BUS100: Chap 1-6, 19, 20 Terms

Deflation

tracks the decrease in prices of goods and services over a period of time

Consumer price index (CPI)

monthly index that measures the changes of prices in a fixed basket of goods

Inflation

tracks the increase in prices of goods over a period of time

Unemployment rate

percentage of country’s labour force being unemployed at any time. Calculated as the number of unemployed divided by the number of people currently in the labour force

Gross domestic product (GDP)

total dollar value of goods/services produced by all people within the boundaries of a country during a year

Recession

Two or more consecutive 3 month periods of decline in GDP; economy shrinks

Game theory

model the interaction between two or more businesses to determine what will happen if one or more companies change prices or introduce new products or services

Monopoly

only one seller and barriers to keep other companies from entering industry

Oligopoly

Few large sellers, sizeable investments to enter market

Monopolistic Competition

many buyers along with a high number of sellers. Sellers have to differentiate their products from competition

Equilibrium price

price at which quantity demand is exactly equal to quantity supplied

Demand

quantity of product that buyers are willing to buy at various prices

Supply

quantity of product that producers are willing to sell at each of various prices

Perfect (pure) competition

many buyers and sellers of a product and no single buyer or seller is powerfully enough to affect the price of that product

Mixed economy

most land and businesses are privately owned but with various levels of government involvement

Socialism

infrastructure is owned and controlled by the government

Market economy

based on competition in which individuals own and operate the majority of businesses that provide goods and services

Factors of production

recourses used to create goods and services

Economic system

combination of policies, laws and choices made by governments

Economy

Way in which people deal with creation and distribution of wealth

Environmental scan

process of collecting information about external environment to determine how it may impact the business’s operations

Competition

Rivalry among businesses for sales and potential customers

Command economy

government decides what goods will be made, how they’re made, who they’re made for and who owns and controls major factors of production

Business

Organization that offers products/services to people who need it

Business Integrity

Ability to act honestly, ethically and in a socially responsible manner

Corporate Governance

Way in which an organization is governed, directed and administered; requires the balancing of interests of all shareholders

Ethics

Study of right and wrong, and of morality of the choices individuals make

Business Ethics

Application of moral standards to business situations

Conflict of interest

Occurs when an employee takes advantage of a situation for their own personal interests rather than for the employer’s interest

Transparency

Free flow of information inside and outside the companyq

Social responsibility audits

Comprehensive reports of what an organization is doing in regard to social issues that affect it

Preconventional ethics

Child-like, selfish, calculating; makes these decisions based on the possibility of immediate punishment or reward.

Conventional Ethics

Employee only doing the bare minimum; consider the expectations of an organization or society

Postconventional ethics

Mature adult, thinking ahead and assessing protentional damages or consequences

Code of ethics

written guide to acceptable and ethical behaviour as an organization

Whistle-blower

employee who exposes or reports unethical practices within an organization

Ethical dilemmas

Decisions where every alternative impacts various stakeholders in unpleasant ways

Social responsibility

Recognition that business activities have an impact and those impacts are to be considered when making decisions

Encouraging ethical behaviour in organizations: Govs’ role

Legislate strict regulations

Encouraging ethical behaviours in organizations: Trade association’s role

Experts pressure businesses who stoop to questionable measures; must ensure codes do not violate competition laws

Encouraging ethical behaviour in organizations: Organization’s role

Demonstrate commitment to leadership; an ethic of codes; designate an ethics officer; protect whistle-blower

Economic Model

Business exists to produce quality goods and services, earn a reasonable profit, provide jobs and employment  

Socioeconomic model

Focuses on profits and how business decisions impact society

Strategic giving

Strategy to positively impact the company by giving with an expectation of gain

Stakeholders

anyone who is impacted by the activities of the company (employees, investors, suppliers, etc)

Social investing

Investor looking for opportunities that align with their beliefs and values

Employment equity

Increased representation of minority groups in the workplace; equal employment opportunities for all

Canadian Human Rights Commission

Ensures federally regulated employers are fulfilling their obligation to provide equal employment to all minorities

Caveat emptor

Latin phrase, “Let the buyer beware”

Green marketing

Process of developing and promoting environmentally friendly products and services

Sustainability

Protecting the natural environment to ensure survival for present and future generations

Absolute Advantage

Ability to produce a specific product more efficiently than any other nation

Comparative advantage

Ability to produce a specific product more efficiently than any other product

Exporting

Selling and shipping of raw materials

Importing

Buying of raw materials or products from other countries

Foreign-exchange control

Restriction on the amount of a particular foreign currency that can be purchased or sold

Currency devaluation

Drop in the value of one country’s currency relative to other currencies

Currency exchange rate

Value of one currency in relation to another

Balance of trade

Value of exports minus the value of imports of a country

Trade surplus 

positive balance of trade; exports is greater

Trade deficit

Negative balance of trade; imports is greater

Balance of payments

Total flow of money into a country minus the total flow of money out

Tariff

Tax on a particular foreign product being imported into a country, making imports more expensive

Quota

Limit on the amount of product that may be imported into a country during a period of time

Embargo

Trade barrier; complete halt of trade with a particular country or product

Revenue tariff

Imposed solely to generate income for the government

Protective tariff

Imposed to protect domestic industries by keeping competing products level or higher in price

Cultural barriers to trade

Consumers use “country of origin” as cues for purchase

Trade restrictions

Can lead to long-term consequences within restricting country: higher prices, restriction of choice, misallocation to weak/dying industries; increased hostilities

National rivalries

Nations compete economically, politically and militarilyi

Economic instability

Economic crisis can cause foreign investments to dry-up and economic growth to stall

World trade organization

Addresses trade barriers that prevent free trade among countries, provides trade forum for negotiations, mediates trade disputes

International monetary fund

Provides policy advice to govs and central banks on economic issues; provides lending for economic crisis, which can collapse a country and have a ripple effect; promotes exchange rate stability 

World Bank

provides low-interest loan and grants, technical support; supports investments to developing countries

Econommic community

Organization of countries found to promote free movement of resources among member nations

Letter of credit

Document issued by a bank on request of an importer

Bill of lading

Document issued to exporter by transport carrier to prove merchandise has been shippedd

Draft

Document issued by exporter’s bank, ordering payment, guaranteeing payment by importer’s bank

International direct investment

Provides complete control over operations but significant investment is required; most only pursue if they have an abundance of knowledge

Exporting and importing

Companies can manufacture products and export in foreign markets

Contractual agreements

company permits another to produce and market it’s products and use its brand name in return for royalties or other compensation

Strategic alliance

Partnership formed to create competitive advantages on a worldwide basis

Joint venture

Creation of a separate company that will be run jointly by partnering companies

Acquisition

Purchase of an existing company

Complementary products

Items sold separately but are used in combination with each other (ex. video games and counsels)

Installed base

Number of users of a particular technology or the number of units of a products that are currently in use

Network effects

Exists when the value of a product depends on the number of users; greater the better

Virtuous cycle

more complimentary goods, larger installed base

Vicious cycle

Less complimentary goods; smaller the installed base

Management information system

Technology system that provides managers and employees with the information they need to perform their jobs as effectively as possible

Cloud computing

Network of remote services hosted on the internet that store, manage and process data

Green IT

Term used to describe the practice of environmentally sustainable computing

Online-only retailing

Fully online business model where the company was conceived from the outset to sell online

Click and Mortar retailing

Partially online business model used by traditional brick and mortar retailers to sell online as a secondary channel

Business to business procurement

Online model used by companies to move their supply chain ordering processes online

Advertising-based model

Revenue model where content or functionality is offered to users for free and the company sells advertising to generate revenue

Fee-based content

Revenue model where users are charged a fee for access to news, research, entertainment or other types of content

Freemium

Revenue model where a certain amount of content is offered for free, using an advertised-based model but access to premium content requires a sub

Fee-based platform

Revenue model where companies offer users functionality or connectivity in exchange for a fee

Search engine optimization

Improve search engine ranking by: optimizing website structure, use of keywords, number of links from other sites, variety of other techniques