Business Systems and Environment

Vocabulary flashcards covering systems of government and economies, business environment factors (PESTEL), functional areas of business, basic economics and market structures, economic indicators and policies, ethics and corporate social responsibility (CSR), global business market entry methods, challenges in global business, and trade regulations.

Dictatorship

One leader or small group has total control over government and people. Citizens have few/no rights.

Communism

Government owns all resources/businesses, makes all decisions, aims for classless society.

Socialism

Government owns/controls big industries (healthcare, energy), but private small businesses exist.

Capitalism (Free Market System)

Individuals/companies own businesses; supply/demand & competition set prices.

Mixed Economy

Blend of capitalism + government regulation/public services.

Planned Economy

Government decides what to produce, how, and for whom.

Free Market Economy

Consumers & businesses decide; government plays little role.

Rights in Capitalism

Right to private property, right to own a business, freedom of choice, freedom of competition, right to profits.

PESTEL

A framework for analyzing the Business Environment, standing for Political, Economic, Social, Technological, Environmental, Legal factors.

Political Factor

Government actions that affect business.

Economic Factor

Overall economic health.

Social Factor

Demographics, culture, values.

Technological Factor

New tech impacts.

Environmental Factor

Natural resources & climate issues.

Legal Factor

Laws/regulations businesses must follow.

Management (Functional Area)

Plan, organize, lead, control business operations.

Operations (Functional Area)

Produce & deliver goods/services.

Marketing (Functional Area)

Find needs, design product, set price, promote, and distribute.

Accounting (Functional Area)

Record/report money flow.

Finance (Functional Area)

Manage funds, loans, investments.

Human Resources (HR) (Functional Area)

Hire, train, support workers.

Economics

Study of how resources are used.

Microeconomics

Focus on individuals, households, businesses.

Macroeconomics

Focus on the whole economy.

Factors of Production

Land (natural resources), Labor (people's work), Capital (tools/buildings), Entrepreneurship (risk/innovation), Knowledge (skills/info).

Supply & Demand

Demand is what buyers want; Supply is what sellers offer.

Equilibrium (Market)

The point where supply and demand match.

Perfect Competition

Many sellers, identical products, no one controls price.

Monopolistic Competition

Many sellers, slightly different products.

Oligopoly

Few big firms dominate, sometimes collude.

Monopoly

One seller controls the entire market.

Gross Domestic Product (GDP)

Total value of goods/services produced in a country.

Unemployment Rate

Percentage of people jobless but seeking work.

Inflation Rate

Average price level increases.

Consumer Price Index (CPI)

Tracks the cost of a standard basket of goods.

Business Cycle

The cyclical pattern of expansion "+ Peak "+ Recession "+ Trough "+ Recovery in an economy.

Monetary Policy

Controlled by the Federal Reserve (Fed), it manages interest rates & money supply.

Fiscal Policy

Government policy using taxes & spending.

Ethics

Rules of right/wrong.

Business Ethics

Honesty, fairness, integrity in business.

Ethical Issues (Business)

Conflicts of interest, insider trading, whistle-blowing.

Corporate Social Responsibility (CSR)

A company's duty to benefit society/environment, not just make profits.

CSR Areas

Environmental protection, consumer rights, employee well-being, community engagement.

CSR Tools

Code of ethics, training, monitoring, ethical leadership.

Triple Bottom Line (TBL)

Measures performance by Profit, People, Planet.

Import/Export

Import is buying goods from abroad; Export is selling goods abroad.

Licensing (Global Business)

Granting foreign firm rights to make/sell your product for a fee.

Franchising (Global Business)

Allowing a foreign operator to run a business under your brand.

Outsourcing / Contract Manufacturing

Hiring a foreign firm to make products or services.

Joint Venture / Strategic Alliance

Partnership between companies to share resources without merging.

Foreign Direct Investment (FDI)

A company invests directly in foreign facilities.

Cultural Challenges (Global Business)

Differences in language, values, customs, etiquette.

Economic Challenges (Global Business)

Differences in income levels, systems, infrastructure.

Legal Challenges (Global Business)

Differences in laws/regulations.

Political Challenges (Global Business)

Stability and government policies.

World Trade Organization (WTO)

International body that sets trade rules and settles disputes.

Trade Agreements

Treaties lowering trade barriers (e.g., NAFTA/USMCA, EU).

Tariff

Tax on imports.

Quota

Limit on how much can be imported.

Subsidy

Government payments to domestic producers.