliers
-former employees
-the community
-unions
-environment
-the industry in which the firm operates
-other businesses
-government
-special interest groups
-the media
-society
business (integrated definition)
an organization that strives for profits for its owners while meeting the needs of its customers an employees and balancing the impacts of its actions on other stakeholders
value-price relationship
a relationship in which customers get the best possible value from the products they purchase, given the price they pay
union
formally recognized organizations that represent a company's or industry's workers
environmentalism
efforts and actions to protect the natural environment
business ethics
the search for and commitment to meet appropriate standards of moral conduct in business situations
moral dilemma
a conflict of interests involving ethical choices
private morality
personal moral standards
utilitarianism
greatest good for the greatest number
theory of rights
an approach to decision-making that assumes there are certain individual rights that must always be protected
theory of justice
an approach to decision-making that assumes decisions should be guided by equity, fairness, and impartiality
core values
the specific beliefs that a business makes part of its operating philosophy
codes of conduct
the formal written statements specifying the kinds of things a business believes should be done and those that should be avoided
business culture
a set of unwritten values and beliefs about what is proper, right, and appropriate in a business
macroeconomics
the study of the entire economy of a nation
gross domestic product
the market value of all final goods and services produced in a country in a given year.

Consumption + Investment + Government Spending + Net Exports
economic growth
an increase in total spending in the economy
per capita economic growth
the difference in GDP per person from one year to the next
inflation
a general increase in prices or an increase in the prices of most goods and services
pure competition
a market situation in which many firms sell nearly identical products and no one firm can raise its price without losing most of its customers
monopolistic competition
a market situation in which there are many firms but each has a slightly different product
oligopoly
a market situation in which a few firms, with or without differentiated products, dominate the market
monopoly
a market situation in which only one firm sells a product or service
globalization
a way of thinking in which a business regards its operations all over the world as part of one integrated business system
global strategy
a strategy in which a business sells a uniform product or service throughout the world
multidomestic strategy
a strategy in which a business modifies its products and services to customers in other countries
Why Globalization is Important
the rise of foreign competition
the need to control costs
opportunities for market growth
balance of payments
a record of the inflows of money into a country and the outflows of money from that country
balance of trade
the difference between the value of a country's imports and its exports of goods and services
free trade area
a geographic area where free trade is permitted among the member countries but imports from nonmember countries are limited
cultural relativism
the belief that what is right or wrong depends on where you are
universalism
the belief that there are commonly shared beliefs throughout the world
dumping
selling imports at prices that are below the cost of production and distribution
multinational firms
businesses that have major production and sales operations in more than one country
international partnerships
arrangements between two or more businesses from different countries that enable those companies to do business more successfully
copyright
the exclusive right to the use of intellectual property such as books, photographs, music, or cartoons
trademark
the exclusive legal right to the use of a name, symbol, or design
patent
a government-protected legal monopoly on a product or product design
antitrust laws
laws that prohibit companies from unfairly restricting competition
price-fixing
a situation in which rival firms agree to charge the same price for their competing products
industrywide regulation
a situation in which a local, state, or federal government controls the entry of firms into an industry, the prices they charge, the way they operate, or even their exit from the industry
collective bargaining
the process through which company and union representatives work together to negotiate a labor agreement
tort
a behavior, either intentional or negligent, that harms another person
social overhead capital
the purchase of goods and services by government to increase the productive capacity of business
business focus
the general direction in which top managers plain to take a business
business profile
an assessment of a firm's strengths and weaknesses
SWOT analysis
an assessment of a firm's key strengths and weaknesses compared with the opportunities and threats it faces
core competence
an activity or set of activities that a business performs very well or a quality it possesses in abundance
distinctive competence
a skill, activity, or capacity that a business is uniquely good at doing in comparison to rival firms
competitive advantage
an area of competence that consumers value and the business is capable of exploiting
sustainable competitive advantage
the most important one; a unique, long-term area of competence that competitors cannot duplicate easily, and the company is capable of exploiting
competitive strategy
the specific approach a business chooses to pursue for addressing its competitive environment
3 Business Strategies
low-cost leadership
differentiation
focus
low-cost leadership
a competitive strategy that entails finding ways to reduce the cost of providing a product or service and pass the savings on to customers
differentiation strategy
a competitive strategy that is built on providing a product or service that has some unique feature
focus strategy
a competitive strategy that is built on positioning a business to serve the needs of some unique or distinct customer segment that is not being fully served by the competition
economies of scale
reductions in a firm's average cost of production that are achieved by increasing the overall volume of production
experience curve
a concept whereby costs are lowered as a result of a firm's increasing efficiency through experience in making the product; also called the learning curuve
Other General Strategic Considerations
Diversification
Acquisition
Cooperative Strategies
diversification
a strategy that entails branching out into an additional area (or areas) of business
acquisition
when one company buys another
cooperative strategies
situations in which two or more businesses decide to work together for their mutual benefit
export management firm
a firm located in the US tht sells products abroad for another business
licensing
an arrangement in which a business allows its products to be produced and distributed in other countries by a foreign company
foreign sales office
a special operation in a foreign country that sells and services products that were made domestically
wholly owned subsidiary
a business that is owned as part of a larger business; may be a foreign subsidiary of a domestic firm
strategic planning
a systematic way of analyzing and responding to a competitive environment
synergy
the combined action of two resources so that their total effect is greater than the sum of the effects taken independently
opportunity cost
best forgone alternative
Four types of Resources:
Human Resources
Physical
Financial
Information Technology
downsizing
firing a lot of people
human resources outsourcing
contracting with temporary help agencies or with consulting firms to provide the people a firm needs
physical resources
(1) fixed assets such as land, buildings, and equipment (2) raw materials that will be used in creating the firm's products, and (3) general supplies used in the operation of the business
make-or-buy decision
the choice of whether to manufacture a product in-house or buy it from a supplier
product outsourcing
purchasing a product or component of a product from another company
cash flow
the movement of cash into, through, and out of a firm
cash inflow
the movement of cash into the business from owners, lenders, or customers
equity financing
the money invested in a business by the owners
debt financing
the money a company borrows from outsiders, such as individuals, banks, or other lending institutions, or raises by selling bonds
cash outflow
the movement of cash out of the business for any reason
strategic information
any information about a firm's competitors, customers, and markets that affects its ability to compete
operational information
any information relating to the internal workings of the company that helps it run more efficiently
just-in-time (JIT)
An integrated set of activities designed to achieve high-volume production using minimal inventories of raw materials, work in process, and finished goods