Business Management Lecture Notes

Vocabulary flashcards covering core business management concepts, economic systems, macroeconomics, microeconomics, strategic planning, ethics, and global trade based on Lema Weise's lecture notes.

Business

An organization that offers services and products that meet a person's needs and tries to earn a profit.

Utility

Customer need weighted by benefit received and satisfaction.

Goods

Tangible products offered by a business.

Services

Intangible offerings provided by a business.

Profit

The difference between the cost to make and sell a product and the price customers pay for it (or money left over from expenses incurred).

Standard of Living

The output of goods produced and services customers can afford with the money they have.

Quality of Life

How happy people are based on a variety of factors including life expectancy, education, medical care, cleanliness, and leisure time.

Risk

A threat that could cause a company to lose money over time or fail to reach profit and organizational goals.

Revenue

Money received through selling or providing goods and services.

Fixed Costs

Expenses that do not change with output volume, including leases, insurance, and marketing.

Variable Costs

Expenses such as wages, supplies, and transportation that increase with output or service delivery.

Breaking Even

The financial state in which a company's total revenue just covers its total expenses.

Loss

The result when a business incurs more costs than the revenue it generates.

Sole Proprietorship

A business structure where the owner is the business, legally liable, personally at risk, and responsible for paying taxes.

Partnership

A business structure where two or more people work together, with each person at risk and taxes paid in proportion (such as an LLP).

Limited Liability Company (LLC)

A business entity taxed like a partnership but shielding members from legal liability, limiting liability to the owner's interest.

Corporation

A business entity considered to be a person in its own right under the law, where ownership interest is represented by stock, and the corporation is legally liable and responsible for taxes.

Radar (Stripe)

A fraud-detection service that uses AI to analyze payments and spot suspicious activity.

Atlas (Stripe)

A service that helps local and overseas startups obtain a taxpayer ID, set up a US bank account, and receive legal and tax advice.

Nonprofit Organization

Businesses whose goal is not related to making money, structured like corporations with special tax status in the US.

Commodities

Inputs that are known as natural resources when in a natural state, such as farmland, forests, minerals, oil deposits, and water.

Labor / Human Resources

The contribution provided by people who work for a business.

Capital

Tools, machines, equipment, and buildings used by a business to produce goods and services.

Knowledge

The combined talents and skills of employees within a business.

Inflation

An increase in general prices leading to a decrease in the purchasing power of money.

Technology

Using science and engineering skills and knowledge to better a workplace and achieve growth, efficiency, and strategic advantage.

Internet

A global network system based on a standardized set of communication protocols.

Economic System

A collection of production, resource allocation, and distribution of goods and services.

Socialism

An economic system where some basic industries are controlled and owned by the government or private sector with strong government control over critical businesses.

Macroeconomics

The branch of economics that studies the overall economy by looking at large populations of businesses, products, and people.

Microeconomics

The branch of economics that looks at the actions of individual participants in an economy, their behavior, forms of competition, and supply and demand.

Gross Domestic Product (GDP)

The overall market value of all finalized goods and services produced within a country every year, given by the formula $\text{GDP} = C + I + G + (X - M)$.

Recession

An economic decline in GDP that lasts for at least 2 consecutive quarters.

Business Cycle Graph

A diagram illustrating the cyclical movement of GDP over time through Peak, Recession, Depression, Trough, Recovery, and Expansion.

Frictional Unemployment

Short-term unemployment unrelated to the business cycle, such as individuals looking for jobs after graduating college.

Structural Unemployment

Involuntary unemployment unrelated to the business cycle, caused by a mismatch of worker skills and available regional jobs.

Cyclical Unemployment

Unemployment directly tied to the business cycle that reduces overall demand for labor.

Demand-Pull Inflation

Inflation that occurs when total demand for goods and services is higher than the available supply.

Cost-Push Inflation

Inflation caused by higher production costs due to rising expenses for materials and wages.

Consumer Price Index (CPI)

A price index tracking common goods and services purchased by traditional urban consumers.

Producer Price Index (PPI)

A price index measuring prices paid by producers and wholesalers for items such as raw materials and finished goods.

Monetary Policy

Government and Federal Reserve System programs designed to control the amount of money circulating in the economy and interest rates.

Fiscal Policy

Government policy involving taxation and spending used to stimulate or regulate the economy.

Strategic Planning

The process an organization goes through to identify and understand internal and external factors (SWOT) and develop plans to address them.

COSO Framework

An Enterprise Risk Management (ERM) framework established by the Committee of Sponsoring Organizations of the Treadway Commission for auditing and risk assessment.

Deontology

An ethical theory stating that employees and businesses should fulfill their obligations and duties when faced with ethical scenarios.

Utilitarianism

An ethical framework focusing on the actions taken by a person or business where there is always a winner and a loser.

Stakeholders

Any individuals or groups with a significant interest or concern in an organization, including shareholders, employees, customers, and the general public.

Balance of Payments

A comprehensive measure of all goods, services, capital, investments, and financial transactions entering and leaving an economy.

Balance of Trade

The difference in value between a nation's total exports and total imports.

Absolute Advantage

The ability of a country to produce and sell products at lower overall costs than other countries.

Comparative Advantage

The principle that a country should specialize in producing goods and services made easily and at the lowest opportunity cost for maximum profit.

Opportunity Cost

The value of what must be given up or sacrificed in exchange for choosing a specific action or alternative.

Tariff

A tax imposed by a nation against imported goods coming from another country.

Import Quota

A nontariff trade barrier that limits the total number of specific items an international business can bring into a foreign nation.

Embargo

A complete ban on trade and products from a specific country.

Dumping

The practice of charging a lower price for a product in an international market than the company's internal cost of production.

Licensing

A legal process in which a business owning a license enters an agreement allowing another business (licensee) to use its proprietary processes, trademarks, or patents.

Franchising

A form of licensing where a franchisee pays fees to operate a business location under a established brand and operational model.

Direct Foreign Investment

Active ownership by an investor or entity providing money to acquire a controlling or large minority interest in an overseas company.

Countertrade

An international trade agreement in which payment is made by exchanging goods or services directly in bartering rather than using currency.