Management chapters 1-16

Revenue

Money a company brings in through the sale of goods and services.

Business model

A concise description of how a business intends to generate revenue.

Profit

Money left over after all the costs involved in doing business have been deducted from revenue.

Competitive advantage

Some aspect of a product or company that makes it more appealing to target customers

Not-for-profit organizations

Organizations that provide goods and services without having a profit motive; also called nonprofit organizations.

Goods-producing businesses

Companies that create value by making "things," most of which are tangible (digital products such as software are a notable exception).

Service businesses

Companies that create value by performing activities that deliver some benefit to customers.

Barrier to entry

Any resource or capability a company must have before it can start competing in a given market.

Social environment

Trends and forces in society at large.

Stakeholders

Internal and external groups affected by a company's decisions and activities.

Technological environment

Forces resulting from the practical application of science to innovations, products, and processes.

Economic environment

The conditions and forces that affect the cost and availability of goods, services, and labor and thereby shape the behavior of buyers and sellers.

Legal and regulatory environment

Laws and regulations at local, state, national, and even international levels.

Market environment

A company's target customers, the buying influences that shape the behavior of those customers, and competitors that market similar products to those customers.

Research and development (R&D)

Functional area responsible for conceiving and designing new products.

Information technology (IT)

Systems that promote communication and information usage through the company or that allow companies to offer new services to their customers.

Operations management

Management of the people and processes involved in creating goods and services.

Professionalism

The quality of performing at a high level and conducting oneself with purpose and pride.

Etiquette

The expected norms of behavior in any particular situation.

Economy

The sum total of all the economic activity within a given region.

Economics

The study of how a society uses its scarce resources to produce and distribute goods and services.

Microeconomics

The study of how consumers, businesses, and industries collectively determine the quantity of goods and services demanded and supplied at different prices.

Macroeconomics

The study of "big-picture" issues in an economy, including competitive behavior among firms, the effect of government policies, and overall resource allocation issues.

Natural resources

Land, forests, minerals, water, and other tangible assets usable in their natural state.

Human resources

All the people who work in an organization or on its behalf.

Capital

The funds that finance the operations of a business as well as the physical, human-made elements used to produce goods and services, such as factories and computers.

Entrepreneurship

The combination of innovation, initiative, and willingness to take the risks required to create and operate new businesses.

Knowledge

Expertise gained through experience or association.

Scarcity

A condition of any productive resource that has finite supply.

Opportunity cost

The value of the most appealing alternative not chosen.

Economic system

The policies that define a society's particular economic structure; the rules by which a society allocates economic resources.

Free-market system

Economic system in which decisions about what to produce and in what quantities are decided by the market's buyers and sellers.

Capitalism

Economic system based on economic freedom and competition.

Planned system

Economic system in which the government controls most of the factors of production and regulates their allocation.

Socialism

Economic system characterized by public ownership and operation of key industries combined with private ownership and operation of less-vital industries.

Nationalizing

A government's takeover of selected companies or industries.

Privatizing

Turning over services once performed by the government to private businesses.

Demand

Buyers' willingness and ability to purchase products at various price points.

Supply

A specific quantity of a product that the seller is able and willing to provide at various prices.

Demand curve

A graph of the quantities of a product that buyers will purchase at various prices.

Supply curve

A graph of the quantities of a product that sellers will offer for sale, regardless of demand, at various prices.

Equilibrium point

The point at which quantity supplied equals quantity demanded.

Competition

Rivalry among businesses for the same customers.

Pure competition

A situation in which so many buyers and sellers exist that no single buyer or seller can individually influence market prices.

Monopoly

A situation in which one company dominates a market to the degree that it can control prices.

Monopolistic competition

A situation in which many sellers differentiate their products from those of competitors in at least some small way.

Oligopoly

A market situation in which a small number of suppliers, some- times only two, provide a particular good or service.

Recession

A period during which national income, employment, and produc- tion all fall; defined as at least six months of decline in the GDP.

Business cycles

Fluctuations in the rate of growth that an economy experiences over a period of several years.

Unemployment rate

The portion of the labor force (everyone over 16 who has or is looking for a job) currently without a job.

Inflation

An economic condition in which prices rise steadily throughout the economy.

Deflation

An economic condition in which prices fall steadily throughout the economy.

Regulation

Relying more on laws and policies than on market forces to govern economic activity.

Deregulation

Removing regulations to allow the market to prevent excesses and correct itself over time.

Monetary policy

Government policy and actions taken by the Federal Reserve Board to regulate the nation's money supply.

Fiscal policy

Use of government revenue collection and spending to influence the business cycle.

Economic indicators

Statistics that measure the performance of the economy.

Consumer price index (CPI)

A monthly statistic that measures changes in the prices of a representative collective of consumer goods and services.

Producer price index (PPI)

A statistical measure of price trends at the producer and whole- saler levels.

Gross domestic product (GDP)

The value of all the final goods and services produced by busi- nesses located within a nation's borders; excludes outputs from overseas operations of domestic companies.

Economic globalization

The increasing integration and interdependence of national economies around the world.

Economies of scale

Savings from buying parts and materials, manufacturing, or marketing in large quantities.

Balance of trade

Total value of the products a nation exports minus the total value of the products it imports, over some period of time.

Trade surplus

A favorable trade balance created when a country exports more than it imports.

Trade deficit

An unfavorable trade balance created when a country imports more than it exports.

Balance of payments

The sum of all payments one nation receives from other nations minus the sum of all payments it makes to other nations, over some specified period of time.

Exchange rate

The rate at which the money of one country is traded for the money of another.

Free trade

International trade unencumbered by restrictive measures.

Protectionism

Government policies aimed at shielding a country's industries from foreign competition.

Tariffs

Taxes levied on imports.

Import quotas

Limits placed on the quantity of imports a nation will allow for a specific product.

Embargo

A total ban on trade with a particular nation (a sanction) or of a particular product.

Export subsidies

A form of financial assistance in which producers receive enough money from the government to allow them to lower their prices in order to compete more effectively in the global market.

Dumping

Charging less than the actual cost or less than the home-country price for goods sold in other countries.

Trading blocs

Organizations of nations that remove barriers to trade among their members and that establish uniform barriers to trade with nonmember nations.

Culture

A shared system of symbols, beliefs, attitudes, values, expectations, and norms for behavior.

Stereotyping

Assigning a wide range of generalized attributes, which are often superficial or even false, to an individual based on his or her membership in a particular culture or social group.

Ethnocentrism

Judging all other groups according to the standards, behaviors, and customs of one's own group.

Tax haven

A country whose favorable banking laws and low tax rates give companies the opportunity to shield some of their income from higher tax rates in their home countries or other countries where they do business.

Importing

Purchasing goods or services from another country and bringing them into one's own country.

Exporting

Selling and shipping goods or services to another country.

Licensing

Agreement to produce and market another company's product in exchange for a royalty or fee.

Foreign direct investment (FDI)

Investment of money by foreign companies in domestic business enterprises.

Multinational corporations (MNCs)

Companies with operations in more than one country.

Multidomestic strategy

A decentralized approach to international expansion in which a company creates highly independent operating units in each new country.

Transnational strategy

A hybrid approach that attempts to reap the benefits of international scale while being responsive to local market dynamics.

Global strategy

A highly centralized approach viewing the world as a single integrated market. This is essentially the opposite of the to international expansion, with headquarters in the home country making all major decisions.

Ethics

The rules or standards governing the conduct of a person or group.

Transparency

The degree to which affected parties can observe relevant aspects of transactions or decisions.

Insider trading

The use of unpublicized information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market.

Code of ethics

A written statement that sets forth the principles that guide an organization's decisions.

Whistle-blowing

The disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization.

Ethical lapse

A situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical.

Ethical dilemma

A situation in which more than one side of an issue can be supported with valid arguments.

Conflicts of interest

Situations in which competing loyalties can lead to ethical lapses, such as when a business decision may be influenced by the potential for personal gain.

Corporate social responsibility (CSR)

The idea that business has obligations to society beyond the pursuit of profits.

Philanthropy

The donation of money, time, goods, or services to charitable, humanitarian, or educational institutions.

Strategic CSR

Social contributions that are directly aligned with a company's overall business strategy.

Nongovernmental organizations (NGOs)

Nonprofit groups that provide charitable services or promote social and environmental causes.

Cap and trade

A type of environmental policy that gives companies some freedom in addressing the environmental impact of specified pollutants, by either reducing emissions to meet a designated cap or buying allowances to offset excess emissions.