FBLA Introduction to Business Concepts

Needs

Things that are required in order to live. Everyone needs food, water and shelter, but today's economy also needs good education, employment, and safety.

Wants

Things that add comfort and pleasure to your life. Most products and services purchased meets more than your needs.

Goods

Things that you can see and touch. They are the products you can purchase to meet your wants and needs.

Services

Activities that are consumed at the same time they are produced.

Economic resources

The means through which goods and services are produced. are called factors of production.

Scarcity

Not having enough resources to satisfy every need.

Economic decision making

The process of choosing which wants, among several options, will be satisfied.

Trade-off

When you give up something to have something else.

Opportunity cost

The value of the next-best alternative that you did not choose.

Economic system

A nation's plan for answering the three economic questions.

Command economy

The resources are owned and controlled by the government.

Market Economy

The resources are owned and controlled by the people of the country.

Traditional Economy

Goods and services are produced the way it has always been done.

Capitalism

The private ownership of resources by individuals, rather than by the government.

Consumer

A person who buys and uses goods and services.

Producers

Individuals and organizations that determine what products and services will be available for sale.

Demand

The quantity of a good or service the consumers are willing and able to buy.

Supply

Refers to the quantity of a good or service that businesses are willing and able to provide.

Market Price

The point where supply and demand are equal.

Gross Domestic Product(GDP)

It is the most widely used measure. GDP is the total dollar value of all final goods and services produced in a country during one year.

GDP per capita

Output per person.is calculated by dividing __ by the total population, this shows how much money each person is expected to bring into the economy.

Unemployment rate

One economic statistic of concern. It is the portion of people who can work, but are not working.

Productivity

A vital source of economic growth is an increase in output per worker. Productivity is the production output in relation to a unit of input, such as a worker.

Personal income

Refers to salaries and wages as well as investment income and government payments to individuals.

Retail sales

Is measured on a monthly basis by the U.S. Department of Commerce. It tracks the sales of durable and nondurable goods bought by consumers.

Business Cycle

The movement of the economy from one condition to another and back again. They are the recurring ups and downs of GDP.

Prosperity

A period in which most people who want to work are working.

Recession

A period in which demand begins to decrease, businesses lower production, unemployment begins to rise, and GDP growth slows for two or more quarters of the calendar year.

Depression

A phase marked by a prolonged period of high unemployment, weak consumer sales, and business failures.

Recovery

The phase in which unemployment begins to decrease, demand for goods and services increases, and GDP begins to rise again

Inflation

An increase in the general level of prices. During this time, more money is required to buy the same amount of goods and services.

Price Index

A number that compares prices in one year with prices in some earlier base years. There are different types of price indexes. The most watched measures of inflation is called Consumer Price Index(CPI)

Deflation

A decrease in the general level of prices. It usually occurs in periods of recession and depression.

Capital projects

Involve spending by businesses for items such as land, buildings, equipment, and new products.

Stock

Represents ownership in a corporation. Stop ownership is commonly called equity.

Bond

Represents debt for an organization. If you purchase a corporate of government bond, you are a creditor.

Budget Surplus

When a government may spend less than it takes in. if a surplus exists, government may reduce taxes or increase spending on various programs.

Budget Deficit

When a government spends more than it takes in. Over time, deficits build up.

National Debt

The total amount owed by the federal government.

Imports

Items bought from other countries. Without foreign trade, many things you buy would cost more or not be available.

Exports

Goods and services sold to other countries.

Balance of trade:

The difference between a country's total exports and total imports;

The Balance of Payments

The difference between the amount of money that comes into a country and the amount that goes out of it.

Exchange rate

The value of a currency in one country compared with the value in another.

Trade Barriers

Government actions can create these, which are restrictions to free trade. Three common formal forms are quotas, tariffs, and embargoes.

Informal trade barriers

These situations are not based on formal government actions but they do restrict trade.

Quota

To regulate international trade, governments set a limit on the quantity of a product that may be imported or exported within a given period.

Tariff

A tax that a government places on certain imported products.

Embargoes

When a government stops the export or import of a product completely.

A multinational company (MNC)

An organization that does business in several countries. It usually consists of a parent company in a home country and divisions or separate companies in one or more host countries.

Joint Venture

An agreement between two or more companies to share a business project.

Contract:

An agreement to exchange goods or services for something of value, usually money.

Patent

Gives the inventor the sole right to make, use or sell the item for 20 years,

Copyright

Protects the creative work of authors, composters, and artists. Copyright lasts for the life of the person receiving the copyright.

Trademark

A word, letter, or symbol linked with a specific company or product. Businesses register company names, team emblems, and label designs with the government.

Public utility

An organization that supplies a service or product vital to all people.

Monopoly

When a business has control of the market for a product or service.

Antitrust laws

Prevent other unfair business practices such as false advertising, deceptive pricing, and misleading labeling.

Contingent worker

One who has no explicit or implicit contract for long-term employment.

Intermediaries

Businesses involved in selling the goods and services of producers to consumers and other businesses

Service business

Carries out activities that are consumed by its customers.

Proprietorship

A business owned and run by just one person. It is the easiest form of business to start and end.

Partnership

A business owned and controlled by two or more people who have entered into an agreement.

Corporation

A separate legal entity formed by documents filed with a state.

Partnership Agreement

A written agreement among all owners. It details the rules and procedures that guide ownership and operations.

Articles of incorporation

A written legal document that defines ownership and operating procedures and conditions for the business.

Franchise

A written contract granting permission to operate a business and sell products and services in a set way.

Mission statement

A short specific written statement of the reason a business exists and what it wants to achieve.

Goal

A precise statement of results the business expects to achieve.

are used to define what needs to be accomplished and to determine if the business is successful.

Policies

Guidelines used in making consistent decisions.

Procedures

Descriptions of the way work is to be done.

Organization Chart

A diagram that shows the structure of an organization, classifications of work and jobs, and the relationships among those classifications.

Entrepreneur

Someone who takes a risk in starting a business to earn a profit.

Entrepreneurship

The process of starting, organizing, managing, and assuming the responsibility for a business.

Venture capital

Money provided by large investors to finance new products and new businesses that have a good chance to be very profitable.

Innovation

An invention or creation that is brand new.

Improvement

A designed change that increases the usefulness of a product, service, or process.

Small Business

An independent business with fewer than 500 employees.

Small Business Administration (SBA)

A government agency that helps small business owners develop business plans and obtain financing and other support for their companies.

Business Plan

A written description of the business idea and how it will be carried out, including all major business activities.

Start-up financing

The amount of money needed to open the business. It includes the cost of buildings, equipment, inventory, supplies and licenses

Short-Term Financing

The money needed to pay for the current operating activities of a business.

Long-Term Financing

Money needed for the main resources of a business that will last for many years.

Management

The process of accomplishing the goals of an organization through the effective use of people and other resources.

Planning

Involves analyzing information, setting foals, and making decisions about what needs to be done.

Organizing

Means identifying and arranging the work and sources needed to achieve the goals that have been set.

Staffing

Includes all of the activities involved in obtaining, preparing, and compensating the employees of a business.

Implementing

The effort to direct and lead people to accomplish the planned work of the organization.

Controlling

Determines to what extent the business is accomplishing the goals is set to to reach in the planning stage.

Management Style

The way a manager treats and involves employees. Two very different styles often used by managers are tactical management and strategic management.

Leadership

The ability to motivate individuals and groups to accomplish important goals.

Human relations

The way people get along with each other.

Informal Influence

Usually one or two people emerge as leaders to help get the group focused and organized.

Formal Influence

The leadership position is part of the organization's structure.

Ethical Business Practices

Ensure that the highest standards of conduct are observed in a company's relationships with everyone who is a part of the business or is affected by the business activities.

Core values

The important principles that will guide decisions and actions in the company.

Workforce

Made up of all the people 16 years and older who are employed or who are looking for a job.

Downsizing

A planned reduction in the number of employees needed in a firm in order to reduce costs and make the business more efficient.

Outsourcing

Revoces work from one company and sends it to another company that can complete it at a lower cost.

Job Analysis

A specific study of a joh to identify in detail the job duties and skill requirements.