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What is a not-for-profit organizations primary objective?
to not return profits to owners
What activity lies at the heart of every business endeavor?
an exchange between a buyer and a seller
What do profits represent?
rewards earned by business people who take risks to create want-satisfying goods and services
What accounting equation must every organization solve?
revenue - expense = profit
What are the four basic factors of production?
natural resources, capital, human resources, and entrepreneurship
What is a natural resources corresponding factor payment?
rent
What is capitals corresponding factor payment?
interest
What is human resources corresponding factor payment?
wages
What is entrepreneurship's corresponding factor payment?
profit
What are the four types of captial?
technology, tools, information, and physical facilities
What is an entrepreneur?
someone who takes a risk in starting a business to earn a profit
What is the private enterprise system?
an economic system that rewards firms for their ability to identify and serve the needs and demands for customers
What is an alternative term for the private enterprise system?
capitalism
What is the most basic freedom under the private enterprise system?
private property
What is private property?
the right to own, use, buy, sell, and bequeath land, buildings, machinery etc.
What does the private enterprise system guarantee business owners?
the right to all profits - after taxes - they earn through their activities
What is freedom of choice in a private enterprise system?
the potential for citizens to choose their own employment, purchases, and investments
What are the six eras of business history?
colonial, industrial revolution, industrial entrepreneurs, production, marketing, relationship
What is transaction management?
building and promoting products in the hope that enough customers will but them to cover costs and earn profits
During which era of business history was branding developed?
the marketing era
Why was the industrial revolution era important in business?
introduction of mass production by semi-skilled workers and machines
What is the definition of outsourcing?
using outside vendors to produce goods or fulfill services that were handled in-house or in-country
What is the definition of offshoring?
relocation of business processes to lower-cost locations overseas
What is the definition of nearshoring?
outsourcing production or services to locations near a firms home base
What is the definition of onshoring?
returning production to its original manufacturing location because of changes in costs or processes
What are business ethics?
the standards of conduct and moral values involving decisions made in the work environment
What is social responsibility?
a management philosophy that includes contributing resources to the community, preserving the natural environment, and developing nonprofit programs for the benefit of the general public
What is customer orientation?
focuses first on determining unmet consumer wants and needs and then designs products to satisfy those needs
What is the definition of business ethics?
the standards of conduct and moral values governing actions and decisions in the work environment
What is conflict of interest?
business decision may be influenced for personal gain or to harm another
What are Lawrence Kohlberg's stages of ethical standards?
pre-conventional, conventional, and post-conventional
What is the pre-conventional stage?
individuals consider their own needs and desires and rules are followed out of fear
What is the conventional stage?
individuals consider the interests of others and outside group influences
What is the post-conventional stage?
the highest level of ethical and moral behavior where individual follows personal principles
What does CSR stand for? What is it?
Corporate Social Responsibility. Contributions to the overall economy
What are stakeholders?
customers, investors, employees, and public affected by or with an interest in a company
What is a code of conduct?
a formal statement that defines how an organization expects employees to resolve ethical questions
What is whistle-blowing?
an employee's disclosure to company officials, government authorities, or the media of illegal, immoral, or unethical practices
What is economics?
the social science that analyzes the choices individuals, groups, and governments make in allocating scarce resources
What is microeconomics?
the study of small economic units, such as individual consumers, families, and businesses
What is macroeconomics?
the study of a nation's overall economic issues, how resources are used, and how government policies affect standard of living
What is the definition of demand?
willingness and ability of buyers to purchase goods and services at different prices
What is the definition of supply?
the amount of goods and services for sale at different prices
What is demand driven by?
the number of factors that influence how people decide to spend their money, outside circumstances, or large economic events
What is a demand curve?
a graph of the amount of a product that buyers will purchase at different prices
What do lower prices attract?
larger purchases
What is a supply curve?
a graph that shows the relationship between different prices and the quantities that sellers will offer for sale, regardless of demand
What is the equilibrium price?
supply and demand curves meet, prevailing market price at which you can buy an item
What is pure competition?
a market structure where large numbers of buyers and sellers exchange homogeneous products that no single participant can significantly influence price
What is monopolistic competition?
a market structure where large numbers of buyers and sellers exchange heterogeneous products so participant has some control over price
What is an oligopoly?
a market situation where relatively few sellers compete and high start-up costs serve as barriers to new competitors (think industries)
What is a monopoly?
a market situation in which a single seller dominates trade of a good or service for which buyers can find no close substitutes (think government regulated)
What is a planned economy?
government controls determine business ownership, profit, and resource allocation
What is socialism?
government ownership and operation of major industries such as communications
What is communism?
property would be shared equally under direction of a strong central government (classless)
What is a mixed market economy?
economic system that mixes both private enterprise and planned economy
What is recession?
cyclical economic contratction that lasts for longer than six months
What is a depression?
prolonged recession that causes significant drop in gross domestic product (GDP)
What is GDP?
gross domestic product or the sum of all goods and services produced within a countries boundaries
What is inflation?
rising prices caused by excessive consumer demand and increases in cost of production or material
What is core inflation rate?
inflation rate after energy and food prices are removed
What is hyperinflation?
economic situation characterized by soaring prices
What is deflation?
prices continue to fall and weaken economy
What is CPI?
Consumer Price Index or the monthly average change in prices of goods and services
What are the four unemployment types?
frictional (between jobs), structural (displacement), cyclical (downturn in business cycle), seasonal (pattern of work)
What does productivity describe?
the relationship between the number of units produced and the number of human inputs necessary to produce them
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