COMM 1800 Chapter 1 (WIP)

Business

An organization that provides goods or services to earn profits.

Profit

The difference between a business’s revenue and expenses.

Consumer Choice

The demand that businesses must consider when running or opening.

External Environment (EE)

Everything outside an organization’s boundaries that might affect it.

Domestic Business Environment

The environment where the firm conducts its operations and derives its revenues.

Global Business Environment

International forces that affect a business, including trade agreements and political unrest.

Technological Environment

All the ways firms create value for their constituents through technology.

Political-Legal Environment

The relationship between business and government, often involving regulation.

Sociocultural Environment

Customs, mores, values, and demographic characteristics of the society in which the organization functions.

Economic Environment

Relevant conditions that exist in the economic system in which a company operates.

Factors of Production

Resources utilized in the production of goods/services, including labor, capital, entrepreneurs, physical resources, and information resources.

Labor

Physical and mental capabilities of people as they contribute to economic production.

Capital

Funds needed to create and operate a business enterprise.

Entrepreneur

A businessperson who accepts the risks and opportunities of creating and operating a new business venture.

Physical resources

Tangible items that organizations use in the conduct of their business

Information Resources

Data and other information used by businesses

Economic System

A nation’s system for allocating its resources among its citizens

Planned Economy

An economic system where the government controls all factors of production and makes all production/allocation decisions.

Market Economy

An economic system where individuals control production and allocation decisions through supply and demand.

Private Enterprise

An economic system that allows individuals to pursue their own interests without undue governmental restriction.

Perfect Competition

Market structure characterized by many buyers and sellers, with identical products.

Monopoly

Market structure characterized by a single producer that sets the price of products.

Business Cycle

Short-term pattern of economic expansions and contractions.

Gross Domestic Product (GDP)

Total value of all goods/services produced within a national economy during a given period.

Inflation

Widespread price increases occurring in an economic system.

Consumer Price Index (CPI)

Measure of the prices of typical products purchased by urban consumers.

Recession

A period during which aggregate output declines.

Fiscal Policies

Government policies regarding how it collects and spends revenue.

Monetary Policies

Policies used to control the size of the money supply.