Business Exam 1

Business

Organized effort of individuals to produce and sell, for a profit, the goods and services taht satisfy society’s needs

Land and Natural resources

raw materials used in manufacturing processes

Labor

time and effort used to produce goals and services

Capital

facilities, equipment, machines, tool, and man-made items used in production of goods and services and operation of businesses

Entrepreneurship

activity that conceptualizes, creates, and organizes land and natural resources, labor, and capital

Service business

business that provides a service to people

Manufacturing business

business that processes material resources into tangible goods

Marketing intermediaries

Business that buys products from manufacturers to resell

Brick-and-mortar business

Business with a physical location

E-business

the organized effort of individuals to produce and sell for a profit, the goods and services that satify society’s needs through the facilities available on the internet

Profit

what remains after all business expenses have been deducted from sales revenue

Stakeholders

All people or groups of people who are affected by an organization’s policies, decisions, and activites

Economics

The study of how wealth is created and distributed

Microeconomics

Study of decisions made by individuals and businesses

Macroeconomics

study of the national and global economy

Factors of production

the inputs and resources used to produce goods and services

Capitalism

Economic system in which individuals own and operate the majority of businesses that provide goods adn services

Market economy (free-market economy)

Economic system in which businesses and individuals decide what to produce and buy, and the makret determines prices and quantities sold

Mixed Economy

Economic system that exhibits elements of capitalism and socialism

Households

Consumers of goods and services as well as owners of some factors of production

70 percent

How much of the nation’s total production consists of consumer products

Consumer products

goods and services purchased by individuals for personal consumption

Government

Provides services not produced by business or produced only for those who can pay for them

National defense, police, fire protection, education, and construction

Typical services governments offer

Command Economy

Economic system in which the government decides what goods and services will be produced, how they will be produced, and who owns the major factors of production

Socialism

Economic system where key industries are controlled by the government, but private ownership of small businesses is permitted

Communism

Economic system where government owns all major resources and means of production

Productivity

The average level of output per worker per hour

Gross Domestic Product (GDP)

Total dollar value of all goods and services produced by all people within a country during a specified time period

Consumer price index (CPI)

measures change in prices of a fixed basket of goods purchased by a typical consumer

Producer price index (PPI)

measures prices producers recieve for finished goods

Business Cycle

recurrence of periods of growth and recession in a nation’s economic activity

peak, recession, trough, and recovery/expansion

The four phases of the business cycle

Peak period

Economy is at its highest point and unemployment is low

Recession

two or more consecutive three-month periods of decline in a country’s GDP

Depression

Severe recession that lasts longer than a typical recession and has larger decline in business activity

Trough

turning point of recession or depression when a nation’s production and employment bottom out and reach their lowest levels

Federal deficit

Government spends more than it receives

National debt

Total of all federal deficits

Recovery/Expansion

Movement of economy from trough to the next peak in a business cycle

Competition

Rivalry among businesses for sales to potential customers

Perfect competition

Market situation in which there are many buyer and sellers of a product

Supply

Quantity of product producers are willing to sell at each of various prices

Demand

Quantity that buyers are willing to purchase at each of various prices

Market price

Price at which the quantity demanded is exactly equal to the quantity supplied

Monopolistic Competition

market situation in which there are many buyers along with a relatively large number of sellers

Product Differentiation

process of developing and promoting differences between a company’s products and all competitive products

Oligopoly

Market situation in which there are only a few large sellers

Monopoly

A market with only one seller and customers can only buy the product or service from that seller

Standard of living

subjective measure of how well off an individual or society is, mainly in terms of want satisfaction through goods and services

Service Economy

economy in which more effort is devoted to the production of services than to the production of goods

Sustainability

the ability to create and maintain conditions under which present and futer generations can exist in productive harmony

Ethics

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

Business ethics

application of moral standards to business situations

Fairness and honesty, organizational relationships, conflicts of interest, and communications

Ethical concerns in business

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 the employer’s interest

Individual factors, social factors, and opportunity

Factors that affect ethical behavior

personal knowledge, values, and goals

Individual factors affecting ethics

cultural norms, actions and decisions of co-workers, and values and attitudes of “significant others”

Social Factors affecting ethics

Oppurtunity

the amount of freedom an organization afforst an employee to behave unethically if they choose to do so

Sarbanes-Oxley Act of 2002

Act that protects whistle-blowers who report corporate misconduct

Code of Ethics

written guide to acceptable and ethical behavior as defined by an organization, outlines uniform policies, standards, and punishments for violations

Whistle-blowing

informing the press of government officials about unethical practices within an organization

Social Responsibility

recogniton that business activities have an impact on society and the consideration of that impact in business decision making

Economic model of social responsibility

model that holds that society will benefit most when business is left alone to produce and market profitable products that society needs

Socioeconomic model of social responsibility

Model that places emphasis on both profits and the impact of business decisons on society

Consumerism

consists of all activities undertaken to protect the rights of consumers

right to safety, right to be informed, right to choose, right to be heard, right to consumer education, right to service

The basic rights of consumers

Right to safety

Products consumers purchase must be safe for their intended use

Right to choose

Consumers must have choice of products, offered by different manufacturers and sellers, to satisfy a particular need

Right to be heard

Someone will listen and take appropriate action when customers complain

Right to consumer education

Entitles people to be fully informed about their rights as consumers

Right to service

Entitles consumers to convienence, courtesy, and responsiveness from manufacturers and sellers of consumer products

individual consumer advocates and organizations, consumer education programs, and consumer laws

Major forces in consumerism

Affirmative action program

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

Equal Employment Opportunity Commission (EEOC)

government agency with the power to investigate complaints of employment discrimination and sue firms that practice it

Hard-core unemployed

workers with little education or vocational training and a long history of unemployment

disabilities, systemic racism, economic factors, or personal issues

Reasons individuals may not gain employable skills

Workplace bullying

repeated work sabotage, verbal abuse, and/or abusive conduct that is threatening, humiliating, or intimidating

Pollution

the contamination of water, air, or land through the actions of people in an industrialized society

Recycling

converting used materials into new products or components for new products to prevent unecessary disposal

Green marketing

process of creating, making, delivering, adn promoting products that are environmentally safe

Social audit

comprehensive report of what an organization has done and is doing whith regard to socila issues that affect it

International business

encompasses all business activities that involve exchange across national boundaries

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 raw materials or products to other nations

Importing

purchasing raw materials or products in other nations and bringing them into one’s own country

Balance of trade

total value of its exports minus the total value of imports over a specified period of time

Trade deficit

negative balance of trade

Balance of payments

total flow of money into a country minus the total flow of money out of that country over a specified period of time

export-import merchant

type of wholesaler specializing in international trade

Trading company

provides a link between buyers and sellers in different countries

Countertrade

international barter transaction in which goods and services are exchanged for different goods and services

Licensing

A contractual agreement in which one firm permits another to produce and market its product and to use its brand name in return for a royalty or other compensation

Franchising

contractual agreement for an individual or organization to operate facilities, typically stores, on behalf of another

Contract manufacturing

When one firm employs another business to manufacture its products ro product components to the domestic firm’s specifications

Outsourcing

contracting of manufacturing and/or other activities overseas companies that specialize in those acitivities and can offer them at a lower cost

Joint venture

agreement between two ro more groups to form a business entity to achieve a specific goal or to operate for a specific period of time