POB Chapters 1-5 Terms

business

The organized effort of individuals to produce and sell goods and services for a profit.

profit

What remains after all business expenses have been deducted from sales revenue.

stakeholders

All the different people or groups affected by an organization's policies, decisions, and activities.

economics

The study of how wealth is created and distributed.

factors of production

The inputs and resources (land, labor, capital, entrepreneurship) used to produce goods and services.

entrepreneur

A person who risks time, effort, and money to start and operate a business.

capitalism

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

invisible hand

Adam Smith's term describing how an individual's own personal gain benefits others and a nation's economy.

gross domestic product (GDP)

The total dollar value of all goods and services produced within a country during a specified time period.

business cycle

The recurrence of periods of growth and recession in a nation's economic activity.

competition

Rivalry among businesses for sales to potential customers.

monopoly

A market with only one seller, where customers can only buy the product from that seller.

small business

An independent business with fewer than 500 employees, depending on its industry.

Small Business Administration (SBA)

A government agency that assists, counsels, and protects the interests of small businesses in the United States.

Service Corps of Retired Executives (SCORE)

A group of businesspeople who volunteer their services to small businesses through the SBA.

Small Business Development Centers (SBDCs)

University-based groups that provide individual counseling and practical training to owners of small businesses.

business plan

A carefully constructed guide for the person starting a business.

franchise

A license to operate an individually owned business as part of a chain of outlets or stores.

franchisor

An individual or organization granting a franchise.

franchisee

A person or organization purchasing a franchise.

equity financing

Raising funds by promising investors a share of future profits and an ownership stake in the business.

debt financing

Financing that requires the entrepreneur to repay the invested amount at a later date.

crowdfunding

Financing through online sites where entrepreneurs invite people to contribute.

ethics

The study of right and wrong and of the morality of the choices individuals make.

business ethics

The application of moral standards to business situations.

plagiarism

Knowingly taking someone else's words, ideas, or other original material without acknowledging the source.

conflict of interest

When businesspeople take advantage of a situation for their own personal interest rather than for their employer's interest.

Sarbanes-Oxley Act of 2002

Legislation with tough provisions to deter and punish corporate and accounting fraud and corruption.

code of ethics

A written guide to acceptable and ethical behavior as defined by an organization.

corporate citizenship

Adopting a strategic approach to fulfilling economic, ethical, environmental, and social responsibilities.

caveat emptor

A Latin phrase meaning 'let the buyer beware'.

consumerism

All activities undertaken to protect the rights of consumers.

affirmative action program

A plan designed to increase the number of employees from underrepresented groups at all levels within an organization.

social audit

A comprehensive report of what an organization has done and is doing with regard to social issues that affect it.

sole proprietorship

A business that is owned (and usually operated) by one person.

unlimited liability

A legal concept that holds a business owner personally responsible for all the debts of the business.

partnership

A voluntary association of two or more persons to act as co-owners of a business for profit.

general partner

A person who assumes full or shared responsibility for operating a business.

limited partner

A person who invests money in a business but has no management responsibility or liability beyond their investment.

stock

The shares of ownership of a corporation.

stockholder

A person who owns a corporation's stock.

dividend

A distribution of earnings to the stockholders of a corporation.

board of directors

The top governing body of a corporation, elected by the stockholders.

S corporation

A corporation that is taxed as though it were a partnership.

limited liability company (LLC)

A form of business ownership that combines the benefits of a corporation and a partnership.

joint venture

An agreement between two or more groups to form a business entity to achieve a specific goal.

syndicate

A temporary association of individuals or firms organized to perform a specific task that requires a large amount of money.

merger

The combining of two corporations or other business entities to form one business.