Intro To Business Chapter 1

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Buisness

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any activity that seeks to provide goods and services to others while operating at a profit.

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Profit

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The amount of money a business earns aboce and beyond what it spends for salaries and other expenses

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Entrepreneur

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A person who risks time and money to start and manage a business.

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Revenue

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The total amount of money a business takes in during a given period by selling goods and services.

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A Loss

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occurs when a business's expenses are more than its revenues.

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Risk

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The chance an entrepreneur takes of losing time and money on a business that may not prove profitable.

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Standard of Living

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The amount of goods and services people can buy with the money they have.

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Quality of Life

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The general well-being of a society in terms of political freedom, a clean natural environment, education, health care, safety, free time and everything else that leads to satisfaction and joy

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Stakeholders

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all the people who stand to gain or lose by the policies and activities of a business.

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Outsourcing

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Contracting with other companies (often other countries) to do some or all of the functions of a firm (e.g. production or accounting).

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A Nonprofit organization

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an organization whose goals do not include making a personal profit for its owners or organizers.

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Social entrepreneurs

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people who use business principles to start and manage organizations that are not for profit and help countries with their social issues

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2 ways to succeed in in business

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1.) Rise up through the ranks of a large companies

2.) Start your own business

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Factors of production

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1.) Land (natural resources)
2.) Labor (workers)
3.) Capital. (whatever is used for the production of goods)
4.) Entrepreneurship
5.) Knowledge

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Business environment

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Consists of the surrounding factors that either help or hinder the development of businesses.

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Elements of the business environment. (5)

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1.) Economic and legal environment
2.) Technological encironment
3.) Competitive environment
4.) Social environment
5.) Global business environment

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Technology

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everything from phones and coopiers to computers, medical imaging devices, personal digital assistants, and efficient, and productive.

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Effectiveness

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Producing the desired result.

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Efficiency

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Producing goods and services using the least amount of resources

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Productivity

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The amount of output you generate given the amount of input.

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e-commerce

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The buying and selling of goods over the internet

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A database

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An electronic storage file where information is kept.

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Identity theft

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Obtaining of private information about a person, such as Social Security number and/or credit card number, and using that information for illegal purposes, such as buying things with it.

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Empowerment

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To meet the needs of customers, firms must give their frontline workers everything they need to quickly respond to the customer.

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Demography

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The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.

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Goods

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Tangible products such as computers, food, clothing.cars, and appliances.

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Sevices

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Intangible products such as education, health care, insurance, recreation, and travel and tourism.

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sole proprietorship

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A business that is owned and usually managed by one person.

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Partnership

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when two or more people legally agree to become co-owners of a business.

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General partnership

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A partnership in which all owners share in operating the business and in assuming liability for the business debts.

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Limited partnership

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A partnership with one or more general partner and one or more limited partner.

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General partner

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A partner with unlimited liability and is active in managing the firm. Must be at least one in each partnership.

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Limited partner

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A owner who invests money but does not have any management responsibility

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Limited Liability

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The limited partners are not responsible for debts of the business.

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Conventional (C) corporation

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A state-chartered legal entity with authority to act and have liability separate from its owners. (The stockholders are the owners)

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S corporation

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Avoids double taxation while still acting like a corporation

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Limited liability company

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a company similar to an S corporation without the special eligibility requirements

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A merger

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The result of two firms forming one company

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An Acquisition

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The purchase of one company by another.

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3 types of mergers

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1.) Vertical merger
2.) Horizontal merger
3.) conglomerate merger

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Vertical merger

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The joining of two firms involved in different stages of related businesses.

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Horizontal merger

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Joins two firms in the same industry and allows them to diversify or expand their products.

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Conglomerate merger

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unites firms in completely unrelated industries.

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Leveraged buyout

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an attempt by employees, management, or a group of investors to purchase an organization.

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Franchise agreement

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an arangement whereby someone with a good idea for a business sells the rights to the business name and to sell a product or service.

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coopertives

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A business owned and controlled by the people who use it- producers, consumers, or workers with similar needs who pool their resources for mutual gain.

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Importing

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Buying products from another country.

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exporting

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selling products to another country.

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Free trade

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the movement of goods and services amoung nations without political or economic barriers.

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comparatice advantage theory

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Theory that states that a country should sell to other countries those products that produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently.

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absolute advantage

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the advantage that exists when a country has a monoply on producing a specific product or is able to produce it more efficiently than all other countries,

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balance of trade

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the total value of a nation's exports campared to its imports measured over a particular period.

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Trade deficit

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An unfavorable balance of trade; occurrs when the value of a country's imports exceeds that of its exports.

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balance of payments

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the difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.

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Dumping

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selling products in a foreign country at lower prices than those charged in the producing country.

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Licensing

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A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).

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contract manufacturing

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a foreign country's production of private-label goods to which a domestic company then attaches its brand name or trademark.

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Joint venture

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a partnership in which two or more companies (often from different countries) join to undertake a major project.

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Strategic alliance

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A long-term partnership between two or more companies established to help each company build competitive market advantages.

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foreign direct investment

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The buying of permenent property and businesses in foreign nations.

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foreign subsidiary

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A company owned ina foreign country by another company (called the parent company),

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multinational corporation

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An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.

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devaluation

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Lowering the value of a nation's currency relative to other currency.

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Countertrading

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A complex form of barterning in which several countries may be involved, each trading goods for goods or services for services.

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Trade protectionism

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The use of government regulations to limit the import of goods and services.

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Tariff

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A tax imposed on imports.

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Economics

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The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among carious competing groups and individuals.

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Macroeconomics

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The part of economics that looks at the operation of a nation's economy as a whole.

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Microeconomics

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The part of economics that looks at the behavior of people and organizations in particular markets.

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resource development

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The study of how to increase resources and to create the conditions that will make better use of those resources.

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invisible hand

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A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.

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Capitalism

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An economic system in which all or most of the factors of production and distribution are pricately owned and operated for profit.

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Four basic rights of capitalism

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1. The right to pricate property
2. The right to own a business and to keep all of the business profit
3. The right to freedom of competition
4. The right to freedom of choice

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Free Markets

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one in which decisions about what to produce and in what quantities are made by the market- that is, by buyers and sellers negotiationg prices for goods and services.

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Supply

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The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

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Demand

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the quantity of products that people are willing to buy at different prices at a specific time

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Market price

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Determined by supply and demand

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Perfect competition

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Exists when there are many sellers in a market and no seller is large enough to dictate the price of a product.

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Monopolistic competition

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exists when a large number of sellers produce products that are very similar but are perceived by buyers as different.

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Oligopoly

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A form of competition in which juset a few sellers dominate the market.

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Monopoly

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a market in which there is only one seller for a product or service.

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Socialism

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An economic system vased on the premise that some, if not most, basic business should be owned by the government so that profits can be evenly distributed amoung the people.

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brain drain

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The loss of the best and the brightest people to other countries.

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communism

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an economic and political system in which the state makes almost all economic decisions and owns almost all the major factors of production

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Free-market economies

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Economic systems in which the market largely determines what goods and services get produced, who gets them, and how the economy grows.

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Command economies

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Economic systems in which the government largely decides what goods and services will be produced, who will get them and how the economy will grow.

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mixed economies

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Economic systems in which some allocation of resources is made by the market and some by the government.

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Gross domestic product (GDP)

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The total value of final goods and sercices produced in a country in a given year.

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Unemployment rate

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The number of civilians at least 16 years old who are unemployed and tried to find a job within the prior 4 weeks.

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Inflation

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A general rise in the prices of goods and services over time

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Disinflation

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a situation in which price increases are slowing (the inflation rate is declining)

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Deflation

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A situation in which prices are declining

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Frictional unemployment

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the people who have quit work because they didn't like the job, boss, or the working conditions and who haven't found a new job. or people who are entering the labor force for the first time.

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Structural unemployment

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unemployment due to restructuring of firms or by a mismatch between the skills of joc seekers and the requirements of available jobs

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cyclical unemploymenmt

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occurs because of a recession or a similar downturn in the business cycle. The most serious

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Seasonal unemployment

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occurs where demand for labor waries over the year, as with the harvesting of crops

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Consumer price index (CPI)

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Monthly statistics that measure the pace of inflation or deflation.

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Producer price index (PPI)

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An index that measures prices at the wholesale level.

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Business cycles

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The periodic rises and falls that occur in all economies over time.

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Recession

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Two or more consecutive quarters of decline in the GDP

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depression

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A secere recession

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Fiscal policy

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The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending

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National debt

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The sum of government deficits over time

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Monetary policy

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The management of the money supply and interest rates