Management: Chapter 1 - Business environment

Business

Organisation that provides goods or services to make profit

Profits

Difference between revenues and expenses

Domestic business environment

Where firms conduct operations and get revenue from

Global business environment

International forces that affect business

Technological environment

Ways by which firms create value for their constituents

Political-legal environment

Relationship between business and environment

Sociocultural environment

Includes customs, morals and values of a society and determines the business standards that a society is likely to accept

Economic environment

Relevant conditions that exist in the economic system a company operates in

Economic systems

system a nation uses to allocate its resources among citizens - individuals and organisations

Factors of production

Information resources, physical resources, entrepreneur, capital and labor

Planned economy

Relies on a centralized government that controls everything (communism)

Market economy

individual producers and consumers control production by creating combinations of supply and demand

Mixed market economy

Both planned and marke

Privatization (economic system)

government enterprises into privately owned companies

Demand

willingness and ability of buyers to purchase a product

Supply

willingness and ability of sellers to offer goods and/or services

Private enterprise

ownership of resources and used to create wealth

Degrees of competition - Perfect competition

Many competitors, relatively easy to enter the industry, identical goods or services, no control over price

Degrees of competition - Monopolistic competition

Some competitors, fairly easy to enter the industry, similar goods or services, some control over price

Degrees of competition - Oligopoly

Few competitors, difficult entry in the industry, similar or different goods/services, some control over price

Degrees of competition - Monopoly

no competitors, entry into industry regulated by government, no directly competing goods or services, considerable control over price

Business cycle

short-term ups and downs in an economy

Aggregate output

all output of goods or services produced during a given period; measure of growth in the business cycle

Standard of living

total quantity and quality of goods that one can buy

GDP

total value produced in an economy in a given period - measure of aggregate output

Productivity

measure of economic growth that compares how much a system produces considering the resources needed to produce it

Stability

Condition at which money in an economic system is growing at a steady rate