EP1130 - Business for Info Systems Quiz 1 Definitions

Definitions from McGraw Hill Education - Options for Organizing Business Chapters 1, 2, and 4

Business

Individuals or organizations who try to earn a profit by providing products that satisfy people’s needs.

Product

A good or service or idea with tangible and intangible characteristics that provide satisfaction and benefits.

Profit

The difference between what it costs to make and sell a product and what a customer pays for it.

Non-profit organizations

A good or service with tangible and intangible characteristics that provide satisfaction and benefits. There is no profit involved and the its purpose is to change lives.

Stakeholders

Groups that have a stake in the success and outcomes of a business. Includes employees, customers, investors, and external suppliers.

Economics

How resources are distributed.

Natural Resources

Land, forests, minerals, water, and pretty much anything not created by people.

Human Resources (Labour)

Physical and mental abilities that people use to produce goods and services.

Financial Resources (Capital)

The funds used to acquire the natural and human resources needed to provide products.

Entrepreneurship

Organizes resources, or factors in production, and takes risks.

Economic System

Describes how a particular society distributes its resources to produce goods and services.

Communism

A society in which people, without regard to class, own all the nation’s resources.

Socialism

An economic system in which the government owns and operates basic industries such as postal services, telephones, utilities, transportation, health care, etc.

Capitalism (Free Enterprise)

An economic system in which individuals own and operate the majority of businesses that provide goods and services.

Mixed Economies

Economies made up of elements from one or more economic systems.

Demand

The number of goods and services that consumers are willing to buy at different prices at a specific time.

Supply

The number of products that businesses are willing to sell at different prices at a specific time.

Equilibrium Price

The price at which the number of products that businesses are willing to supply equals the number of products that consumers are willing to purchase at a specific point in time.

Competition

Represents the rivalry among businesses for consumers’ dollars.

Pure Competition

Exists when there are many small businesses selling one standardized product. No one business sells enough of the product to influence the market price.

Monopolistic Competition

Exists when there are fewer businesses than in a pure competition environment and the differences among the products they sell are small.

Oligopoly

Exists when there are very few businesses selling a product. Individual businesses have control over their products’ price because each business supplies a large portion of the products sold.

Monopoly

Exists when there is only one business providing a product in a given market. Examples are companies that supply electricity, natural gas, and water.

Economic Expansion

Occurs when an economy is growing and people are spending more money. Their purchases stimulate the production of goods and services, which in turn stimulates employment. This often leads to increased income levels and improved standards of living.

Economic Contraction

A slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers.

Depression

A condition of the economy in which unemployment is very high, consumer spending is very low, and business output is very low.

Inflation

A condition characterized by a continuing rise in prices.

Unemployment

A situation where individuals who are able and willing to work cannot find employment, leading to a rise in the unemployment rate.

Gross Domestic Product (GDP)

The sum of all goods and services produced in a country during a year. does not include profits from companies’ overseas operations.

Budget Deficit

When a nation spends more than it takes in from taxes.

Budget Surplus

When a nation spends less than it takes in from taxes.

Trade Balance

The difference between exports and imports. If the balance is positive, it is a trade surplus. if the balance is negative, it’s a trade deficit.

Consumer Price Index

Measures changes in prices of goods and services purchased for consumption by typical urban households.

Per Capita Income

Indicates the income level of “average” Canadians.

Worker Productivity.

The amount of goods and services produced for each hour worked.

Standard of Living

Refers to the levels of wealth and material comfort that people have available to them.

Manufacturing Economy

One devoted to manufacturing goods and providing services rather than producing agricultural products.

Service Economy

One devoted to the production of services that make life easier for busy consumers.

E-commerce

Transactions involving goods and services over the internet.

Technology

The methods and processes used in creating applications to solve problems and make decisions.

Artificial Intelligence (AI)

Relates to machines that are able to learn and perform activities and tasks that usually require human itnelligence.

Big Data

Refers to large volumes of structured and unstructured data that is transmitted at very fast speeds.

Blockchain

A decentralized record-keeping technology that stores linked blocks of order transactions over time.

Drones

Remote control aerial devices that can be programmed with AI to perform human tasks such as delivering products.

Entrepreneur

An individual who risks her or his wealth, time, and effort to develop an innovative product for profit.

Business Ethics

Principles and standards that determine acceptable conduct in business organizations.

Ethics

Decisions made by an individual or work group that society evaluates as right or wrong.

Social Responsibility

Impact of the entire organization’s activities on society.

Business Law

Refers to the laws and regulations that govern the conduct of business.

Conflict of Interest

When a person must choose whether to advance his or her own personal interests or those of others.

Insider Trading

The buying or selling of stocks by insiders who possess material that is still not public. Is an example of a conflict of interest.

Plagarism

Taking someone else’s work and presenting it as your own without mentioning the source.

Code of Ethics

Formalized rules and standards that describe what the company expects of its employees.

Whistleblowing

When an employee exposes an employer’s wrongdoing to outsiders.

Corporate Citizenship

Is the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their various stakeholders.

Right to Safety

Means that a business must not knowingly sell anything that could result in personal injury or harm to others.

Right to be Informed

Gives consumers the freedom to review complete information about a product before they buy it.

Right to Choose

Ensures that consumers have access to a variety of products and services at competitive prices.

Right to be Heard

Assures consumers that their interests will receive full and sympathetic consideration when the government formulates policy.

Sole Proprietorships

Businesses owned and operated by one individual.

Typically consist of less than 50 people.

Most common form of business organization in Canada.

What are the major advantages of a sole properietorship?

1) Ease and cost of formation

2) Secrecy

3) Distribution and use of profits

4) Flexibility and control of the business

5) Government Regulation

6) Taxation

7) Closing the business

What are the major disadvantages of Sole Proprietorship?

1) Unlimited Liability

2) Limited Sources of funds

3) Limited Skills

4) Lack of continuity

5) Taxation

Partnership

An association of two or more persons who carry as co-owners of a business for profit.

General Partnership

Involves a complete sharing in the management of a business.

Each Partner has unlimited liability for the debt of the business.

Limited Partnership

Has at least one other general partner, who assumes unlimited reliability.

Limited Liability Partnership (LLP)

A unique partnership agreement where non-negligent partners are not personally responsible for losses created by other partners.

Partnership Agreement

A legal document that sets forth the basic agreement between partners.

What are the advantages of a partnership?

1)Ease of organization

2) Combined knowledge and skills

3) Availability of capital and credit

4) Decision making

5) Regulatory Controls

What are the disadvantages of partnerships?

1) Disagreement between partners

2) Unlimited Liability

3) Business Responsibility

4) Life of the partnership

5) Distribution of Profits

6) Limited sources of funds

Corporation

A Legal entity, created by the state, whose assets and liabilities are seperate from its owners.

Stock

Individuals and organizations who own shares of a business.

Certificate of Incorporation

A legal document that the government issues to a company based on information the company provides in the articles of incorporation.

What are the types of corporations?

1) Private Corporation

2) Public Corporation

3) Crown Corporation

4) Non-profit corporations

Private Corporation

Owned by just one or a few people who are closely involved in managing the business.

Public Corporation

One whose shares anyone may buy, sell, or trade on a public stock exchange.

Crown Corporations

Are corporations owned by the provincial or federal government such as Canada Post.

Non-profit Corporations

Focus on providing a service rather than earning a profit, but they are not owned by a government entity.

Board of Directors

Elected by shareholders to oversee the general operation of a corporation.

Inside Directors

An employee of a company who is on the board of directors.

Outside Directors

An individual who is unaffiliated with a company but is on the Board of Directors.

Preferred Shares

A type of share that Gives individuals the ability to have a claim to profits before other shareholders.

Common Shares

A type of share that does not give an individual preferential treatment regarding dividends but have voting rights.

What are the advantages of Corporations?

•Limited liability

•Ease of transfer of ownership

•Perpetual life

•External sources of funds

•Expansion potential

•Tax Advantages

What are the disadvantages of Corporations?

•Double taxation

•Forming a corporation

•Disclosure of information and regulations

•Impact on management decisions

•Employee-owner separation

Joint Venture

A partnership established for a specific project or for a limited time.

Cooperatives (co-ops)

An organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger corporation.

Merger

Occurs when two companies (typically corporations) combine into one new company.

Acquisition

Occurs when one company purchases another, generally by buying most of its shares.

Leveraged Buyout (LBO)

A group of investors borrow money from banks and other institutions to acquire a company.

Corporate Raider

when a company wants to acquire or take over another company by first offering to buy some or all stock at a premium over it’s current price.

Tender Offer

a formal public bid by a company to purchase a specific number of shares of another company’s stock at a premium price over the market price.

Poison Pill

firm allows shareholders to buy more shares of stock at prices lower than the current market value

Shark Repellent

management requires a large majority of shareholders to approve the takeover

White Knight

a more acceptable firm that is willing to acquire the threatened company.

Canadian Federation of Independent Businesses (CFIB)

offers advice and information to current and potential small businesses.

Advantages of a Social Entrepreneur

-          Independence

-          Enjoyment

-          Financial Rewards

-          Costs

-          Management

-          Focus

-          Reputation

Disadvantages of a social entrepreneur

-          High Stress Level

-          Limited Financial Rewards

-          Time Demands

-          High Failure Rate

External Shocks

Events that occur in a company’s external environment that the company could not control.

Equity Financing

owner of a business uses real personal assets rather than borrowing funds from outside sources to get started in a new business.

Venture Capitalists

persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stock.