The World of Business Today - Chapter 1

Vocabulary flashcards covering the fundamentals of business, economic systems, corporate structures, industry sectors, and international trade based on the Chapter 1 lecture notes.

Business

An organization that produces a good or service in exchange for money, generally with the goal of making a profit or surplus.

Market-based economy

An economy where most goods and services are bought and sold and prices are determined by supply and demand, with a minimum of government interference.

Socialized economies

Economies where the government controls the main sectors of the economy, such as in China, Cuba, and North Korea.

Good

A product that can be touched, such as a clock, pear, or computer.

Service

An activity or advice that is intangible, such as teaching, a doctor’s advice, or mowing a lawn.

Need

Something that is required for survival, such as water and food.

Want

Something that is helpful but not essential for survival, such as a game, a TV, or an expensive car.

Revenue

The income earned through sales of goods and services, fees, and investment interest.

Expenses

Costs incurred in order to generate revenues, such as rent, salaries, raw materials, and electricity.

Profit

The financial benefit gained when a company earns more money than it spends to operate, calculated as $Profit = Revenue - Expenses$.

Non-profit business

A business where there are no owners and all surplus is plowed back into its core activities for future programs and expenses.

Sole Proprietorship

A business owned and operated by a single person who gains all the benefits and assumes all the risk.

Unlimited Liability

A condition where businesses to which money is owed can take personal belongings, such as a house, car, and personal savings, if the owner cannot pay debts.

Partnerships

A business owned and operated by two or more people who share risks and provide a diversity of skills.

Corporation

A legal entity separate from its owners that can buy property, enter contracts, and sue or be sued.

Limited Liability

A legal protection where owners are only responsible for the amount of money they invested in the business.

Shareholders

People or companies who own shares of a corporation and therefore own a portion of the company.

Common Shares

Shares that represent a claim on the company and profits and grant the holder the right to vote on company decisions.

Preferred Shares

Shares that do not have voting rights but are the first to receive profits (dividends) before common shareholders.

Board of Directors

A group voted by shareholders to set the vision for the company and appoint its senior management.

Chain store

A business that is part of a large corporation and is run directly by the parent company, such as Starbucks.

Franchise

A business where each outlet is owned individually, but the operator pays for the right to use the parent company’s name, services, and products.

Private corporation

A corporation whose shares are held by a single owner or a small group and are not bought and sold on a stock exchange.

Public corporation

A corporation whose shares are bought and sold on a stock exchange, often resulting in many owners.

Stock exchange

A centralized marketplace where stocks, bonds, and other securities are traded between buyers and sellers based on market prices.

Co-operative

A special type of non-profit business owned and run by its customers for their own benefit, following the motto 'People first, profits second.'

Crown corporation

A business created by federal or provincial governments to fill important community needs where there is little incentive for for-profit businesses.

Primary industries

Industries that develop and exploit natural resources, including mining, agriculture, fishing, and lumber.

Manufacturing sector

Businesses that take raw materials and turn them into finished, tangible goods.

Services sector

The sector providing intangibles like advice and customer service, which makes up about $70\%$ of Canada’s gross domestic product.

Knowledge economy

Businesses that use science, technology, and information to boost productivity and create high-wage, high-skill employment.

Free trade

A system that allows nations to specialize, leading to greater productivity and mutual benefits for trading countries.

Fair trade

Trading arrangements that seek to correct unfair practices, including corruption and child labour, to secure better deals for workers.

CUSMA

The Canada-United States-Mexico Agreement, which is the updated successor to NAFTA.

Globalization

The interdependence of the world’s economies and the concentration of corporate power.

Protectionism

The practice of shielding a country’s domestic industries from foreign competition, typically by taxing imports.

World Trade Organization (WTO)

The main international organization dealing with the rules of trade between nations, with headquarters in Geneva.

Needs vs Wants

Needs are essential items required for survival, such as food and water; wants are non-essential items that enhance quality of life, like luxury cars or video games.

Types of Business Ownership

Forms of business ownership include sole proprietorships, partnerships, and corporations, each with different levels of liability and operational structures.

Purpose of Shares/Stocks

Shares represent ownership in a corporation; they allow investors to earn dividends and vote on company decisions.

Producers vs Consumers

Producers create goods and services to sell; consumers buy those goods and services to satisfy their needs and wants.

Supply and Demand

Supply is the amount of a good or service available for sale, while demand is the consumer's desire to purchase it; they interact to determine market prices.

Where is Equilibrium Found on a Supply vs Demand Graph?

Equilibrium is found at the point where the supply and demand curves intersect, indicating a balance where the quantity supplied equals the quantity demanded.

Domestic vs International Business

Domestic business operates within a country's borders, while international business crosses national boundaries to trade goods and services.

What is CUSMA?

CUSMA stands for the Canada-United States-Mexico Agreement; it governs trade relations between Canada, the U.S., and Mexico, replacing NAFTA.

Three Sectors of the Canadian Economy

The three sectors are: 1. Primary (extraction of natural resources like mining and agriculture), 2. Manufacturing (production of goods from raw materials), 3. Services (provision of intangible goods like healthcare and education).