Business Administration Core DECA PIs

Comply with the spirit and intent of laws and regulations 🟡

• Law: a body of rules prescribed by a controlling authority (government) with binding legal force

  • The law consists of rules that regulate the conduct of individuals, businesses, and other organizations within societies

  • Follow the original purpose of laws and regulations set by the government and the underlying purpose and ethical principles behind it

• Types of law

  • Civil law- laws that deal with the rights and duties of private entities and disputes between them 

  • Criminal law- crimes against individuals or society, and legal punishment is of criminal offenses 

  • Administrative law- actions of government agencies (FTC or FDA)

Discuss the nature of law and sources of law in the United States 🔴

• In the United States, rooted in the principles of justice and order, serving to maintain peace and providing a framework for disputes and acceptable behavior to protect individual rights and freedom

• Sources of law includes the Constitution, legislature, administrative agencies, judicial decisions, state constitutions, local ordinances

• Federal system means federal law is supreme

Describe the United States' judicial system 🔴

• The judicial branch of the federal government interprets, applies, and administers the laws of the US

  • It is a network of courts at all levels of government. Federal courts include district courts, federal courts of appeals, and the U.S. Supreme Court

  • The state court system also includes a state Supreme Court, associate circuit courts, city or municipal courts, small claims courts, juvenile courts, and probate courts

• Courts have the power to declare laws or executive actions unconstitutional

• Legal disputes are resolved through an adversarial process where opposing parties present evidence and arguments, and neutral judge or jury makes a decision

Describe methods used to protect intellectual property 🔴

• Intellectual property is a legal term that refers to the rights of creators over original ideas and works

• There are many ways to protect intellectual property

  • Patents: Protects inventions of processes which grants protection by the government for a period of time

  • Trademarks: Symbols, phrases, names, or devices to identify/distinguish goods are protected

  • Copyrights: Legal protection of books and other artistic works (gives creators sole rights for a certain period)

  • Creative Commons: Like copyright, but with more ability to encourage creativity and use among the public

  • Trade Secrets: Information that a company uses for competitive advantage in the business world

Describe legal issues affecting businesses 🔴

• Legal requirement to at least pay minimum wage to all employees, takes away from profit

• OSHA workplace safety rules must be met, can be costly and time-consuming

• An array of tax obligations set by the government must be followed, takes away from profit

• Employee protection laws must be followed when hiring, training, and firing employees

• Must abide by truth-in-advertising laws

• Must abide by antitrust laws to prevent monopolies

Identify the basic torts relating to business enterprises 🔴

• Torts: Civil wrongs that cause harm or loss, leading to legal liability

  • Business torts are civil wrongs committed by or against an organization 

• There are many types of torts (intentional and unintentional)

  • Fraudulent misrepresentation (Providing false information to induce a party into an agreement or contract)

  • Defamation (libel or slander)

  • Tortious interference (intentional disruption of a contract or relationship)

  • Conversion

  • False Advertising

  • Invasion of Privacy

  • Premises Liability (failing to maintain a safe environment)

  • Product Liability (selling defective or dangerous products)

  • Negligent Hiring or Supervision 

• Usually satisfied by a lawsuit

Describe the nature of legally binding contracts 🔴

• Contract: Voluntary, deliberate, and legally binding agreement, typically written, and sometimes spoken or implied

• Legally binding contracts are enforceable by law, and failure to meet mutual obligations can result in legal consequences

Describe the nature of legal procedure 🔴

• Civil procedure (between individuals and/or organizations) and criminal procedure (offenses against state or public)

  • Cases are files (lawsuit/criminal charge)

  • Defendant is notified

  • Both sides present arguments, evidence, and testimonies during trial

  • The court issues a decision which may be appealed to higher courts

Discuss the nature of debtor-creditor relationships 🔴

• Debtor: The person who owes a financial obligation

• Creditor: The person who is owed the obligation

• The relationship arises from a contract or agreement where the debtor is obligated to repay the debt

  • Relationship is governed by terms like repayment schedule, interest (if applicable), and consequences of default

Explain the nature of agency relationships 🔴

• Agency relationships are legal arrangements where one party (the agent) acts on behalf of another party (the principal) in business or legal matters

  • Based on trust and mutual consent 

  • Fundamental to business and legal transactions

Discuss the nature of environmental law 🔴

• Aims to protect natural resources, control pollution, and promote sustainable development through regulations

  • As it relates to business, these laws mandate and regulate business practices in the best interest of the environment 

Discuss the role of administrative law 🔴

• Governs the activities of administrative agencies of government

• Ensures transparency, accountability, and fairness in implementation of laws and regulations

Explain types of business ownership 🟡

• Sole Proprietorship: Owned and operated by one individual, where the owner has complete control and responsibility for all aspects

• Partnership: Owned by two or more people who share profits, responsibilities, and liabilities. General partnerships are equal for all parties, versus limited partnerships which have limited liability for certain parties 

• Cooperative: Owned by its members

• Corporation: A legal entity separate from its owners, offering limited liability protection to shareholders. Can be publicly or privately held and issue stock

  • “artificial being, invisible, intangible, and existing only in contemplation of law.”

  • Functions independently but is treated as a person with rights, duties, and powers

  • Owned by the stockholders

• Limited Liability Company (LLC): A hybrid structure combining elements of partnerships and corporations. Owners enjoy protection with flexibility in management and taxation

• Joint venture/strategic alliance: Two or more business enter a relationships for the benefit of all 

• Limited Partnership: Permits a partner to invest money for limited liability

• Stockholder/Shareholder: Purchases stock to become a (fractional) owner

Explain the nature of import/export law 🔴

• Regulates the movement of goods and services across international borders, ensuring compliance with national and international trade agreements, tariffs, and restrictions

  • Export violations- Fails to obtain export license before shipping goods out

  • Import violations- Hiding the nature, origin, or value of imports brought into a country to avoid certain duties

  • Smuggling- Bringing forbidden items in

  • False declaration- Misrepresenting or leaving out information about items that an individual is bringing inside a country

Describe the nature of customs regulations 🔴

• Laws and rules governing the import and export of goods across international borders

  • Controls how goods are declared, classified, and taxed when entering or leaving a country

  • Ensure compliance with trade policies, like tariffs, quotas, and restrictions while addressing safety and security concerns

Identify sources that provide relevant, valid written material 🟢

• You can use the “REVIEW” concept to do this

  • R: Relevance of source

  • E: Expertise of author

  • V: Viewpoint of author or organization

  • I: Intended audience

  • E: Evidence

  • W: When published

• Check domain (if applicable), peer reviews, author credentials, last modification or publication date, and links to resources or a bibliography 

Extract relevant information from written materials 🟢

• Three segments when reading

  • Pre-read: determine what you need to know as a result of your reading, scan headings and topic titles, and look at graphics to get a general idea

  • Read: Pay attention to main ideas, key details, and supporting ideas, and look for answers to questions you set for yourself

  • Review: Reflect on the content, ensure you have covered everything you needed to gain as a result of your reading

Apply written directions to achieve tasks 🟢

• Read instructions as many times as needed to fully understand

• Follow instructions in the exact order they are written

  • Check after each step to ensure everything is done the exact same way

• Ask questions or refer back to instructions if any concerns or confusion arise

Analyze company resources to ascertain policies and procedures 🟡

• Review current policies/procedures to see how well they are working

  • Identify any weaknesses (using personal opinion, doing evaluations and tests, or soliciting other individuals’ opinions)

  • Conduct analyses of effectiveness 

  • Schedule a meeting to review policies and procedures and gain further input

• Follow up on any changes made by reaching out to all staff

Explain communication techniques that support and encourage a speaker 🟢 

• Active listening

• Taking notes

• Nonverbal cues, like eye contact, to show engagement

Follow oral directions 🟢

• Listening actively, taking short and concise notes if needed

• Ask for clarification if you don’t understand or feel you have forgotten a part

• Nonverbal cues to show engagement

Demonstrate active listening skills 🟢

• Body language, good posture and facing the speaker

• Making good eye contact and nodding to show engagement

• Minimize external and internal distractions, focusing solely on the speaker

• Engaging yourself by responding appropriately and asking questions when needed

  • Make comments like “yes” or “I see” if needed to encourage the speaker

Explain the nature of effective verbal communications 🟢

• Verbal communication is the process of conveying information, thoughts, and ideas using spoken language

  • Phone calls, face-to-face meetings, presentations, discussions, voice memos

• There are four main types

  • Intrapersonal: Internal dialogue and talking to yourself

  • Interpersonal: Two people discussing something

  • Small group communication: Small meetings or a group of friends

  • Public communication: Presentations and announcements

• Language you use is significant to effectiveness (analyze profession, formality, age, and other factors to figure out what jargon, language, and tone to use to effectively deliver a message)

• Visual aids/statistics/powerful sentences can set the mood depending on who you are talking to and in what setting

• Mainly, know your audience: who are you talking to and what are you trying to accomplish by delivering your message?

  • Rhetorical triangle: Ethos (credibility), Pathos (emotion), Logos (logic)

Ask relevant questions 🟢

• State what you know and don’t know

• Frame your question well

• Speak well and sound confident

• Think about what the speaker says in response, and register it

  • Ask for additional clarification if necessary

Interpret others' nonverbal cues 🟢

• Notice the way someone dresses or presents themselves; this is how they want to be perceived and conveys clues about who they are

• Posture, gestures, facial expressions, vocal tone, and eye movement can tell you about personality or just mood and emotion at the moment

  • Straight posture projects confidence, lack of eye contact and shaky hands projects anxiety, and more

Provide legitimate responses to inquiries 🟢

• Always start with an appropriate answer

• Keep a professional, friendly voice

• State your role, name, and the company name

• Listen carefully to what they have to say

• Use knowledge to answer the question as effectively as possible (referring back to how to effectively communicate with an audience)

• Gently take control of the conversation and keep answers concise and focused on the issue at hand

Give verbal directions 🟢

• Tell them what you want them to do in a clear, direct manner

• If something is wrong, correct with further instruction

Employ communication styles appropriate to target audience 🟡

• Identify target audience

• Analyze  message you want to communicate

• Think about what communication channels and styles would be appropriate for that audience and that message

  • For example, youth prefer social media, and seniors prefer literary materials like the newspaper

• Types of communication channels

  • Lean channel of communication : Presents messages/information without allowing for immediate interaction/feedback; goal is just to convey information

    • Voice messages

    • Blogs

    • Brochures

    • Texts

    • Emails

    • Social media

  • Rich channel of communication: More interactive, and provide opportunities for two-way communication and nonverbal cue detection

    • Face-to-face meetings

    • Online conferencing

    • Video meetings

    • Phone calls

• Importance of utilizing the right style for a target audience

  • When a writer takes the time to follow the appropriate writing style and cite sources in a preferred format, it indicates that the writer has taken care to present the facts and findings in a meaningful way

  • As a result, the writer often increases his/her credibility or trustworthiness with the audience

Defend ideas objectively 🟡

• Defend but don’t be defensive

• Present facts and reasoning clearly

• Address concerns in a thoughtful manner

• Keep an open mind and be aware and educated about opposing viewpoints

Handle telephone calls in a businesslike manner 🟡

• Introduce yourself with your name and the company name

• Be polite and professional, have a friendly tone, and use good manners

• Have information on hand to respond to any inquiries

• Keep the discussion flowing but still be concise and clear with answers

• Utilize varying tone

Participate in group discussions 🟡

• Come into the discussion knowledgeable about the topic

• Nonverbal signs

  • Eye contact

  • Smiling or nodding

  • Good posture

• Take note of others’ body languAGE

• Exchange views confidently but disagree politely, don’t dominate

  • Allow others to finish their thoughts or statements

• Encourage active listening and engagement as you make meaningful contributions

• Take notes when needed

Facilitate (lead) group discussions 🔴

• Encourage active participation from all parties

• Stay neutral on the topic, especially in the case that there are conflicts

• Steer the discussion towards a productive and positive outcome

• Ask open-ended questions to keep the discussion flowing

• If the topic goes stale, guide or help further discussion

Make oral presentations 🔴

• Know your content, be well prepared

  • Keep it simple but emphasize key points

• Watch language

• Ensure clarity in voice, speak slow and loud

• Have good body language, posture and use of gestures

• Interact with audience

  • Questions, room for questions to ask them, points for discussion (dependent on who they are and what it is for)

  • Utilize checks for engagement to see if the audience is with you

Utilize note-taking strategies 🟡

• Key points and important phrases, not exact words

• Paraphrase what you hear so it makes sense to you

  • Utilize headings, bullet points, numbered lists and breaks in sections

• See what style works best for you, not everyone likes written notes

  • Visual mapping can help some who learn from images and visuals

  • Flow charts can help people who work logically

• Underline, use colors, add symbols to show emphasis or break into categories

• Ask yourself if you’ve covered the main points and what is important/informative

Organize information 🟡

• Establish an outline of the content

• Divide content into respective units

  • There are various online programs ow that can be utilized for specific needs, like transactions, CRM, contacts, records, accounting, and more)

Select and use appropriate graphic aids 🟡

• Can be helpful if you know it will resonate with your audience or it is necessary

  • Your goal is to make images stand out and show support for the main purpose of the document or presentation

• Readers should be able to use them to grasp the speaker’s ideas

  • Not too detailed to draw away attention, but not too simple that they are unrelated and correlation is unclear

  • Supports the section it is included in well

• You can use tables, graphs/charts, photos, drawings, and diagrams/flow charts depending on individual needs

  • Part-to-whole: Pie chart

  • Values across categories: Bar chart

  • Information over time: Line graph

  • Information by row and column: Table

Explain the nature of effective written communications 🟡

• Clear knowledge of the goal of the communication and purpose

• Complete clarity so there is no confusion on meanings of certain things

  • Active language, good grammar and spelling

  • Being straightforward with the message, cut to the chase

• Visual elements when appropriate to support ideas

• Appropriate formatting for the occasion 

  • Professional and accurate

• Includes all necessary information

Select and utilize appropriate formats for professional writing 🟡

• There are many formats

  • Emails

  • Snail mail 

  • Business letters

  • Papers

  • Proposals

  • Executive summaries

  • Memos

  • Recommendations

• Identify needs based on the situation and adapt to a format based on that

Edit and revise written work consistent with professional standards 🟡

• Re-read your work and ask yourself if you’ve considered personal questions or concerns, included sufficient examples, and other checks based on situation

• Examine that introduction and conclusion are appropriate, that paragraphs flow well

• Check for grammar, spelling, and punctuation

• Make sure what you’ve written aligns with the format you’ve chosen

  • Block format for business letters- single spaced, left justified

Write professional emails 🟡

• Address or copy to all relevant people

• Relevant subject line

• Greeting

• State purpose

• Relevant body information

• Closing remarks and closing, plus a signature

Write business letters 🟡

• Business letter: A form of written communication between businesses or individuals that conveys information, requests action, or discusses a deal

  • Appropriate font and layout with font family, sizing and spacing, and block paragraphs

  • Included company information, data, and recipient information

  • Simple and short, straightforward in a brief, professional tone

  • Salutation and formal closing

Write informational messages 🟡

• Informational message: Concise updates that clearly convey important facts/details

  • Clear subject line

  • Concise introduction

  • Organized body

  • Call to action if necessary

• Maintain a professional tone throughout 

• Internal vs external audiences

  • Internal- People like business employees

  • External- People outside the business, like customers

Write inquiries 🟡

Address and date

• Opening, greeting, and reason for writing

• Questions asking for specific information, be clear and concise with what you need to know and what you already know

• Closing and request for a quick answer as possible, and signature

Write persuasive messages 🔴

• Persuasive message: A message that aims to change or influence a person’s behavior, action, or opinion

  • Know your audience (rhetorical triangle: ethos, pathos, logos)

  • Use confident and strong language, utilize relatability and knowledge 

  • Consider and address concerns or counter arguments

  • Establish a clear purpose to reinforce beliefs

• Mainly, know your goal, your audience, and what would work for them

  • There is a serious need for businesses to pay attention to customer preferences and needs, especially when developing advertisements or persuasive messages geared towards them

Write executive summaries 🔴

• Executive summary: Short document that summarizes a longer report or proposal

  • Introduction that provides context

  • Objectives and goals of the document

  • Key findings and results

  • Recommendations (recommended solution outline)

  • Conclusion of main points

Prepare simple written reports 🔴

• Written report: A document that presents information in a structured format

  • Title page with subject, recipients, and date

  • Abstract, with short information of why it is being read, how the study was undertaken, and the significance of the document

  • Table of contents

  • Introduction

  • Body with main points in a structured format and detailed analysis

  • Conclusion with a summary of main points

Explain how digital communications (e.g., email, text messages, chats) exposes business to risk 🔴

• The tendency of being hacked or data breaches is a risk

  • If information is not safe and encrypted properly, confidential business information can be seen by others

• Additionally, improper handling of those using it can be an issue

Adapt written correspondence to targeted audiences 🔴

• Make sure it is appropriately written in the way the target audience would understand

  • Correctly given context and thoughtful structure for effective communication

  • Be mindful of use of jargon

Use data visualization techniques (e.g., infographics, heat-maps, dynamic model outputs) 🔴

• Data visualization is the easiest way to understand data

• Infographics, charts, and tables are very easy to understand, but adapt for needs

  • Bar or line graphs for profit 

  • Pie chart for budget

• Apply needs of the situation to what fits best

Describe the impact of a person's social media brand on the achievement of organizational objectives 🟡

• Social media brand can market the company

  • Influencers with a certain brand will have a certain category of followers

  • Appropriate selection of who to choose to market a company can allow a company to connect with customers that match them

• Any association of a company with a certain brand creates an image in audiences’ heads, and makes them associate that company with certain values and brands

  • Manipulating this can allow companies to reach their target audiences and max out on profits

Distinguish between using social media for business and personal purposes 🟡

• Business use: Clean record, show confidence and positivity throughout

  • Typically a whole team is managing and figuring out the best ways to shape brand image

  • Focused on maintaining an image or theme

• Personal use: You can use to express yourself in the way you’d like followers to see, no stakes

Explain the nature of staff communication 🟡

• Upwards: From employees to their manager

• Downwards: From a manger to his/her employees

• Lateral/horizontal: To fellow team members or other employees on your level

Choose and use appropriate channel for workplace communication 🟡

• Consider several factors of the message and make the best decision 

  • Urgency (immediate action required, non-urgent)

  • Formality (formal or informal)

  • Intended audience (one-on-one or group)

Participate in a staff meeting 🟡

• Review agenda and understand meeting purpose

• Gather relevant information

• Engage in active listening

• Share thoughts and ideas

• Listen and encourage team members, and ask questions

• Take notes

• Follow up if necessary

Participate in problem-solving groups 🟡

• Focus on active listening, clear communication, and collaborative brainstorming with other members of the group

• Explore solutions and evaluate possible outcomes

Explain the nature of positive customer relations 🟡

• A positive customer relations mindset includes believing your customers

  • deserve the best

  • are your employers

  • have important problems and complaints

• Treating customers well using this mindset yields benefits to businesses, employees, and customers

  • Better treatment of customers means more repeat customers, word-of-mouth marketing, publicity, and more

• Building positive customer relations is one of the least expensive ways for a business to compete with other businesses (a helpful attitude and smile is always free, and even the smallest businesses with the most limited funds can afford to provide them)

Demonstrate a customer service mindset 🟡

• Ensuring customer satisfaction

  • Be patient, respectful, and responsive

  • Understand significance of placing customer satisfaction at the forefront of every business endeavor

  • Think that customers always come first

Develop rapport with customers 🟡

• Exhibit empathy, be understanding to complaints or concerns

• Consider a positive customer relations mindset at all times

• Understand relationship marketing

  • Marketing based on the idea that the relationship between seller and customer creates additional value for both parties, on top of value of goods/services exchanged

Reinforce service orientation through communication 🟡

• Service orientation: Ability or desire to anticipate, recognize, and meet others needs

  • Employees must ensure it is clear their intention is to help the customer

Respond to customer inquiries 🟡

• Understand what the customer is truly asking

• Be considerate

• Provide a thoughtful response

• Offer any necessary assistance to satisfy customer needs

Adapt communication to the cultural and social differences among clients 🟡

• As globalization occurs

  • Analyze target and the message

  • See cultural and social preferences and adapt communication styles based on that

  • Maintain a standard of understanding and respect, acknowledging that differences may exist

Interpret business policies to customers/clients 🟡

• Business policy: A general rule to personnel that they should follow

  • State the policy, explain how it applies to the situation

  • Stress desire to maintain fairness through use of the policy

  • Remain calm, be knowledgeable and answer questions about store policy

  • Reinforce customer service mindset

• Clear business policies that are consistently enforced reduce misunderstandings that often cause bad feelings and ill will

• Business policies are used to guide employee actions and are intended to ensure all customers are treated the same and fair and consistent treatment of them is carried out

Build and maintain relationships with customers 🔴

• Customer loyalty: The likelihood of previous customer continuing to buy from a specific organization (repeat purchases)

• You can retain current customers in many ways

  • Customer relationship management

  • Marketing (specifically relationship marketing)

  • Good customer service

  • Loyalty programs

  • Active social media presence

• These result in more business from current customers, as well as free word-of-mouth marketing and publicity

Handle difficult customers 🟡

• Hear them out and try to truly listen to what they have to say

• Show understanding for their concerns or complaints

• Respond in a concerned, but calm and friendly tone

  • Never get defensive/offended

• Keep customer satisfaction at the forefront of your mind and your main goal as you help them

• Types of difficult customers

  • Domineering/superior: Think they are better than everyone and deserve everything

  • Disagreeable: Leave-me-alone attitude, irritable and moody

  • Suspicious: Can be hard to help and difficult to change, careful with everything they do

  • Slow/methodical: Takes their time for everything, hard to deal with due to time

Handle customer/client complaints 🟡

• Listen to what they have to say

  • Pay attention to the root cause of the complaint; this is what you will address

• Be knowledgeable about store policies or whatever issue the customer is having trouble with

• Assist them by maintaining a professional and friendly tone, attempt solutions

Identify company’s brand promise 🟡

• Brand promise: Extension of a company’s positioning; an expected tangible benefit that creates desire for a product/service and differentiates a company from competitors, a statement that describes value and the company’s goals to provide for their customers

  • Communicates value

  • Differentiates from competitors

  • Creates a feeling of trust

• Look for motifs that are commonly displayed by a brand in an effort to create a mood or feeling within the customer

• Touchpoints are every interaction a company has with their customers, and essentially represent every opportunity said company has to deliver on their brand promise

  • Any interaction between a business and a customer or potential customer (there may be hundreds of potential touchpoints)

    • Not every customer will experience every touchpoint

    • The sum that the customer does experience becomes the company’s communication if its brand promise to that customer

• Refer to employee handbook/store policy if/when necessary

Determine ways of reinforcing the company's image through employee performance 🟡

• Employees are the customer’s perception of the company

  • All the advertisements in the world cannot change customer perception if employees don’t give off a good impression

  • Direct service/experience is important

• Good signs include many aspects

  • Clean, well groomed

  • Professional and friendly looking

  • Good tone, facial expressions, and body language

  • Enjoys work

  • Communicates well with customers

  • Knowledgeable about the company

• Encourage and reward good performance

• Develop handbooks for employee expectations and behavior

• Emphasize the need to exude a certain image

Discuss the nature of customer relationship management 🔴

• An approach to manage a company’s interaction with current and potential customers

  • Uses data analysis about customers’ history with a company to establish and improve business relationships with customers

• Specifically focused on customer retention and driving sales growth

• In modern society, customers prefer relationship buying with businesses rather than shopping around

  • Mixed feelings/judging parts is rare, customers look at businesses as a whole and are either loyal to or avoid brands

Explain the role of ethics in customer relationship management 🔴

• Ethics are moral rights/wrongs

  • Knowing what is ethical in a society helps present a company in a good light

• Customers will trust a company and feel good about purchasing from somewhere if behaviors by the company are interpreted as ethically correct

• Ethics in customer dealings also improves quality of customer service and fosters positive relationships

Describe the use of technology in customer relationship management 🔴

• CRM systems gather information from various sources (website interactions, calls, social media) and stores it into a centralized database

• They help facilitate communication with customers through multiple channels (live chat, SMS, calls, email) to allow for personalized interaction

• They utilize customer data to create targeted marketing campaigns

  • Analyzing the data to identify trends, patterns, and insights. enables businesses to make informed decisions regarding retention and acquisition of customers

Distinguish between economic goods and services 🟡

• Goods are tangible items that have monetary value and satisfy customer needs/wants

  • A car

• Services are intangible items that have monetary value and satisfy customer needs/wants

  • Repairing a car

• The production, distribution, and consumption of goods and services is the foundation of economic activity and trade

• Types of goods/services

  • Industrial: Purchased by a business for commercial use

  • Consumer: Purchased by an individual for personal use

  • Ask yourself who bought it and for what purpose to distinguish

Explain the concept of economic resources 🟡

• A resource is any item that can be used to produce goods/services

  • Natural resources: resources that come from nature (like water, coal, and oil)

  • Human resources: people, the work they do, and their skills/contributions

  • Capital resources: material used in production (physical/intellectual/financial)

  • Entrepreneurship resources: capacity of people to want to contribute to a field (drives innovation and invention)

• All of these resources are limited

  • The basic economic problem is how to meet unlimited wants with limited resources, this gap is called scarcity

  • Ways to save or conserve economic resources

    • Conserving the resource itself

    • Increasing the price of the resource

    • Maintaining the capital good

    • Finding other sources

Describe the concepts of economics and economic activities 🟡

• Economics: the production, distribution, and consumption of goods/services

  • Economic systems deal with the way a country provides for the needs and wants of its citizens and help countries make decisions about how to use its resources

• Economic activities are the processes that involve the production, distribution, and consumption of goods and services

  • Production

  • Distribution

  • Transportation

  • Exchange (Buying/Selling)

  • Consumption

• Sectors of economic activity

  • Primary: Activities that extract raw materials from nature

  • Secondary: Activities that process raw materials into finished goods

  • Tertiary: Activities that provide services to consumers

Determine economic utilities created by business activities 🟡

• Utility: Satisfaction, happiness, or benefit that an individual derives from consuming a good or service

  • It is a measure of the value or usefulness that something provides to a consumer.

• Measures of Utility 

  • Total Utility: The overall satisfaction gained from consuming a certain quantity of goods or services

  • Marginal Utility: The additional satisfaction gained from consuming one more unit of a good or service

  • Law of Diminishing Marginal Utility: As a person consumes more of a good, the marginal utility derived from each subsequent unit typically decreases

• Types of Utility 

  • Form Utility: Using raw materials to make a finished good

  • Place Utility: Having the good available where the customer wishes to buy it

  • Time Utility: Having the good available when the customer wishes to buy it

  • Possession Utility: Exchange of a product for money

  • Information Utility: Communicating with the customer about the product

Explain the principles of supply and demand 🟡

• The principles of supply and demand are fundamental concepts in economics that describe how the interaction between producers (supply) and consumers (demand) determines the price and quantity of goods and services in a market

  • Supply: amount of goods and services producers are willing to make and sell

  • Demand: willingness and ability of consumers to buy goods and services

    • For demand to exist, customers must have the desire for a good or service and the buying power for the good or service

    • If you want something but cannot afford it, there is no demand; similarly, if you don’t want something even though you can afford it, there is no demand

• Laws of supply and demand

  • Law of supply: As price increases, quantity supplied increases (DIRECT)

  • Law of demand: As price decreases, amount demanded decreases (INVERSE) 

• Effects of supply and demand

  • EQUILIBRIUM: When supply = demand

  • SURPLUS: When supply > demand

  • SHORTAGE: When supply < demand

• Related markets

  • A seller’s market is characterized by large demand, small supply, and high prices

  • A buyer’s market is characterized by small demand, large supply, and low prices

  • Both are the best times for either producers to produce or consumers to consume, while equilibrium meets right in the middle of both

Describe the functions of prices in markets 🟡

• Price is the money placed on a good or service

  • Signaling function: Conveys information about relative scarcity of a good (indicates when there is high demand or low supply) 

  • Rationing function: Acts as a mechanism to distribute goods among consumers- higher prices lead to less demand and lower prices encourage higher demand

  • Incentive function: Motivates producers to either increase or decrease production based on profit potential

  • Allocative function: Guides allocation of resources within an economy by directing production towards highly valued goods and services

• Price ratio is the ratio of a relative price of a product compared to the relative price of another

Explain the role of business in society 🟡

• To create and distribute goods and services that fulfill customer needs and wants (improve standard of living)

• To generate wealth, provide employment opportunities, an drive innovation in order to contribute to the economy

• Social responsibility

  • With the privilege of being in a free enterprise system where everyone is free to start a business and pursue its success comes this responsibility

  • This is the duty of a business to contribute to the well-being of society

Describe types of business activities 🟡

• Operations/logistics

  • Managing production, inventory control, distribution of services and goods

• Sales/marketing

  • Target markets, promoting products and services, managing sales channels

• General administration

  • Managing HR, legal compliance, and other daily administrative functions

• Customer service

  • Customer inquiries, providing support, and maintaining customer relationships

• Accounting and auditing

  • Financial reports, ensuring accuracy of financial data, conducting internal audits

• Budgeting and forecasting

  • Planning future financial performance, setting targets, and monitoring spending

Describe types of business models 🔴

• Retailer model

  • Consumer interacts with retailers, who buy their products from wholesalers and resell at a markup

• Manufacturing model

  • Production of goods from raw materials and wholesalers distribute products

• Franchise model

  • A blueprint is developed for a successful business and sell it to investors/franchisees

• Subscription model

  • Customers pay for access to goods or services by paying a premium every so often

• Freelance model

  • Freelancers provide services for businesses or organizations and work on 

Explain the organizational design of businesses 🔴

• The process of structuring a company’s roles, responsibilities, and relationships within its departments to effectively achieve its goals

  • Defining roles and responsibilities of each position

  • Establishing information flow

  • Determining who has the authority at different levels

  • Dividing the company into departments based on function

• Common types

  • Functional structure: based on skills/expertise (marketing, finance)

  • Divisional structure: based on units, lines, or segments (specific projects a place is working on)

  • Matrix structure: hybrid approach, employees report to a functional and project manager

Discuss the global environment in which business operate 🔴

• Globalization: the expansion of a business internationally

• Cultural imperialism: the practice of imposing a powerful culture's values, practices, and meanings on a less powerful culture

• A complex and dynamic landscape that encompasses various aspects

  • Economic factors: fluctuations in currency exchange rates, stability, and purchasing power

  • Political factors: government policies, trade agreements, regulatory frameworks

  • Social/cultural factors: language barriers, cultural norms, social values and behavior

• All societies operate differently- Hofstede’s dimensions of national culture

  • Power distance:

    • High- hierarchical structure with clear lines of authority and respect for leaders

    • Low- egalitarian structure, less power differences

  • Individualism VS collectivism: 

    • Individualistic- expectation to care for oneself and immediate family

    • Collectivistic- belonging to groups and prioritizing them

  • Masculinity VS femininity: 

    • Masculine- strong emphasis on achievement, competition, and material success

    • Feminine- quality of life, relationships

  • Uncertainty avoidance index:

    • High- preference for rules and rigid, comfortable structure

    • Low- far more openness to ambiguity and change

  • Long VS short-term orientation:

    • Long- perseverance and focus on the future valued

    • Short- respect for the past, immediate results, and tradition valued

  • Indulgence VS restraint:

    • Indulgent- free gratification of desires and enjoying life

    • Restrained- suppressed gratification to emphasize social regulations/norms

Describe factors that affect the business environment 🔴

• Economic (interest rates, inflation, consumer income and purchasing power, economic policies)

• Social (demographics, current trends, consumer lifestyles, consumer behavior and demand)

• Political (laws, regulations, tariffs and taxes)

• Technology (innovation and how people use it)

• Environment (pollution, depletion of resources)

Explain the nature of business ethics 🔴

• Ethics: Guidelines for good behavior, the difference between right and wrong

  • Behaving ethically means being truthful, fair responsible, open, and mindful of the law

• Examples of good business ethics

  • Keeping consumers informed and protected against fraud and deceit

  • Keeping away from practices like price gouging or price fixing 

  • Stay away from bribes and other unethical practices

  • Treating employees fairly, proper HR guidelines

• People do not share all the same ethical values, so businesses should create clear policies on ethics standards

• Laws and regulations

  • Robinson-Patman Act- prohibits price discrimination and states that businesses purchasing similar amounts and types of products should be charged the same price

  • Clayton Act- prevents specific business actions that might restrict competition such as exclusive agreements 

  • Sherman Antitrust Act- prevents monopolies from forming and hinders price fixing 

  • Celler-Kefauver Antimerger Act- protects competitors from takeovers if the acquisition would hinder competition

Explain how organizations adapt to today's markets 🔴

• Identifying trends, assessing competitors and reviewing business models

  • SWOT analysis (strengths, weaknesses, opportunities, threats) to identify room for improvement

  • Environmental scan to analyze outside information that may impact an organization

• Analyzing these trends and consumer needs, organizations should then use these changing needs and respond quickly by focusing on customer experience, embracing transformations (technological, sustainable) and moving forward

Explain the types of economic systems 🟡

• Traditional- People produce what they need to live; few decisions made but those that are are based in habits and tradition

  • Produced goods are what people need to survive

  • Goods are typically produced by farming, hunting, and gathering. 

  • People make their own goods, or share and trade them 

• Command- All production/distribution is controlled by the government with little to no competition 

  • Produced goods are decided by the government 

  • Products are produced in a manner decided by the government

  • Products are distributed in any way the government decides (class, reward system, lines)

• Market- Questions are all answered by individuals and businesses in the marketplace, prices are controlled by supply and demand

  • Produced goods are what people are willing to buy and sell

  • Products are produced in efficient legal methods determined by business owners

  • The way people get products is determined by how much a person pays for them

• Mixed

  • Economic decisions are made by both the government and individuals/businesses

  • Private property exists but there is some government regulation in certain industries, and the government also provides public goods/services

Identify the impact of small business/entrepreneurship on market economies 🟡

• Diversifies and supports the local economy with new jobs, products, services, and revenue

• The creation of small businesses is driven by creativity and fosters innovation

• Increases competition in the economy

• Provides a pathway for new products/services to enter the market

Explain the concept of private enterprise 🟡

• Private enterprise: Individuals and businesses are in charge of what goods/services will be provided, how they will be provided, and by whom they will be provided, not the government

  • Businesses are free to choose what they wish to produce, how to produce them, and what price they will charge 

  • Individuals and businesses may own, use, buy, and sell private property

  • There is limited government control or intervention

  • Competition exists and is encouraged

  • Businesses are motivated by the ability to make and maintain a profit

  • Prices are important in making the supply and demand system work correctly

• Personal choices is a limit in the private enterprise system

  • Even though there are many economic freedoms, we are limited by our own choices

  • If we choose to buy one thing, we may not have enough money to buy another and must choose what is more important to us

• Characteristics

  • Private property

  • Profit motive

  • Pricing systems

Identify factors affecting a business's profit 🟡

• Profit: Monetary return a business owner receives for taking the risk of investing in the business (generally, profit = income - expenses)

  • Gross profit: Money left over after cost of goods is subtracted from income from sales 

  • Net profit: Money left over after operating expenses is subtracted from gross profit 

• Factors

  • Demand for good/service

  • Available supply for good/service

  • Set prices

  • Consumer buying power and health of the economy

  • Government regulations

  • Marketing strategies

  • Expenses (fixed and variable, like payouts, cost of goods, operating costs)

  • Nature of products

Determine factors affecting business risk 🟡

• Risk: Possibility of incurring a loss

• Some risks are controllable, while others are not. Factors affecting risk:

  • Market fluctuations

  • Competition

  • Economic conditions

  • Customer behavior shifts

  • Supply chain disruptions

  • Government intervention

• Types of risks

  • Pure risk- Carries the possibility of loss or no loss

  • Speculative risk- Could result in a loss, no change, or a gain

Explain the concept of competition 🟡

• Competition is the struggle amongst businesses in the same area for customers

  • There is only ever going to be a certain amount of demand, and businesses want to be the ones to meet that demand, although multiple businesses may offer the same or similar things

• Competition is a good thing

  • An essential component of free enterprise system

  • Forces businesses to produce quality goods at reasonable prices

  • Encourages businesses to develop new products, enhance existing ones, and expand product selection to attract new customers

• Types of competition (assumptions)

  • Price competition: assumption that a customer will buy the lowest-priced product if all other considerations are equal

  • Nonprice competition: where businesses compete on factors such as product quality, business location, reputation, customer service, payment/financing options, etc.

• Monopoly: No competition in the market for a particular good or service; not permitted in a free enterprise system

Determine the relationship between government and business 🟡

• The government serves as both a protector and a regulator of business in a free market economy 

  • It serves to protect business property, enforce contracts and settle disagreements through the courts, and collect taxes on the products businesses sell

  • As a regulator, the government enacts and enforces laws to prohibit certain behaviors, control business activities, and require certain standards

    • Examples of such laws include laws to control monopolies, set product safety standards, and regulate prices.

• Businesses influence the economy by creating jobs and generate tax revenue, and foster innovation and technological innovation 

Describe the nature of taxes 🔴

• Payments made to the government for services they provide

  • The United States tax system is based on the idea that everyone should contribute their fair share, that laws should be clear/simple, and that the system should be flexible

• Income tax: Calculated as a percentage of the taxable income you earn on the job

• Social Security/FICA tax: Used so workers can receive benefits upon retirement

• Sales tax: Percentage of the price of an item a person pays when they buy something

• Estate/Inheritance tax: Taxes on wealth collected after a person has died

• Property tax: Based on value of things like land or buildings (local government source of income)

Explain the concept of productivity 🟡

• Output per worker hour that is measured over a set period of time (week, month, year)

  • Higher productivity means increased profits because more things get done throughout the supply chain, like production, promotion, inventory, and CRM

• Productivity can be increased by investing in new equipment, technologies, or facilities, providing more training to staff, or increasing worker responsibilities

• Productivity is generally calculated by dividing outputs by inputs

  • Goods and services produced (outputs) by resources utilized to produce the goods (inputs)

Analyze impact of specialization/division of labor on productivity 🔴

• It is believed that work can be completed faster and more efficiently when workers specialize in a certain area of production (like an assembly line)

  • Automation: Use of machines to do work of people, which can also cut production time, reduce errors, and simplify procedures, leading to greater overall productivity

Explain the concept of organized labor and business 🔴

• A group of workers can join together to form a union, allowing them to collectively bargain with their employer to negotiate for better wages, benefits, and working conditions

  • Gives a stronger voice in the workplace compared to individual negotiation

  • May sometimes resort to strikes, where workers refuse to work, putting pressure on employers to meet demands

Explain the impact of the law of diminishing returns 🔴

• As you continuously increase one input in a production process while keeping other inputs constant, the marginal output will eventually decrease

  • Adding more of the same input will result in progressively smaller increases in total output, ultimately reaching a point where further additions become inefficient, and may even decline

• Impacts of the law

  • Highlights there is an optimal level of input for max efficiency, emphasizes the importance of balancing inputs to increase profitability

  • Affects decision making in business, as companies need to carefully manage production inputs to not reach the point of diminishing returns

Discuss the measure of consumer spending as an economic indicator 🔴

• Consumer spending is often measured as “Personal Consumption Expenditures” or PCE

  • Reflects the total value of goods and services purchased by individuals and households

  • Provides insight into overall health of an economy and represents the largest component of a nation’s GDP

Describe the economic impact of inflation on business 🔴

• Inflation: When the price of goods and services in an economy increases over time

  • Increases cost of goods/services, which may cause lower customer demand

  • Inventory management challenges, wage pressures, borrowing costs, pressure to raise prices

  • Increased cost of raw materials, operational costs, labor, and utilities

Explain the concept of Gross Domestic Product (GDP) 🔴

• The output of goods/services produced by labor and properly located within a country

  • One measure of a nation’s productivity/output of workers in a given period of time

• Elements

  • Private investment

  • Government spending

  • Personal spending

  • Net exports of goods

  • Change in business inventories

• Two types

  • Nominal GDP: Total value using current prices

  • Real GDP: Same value adjusted for inflation

• To calculate

  • Add private business, government, and personal spending

  • Either add a trade surplus or subtract a trade deficit

  • Either add expanding inventories or subtract shrinking inventories.

• GNP (gross national product) is for a nation (including stuff produced outside its own territory by its own citizens)

Discuss the impact of a nation’s unemployment rates 🔴

• Affects consumer spending, overall economic output, individual wellbeing, and social stability

  • High unemployment rates generally lead to a weakened economy, reduced customer buying power and disposable income, and increased societal strain