Chapter 1-3: Business, Ethics, and International Trade - Vocabulary

Vocabulary flashcards covering key terms and concepts from the notes on business foundations, ethics, and international trade.

Business

An organization or activity that provides products or services to satisfy needs and create value, with the goal of earning profit.

Tangible Product

A physical, material item produced by a business.

Intangible Product

A non-physical offering such as a service, brand, or experience that provides value.

Value

The worth delivered to customers in the form of satisfaction or benefits from a product or service.

Profit

Financial gain earned by a business after costs are deducted.

Stakeholders

Groups with an interest in a company’s activities: customers, employees, investors, government regulators, and the community.

Economic Systems

The methods a society uses to organize production and distribution (communism, socialism, capitalism).

Communism

An economic system with collective or state ownership and centralized planning.

Socialism

An economic system with government involvement and public or cooperative ownership in key sectors.

Capitalism (Free Enterprise)

An economic system based on private property, voluntary exchange, competition, and profit motive.

Free-Enterprise

The right to own property, earn profits, and determine business operations.

Property Rights

Legal rights to possess, use, and dispose of property.

Supply

The quantity of goods and services producers are willing to offer at a given price.

Demand

The quantity of goods and services buyers are willing to purchase at a given price.

Equilibrium Price

The price at which quantity supplied equals quantity demanded.

Competition

Rivalry among businesses to attract customers, often improving quality or lowering prices.

Pure Competition

A market with many buyers and sellers where prices are determined by supply and demand.

Monopolistic Competition

Many firms with some price-setting power due to product differences and marketing.

Oligopoly

A market dominated by a few firms that can influence price and face barriers to entry.

Monopoly

A market with a single supplier, where the price is controlled and entry is blocked by barriers.

Economic Expansion

A period of growth where the economy increases production and spending (standard of living may rise).

Economic De-expansion

A contraction in the economy that can lead to a recession.

Consumer Price Index (CPI)

A measure of the average change over time in the prices paid by consumers (inflation).

Economics

The study of how resources are distributed to produce goods and services.

Natural Resources

Resources provided by nature (not made by people).

Human Resources (Labor)

People who contribute labor to production.

Financial Resources (Capital)

Money and financial assets used to fund production.

Intangible Resources

Non-physical assets such as reputation and brand value.

Open Economy

An economy that engages in trade across borders.

GDP (Gross Domestic Product)

The total value of all final goods and services produced within a country in a period.

Functions of Management

Planning, Organizing, Leading, and Controlling—the core activities of management.

Planning

Setting goals and determining the actions needed to achieve them.

Organizing

Arranging resources and tasks to implement plans.

Leading

Guiding and motivating people to achieve objectives.

Controlling

Monitoring performance and making adjustments as needed.

Social Responsibility Categories

Legal, Economic, Philanthropy, and Ethics—the areas where businesses are expected to act responsibly.

Legal Responsibility

Obeying laws and regulations.

Economic Responsibility

Being profitable and financially viable.

Philanthropy

Voluntary actions to support social good beyond legal obligations.

Ethics

Standards of right and wrong guiding business conduct.

Influences on Business Ethics

Managers, coworkers, individual values, and codes/compliance requirements shape ethical behavior.

Sustainability

Conducting business to meet present needs without compromising future generations.

Tone at the Top

Leadership’s visible commitment to ethics and compliance.

Moral Hazard

When risk and reward are misaligned, reducing the incentive to act prudently (e.g., risky loans during the 2008 crisis).

Sarbanes-Oxley Act

US law that criminalizes securities fraud and strengthens penalties for corporate fraud.

Misconduct

Unethical behavior that can lead to legal disputes.

Ethical Gray Areas

Situations with unclear values, codes, or laws where multiple actions may seem justifiable.

Ethical Issue

A problem requiring a choice among actions with moral implications.

Improving Ethical Behavior

Using codes of ethics, whistleblowing, and integrity-based programs to reduce misconduct.

Corporate Citizenship

A company’s role as a good citizen, including environmental and social initiatives.

ESO Stages (Sustainability Framework)

Stages assessing sustainability: financial viability, legal compliance, ethics/values, and philanthropic activity.

Intellectual Property Protections

Legal rights (patents, trademarks, copyrights) protecting creations of the mind.

NAFTA

North American Free Trade Agreement; reduces tariffs and promotes trade/investment among the US, Canada, and Mexico.

APEC

Asia-Pacific Economic Cooperation; 21 member economies promoting open trade and economic cooperation; accounts for a large share of world trade and GDP.

ASEAN

Association of Southeast Asian Nations; promotes economic integration and free trade among 10 member states.

GATT

General Agreement on Tariffs and Trade; predecessor to the WTO, reduced tariffs worldwide.

IMF

International Monetary Fund; promotes international financial cooperation and provides short-term loans and currency support.

Offshoring

Relocating a business process to another country to reduce costs.

Joint Venture

A partnership between two or more parties for a specific project or limited time.

Trading Company

A firm that buys goods in one country and sells them to buyers in another.

Commercial Service

US Department of Commerce unit offering knowledge about international markets to firms.

CIBER

Centers for International Business Education & Research; government-funded programs to help US firms compete globally.

Licensing

Granting permission to use a brand, technology, or intellectual property in exchange for fees or royalties.

Franchising

Expanding a business by licensing the franchisee to operate under the franchiser’s brand and standards.

Countertrade

Trade where goods/services are exchanged partly or wholly for other goods/services (barter).

Exporting

Selling domestically produced goods to foreign markets.

Importing

Bringing goods or services into a country from abroad.

Outsourcing

Contracting out tasks to external suppliers to reduce costs or focus on core activities.

Insourcing

Foreign companies performing tasks within the home country (in-house by domestic firm).

Direct Investment

Direct involvement in establishing or acquiring operations abroad; high control and resource commitment.

Multinational Corporation (MNC)

A company that operates in multiple countries, often with assets and operations larger than some nations.

Multinational Strategy

Customizing products and operations to fit different cultural, technological, regional, and national contexts.

Global Strategy (Globalization)

Standardizing products and operations across the world.

Economies of Scale

Cost advantages gained by increasing production and spreading fixed costs over more units.

Balance of Trade

Difference between a country’s exports and imports.

Trade Deficit

Negative balance of trade; imports exceed exports.

Balance of Payments

Difference between money entering and leaving a country.

Infrastructure

Physical and organizational systems (roads, ports, communications) enabling commerce.

Exchange Rates

The value of one currency relative to another.

Tariffs

Taxes on imports or exports.

Quotas

Limits on the quantity of goods that can be imported or exported.

Embargo

Government-imposed ban on trade with a country or on certain activities.

Dumping

Selling goods in a foreign market at below cost or market price to gain market share.

Sociocultural Barriers

Differences in language, body language, time perception, and holidays that affect business.

WTO

World Trade Organization; administers global trade rules and resolves trade disputes.

World Bank

International financial institution that funds development and provides loans to developing countries.

Trade Blocks/Common Markets

Regional groupings (e.g., NAFTA, APEC, EU, ASEAN) that promote freer trade and economic integration.

Exporting vs. Importing

Exporting sells domestic goods abroad; importing brings foreign goods into a country.

Countertrade (revisited)

Barter-like trading where goods/services are exchanged for other goods/services.