BUS 101 Exam 1 Key Terms

Vocabulary review flashcards covering key terms across Chapters 1 through 10 for BUS 101 Exam 1 (Introduction to Business).

Business

Any activity that seeks to provide goods and services to others while operating at a profit.

Entrepreneur

A person who risks time and money to start and manage a business.

Stakeholders

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.

Factor of production

The basic resources used to produce goods and services: land, labor, capital, entrepreneurship, and knowledge.

Business environment

The surrounding factors that either help or hinder the development and operations of businesses.

Productivity

The amount of output you generate given the amount of input, such as the number of hours worked.

Macroeconomics

The part of economics study that looks at the operation and performance of a nation's economy as a whole.

Microeconomics

The part of economics study that looks at the behavior of people and organizations in particular markets.

Invisible Hand

Adam Smith's concept describing the process by which individuals' self-directed efforts produce social and economic benefits for the whole society.

Capitalism

An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.

Gross Domestic Product

The total value of final goods and services produced in a country in a given year.

Consumer Price Index

Monthly statistics that measure the pace of inflation or deflation by evaluating changes in the prices of a representative basket of goods and services.

Fiscal Policy

The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.

Monetary Policy

The management of the money supply and interest rates by the Federal Reserve Bank.

Comparative Advantage

The theory that a country should sell to other countries those products it produces most effectively and efficiently, and purchase products it produces less effectively or efficiently.

Absolute Advantage

The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.

Trade Deficit

An unfavorable balance of trade that occurs when the monetary value of a country's imports exceeds that of its exports.

Dumping

Selling products in a foreign country at lower prices than those charged in the producing country.

Foreign Direct Investment

The buying of permanent properties, businesses, and assets in foreign nations.

Tariffs

Taxes levied on imported goods, designed to make imported products more expensive and protect domestic industries.

Embargo

A complete ban on the import or export of a certain product, or the halting of all trade with a particular country.

Ethics

Standards of moral behavior; conduct that is accepted by society as right versus wrong.

Compliance-based Ethics

Ethical codes that emphasize preventing unlawful behavior by increasing control and penalizing wrongdoers.

Integrity-based Ethics

Ethical standards that define the organization's guiding values, create an environment supporting ethically sound behavior, and emphasize shared accountability among employees.

Whistleblowers

Insiders or employees who report illegal or unethical behavior occurring within an organization.

Corporate Social Responsibility

A business's concern for the welfare of society as a whole, beyond legal requirements.

Social Audit

A systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs.

Sole proprietor

A business that is owned, and usually managed, by one single individual.

Partnership

A legal form of business ownership with two or more people operating as co-owners.

Corporation

A legal entity with the authority to act and have liability separate and distinct from its owners.

Limited liability

The legal principle that business owners are responsible for losses only up to the amount they invested, protecting their personal assets.

Horizontal Merger

The joining of two firms in the same industry that produce similar products or services.

Vertical Merger

The joining of two companies involved in different stages of related businesses or supply chain levels.

Franchise

The right to use a specific business's name and sell its products or services within an assigned territory.

Entrepreneurship

The process of accepting the financial and operational risk of starting and running a new business venture.

Intrapreneurs

Creative employees within an existing corporation who use the company's resources to act as entrepreneurs and generate new products.

Incubators

Facilities that offer new businesses low-cost offices, shared services, and professional assistance during their early development.

Business Plan

A detailed written statement describing the nature of the business, target market, competitive advantages, and the owners' resources and qualifications.

Venture Capitalists

Individuals or investment companies that provide funding to new businesses in exchange for an equity ownership stake.

Small Business Administration

A U.S. government agency that advises and assists small businesses by providing management training, guidance, and financial support or loans.

SWOT Analysis

A strategic planning tool used to assess an organization's internal Strengths and Weaknesses and external Opportunities and Threats.

Strategic Planning

The managerial process of setting broad long-term goals and determining resource allocations and policies to achieve them.

Operational Planning

The process of establishing detailed work standards and schedules necessary to carry out tactical objectives.

Contingency Planning

The process of preparing alternative courses of action that may be implemented if initial plans do not achieve the intended objectives.

PMI

A structured decision-making technique where one lists all the Pluses, Minuses, and Implications of an option.

Autocratic Leadership

A leadership style characterized by making managerial decisions independently without consulting employees.

Participative Leadership

A leadership style where managers collaborate with employees to involve them in the decision-making process.

Economies of Scale

Cost reductions achieved when businesses purchase goods in bulk and expand operations to spread fixed costs across large output volumes.

Span of Control

The optimal number of subordinates a manager supervises directly.

Centralized Authority

An organizational structure where major decision-making power remains concentrated at the top management tier.

Decentralized Authority

An organizational structure where decision-making authority is delegated down to lower-level managers closest to everyday operations.

Matrix Organization

An organization in which specialists from different departments collaborate on specific projects while retaining their positions within a line-and-staff structure.

Benchmarking

The process of comparing an organization's practices, processes, and products against the industry's best performers.

Organizational Culture

The shared beliefs, values, and traditions within an organization that guide employee behavior and foster collaboration.

Intrinsic Rewards

The internal personal satisfaction and sense of accomplishment one experiences from performing meaningful work and achieving goals.

Extrinsic Rewards

External recognition or tangible compensation provided by others for good work, such as wage increases, bonuses, and promotions.

Scientific Management

The approach pioneered by Frederick Taylor that studies work methods scientifically to find the most efficient way to perform tasks.

Hawthorne Effect

The observed phenomenon where individuals alter or improve their behavior simply because they know they are being studied or observed.

Hygiene Factors

In Herzberg's two-factor theory, workplace elements (like working conditions, pay, and policy) that prevent dissatisfaction when present, but do not necessarily motivate employees.

Theory X

A managerial assumption that workers inherently dislike work, seek to avoid responsibility, and require close supervision, control, or threats to perform.

Theory Y

A managerial assumption that employees enjoy work, are naturally self-directed, seek responsibility, and are motivated by intrinsic rewards.

Expectancy Theory

Victor Vroom's motivation theory asserting that an employee's effort depends on their expectation that the effort will lead to performance, and that performance will result in a desired reward.

Job Enrichment

A motivational technique that redesigns jobs to give workers greater responsibility, challenge, and opportunity for personal achievement.

Business

Any activity that seeks to provide goods and services to others while operating at a profit.

Entrepreneur

A person who risks time and money to start and manage a business venture.

Revenue

The total amount of money a business takes in during a given period by selling goods and services.

Profit

The financial gain earned when the amount of revenue gained from a business activity exceeds the expenses and costs needed to sustain it.

Stakeholders

All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.

Factor of production

The fundamental resources used to produce goods and create wealth: land, labor, capital, entrepreneurship, and knowledge.

Economics

The study of how society chooses to employ scarce resources to produce goods and services and distribute them for consumption among various competing groups and individuals.

Macroeconomics

The branch of economics that examines the behavior and operation of a nation's economy as a whole.

Microeconomics

The branch of economics that examines the behavior of people and organizations in markets for particular products or services.

Invisible Hand

A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.

Gross Domestic Product

The total market value of all final goods and services produced within the borders of a country in a given year.

Fiscal Policy

The federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending.

Monetary Policy

The management of the money supply and interest rates by the central bank (such as the Federal Reserve) to regulate economic activity.

Comparative Advantage

The economic principle stating that a country should sell to other countries the goods it produces most effectively and efficiently, and purchase what it cannot produce as effectively.

Absolute Advantage

The advantage that exists when a country has a monopoly on producing a specific product or can produce it more efficiently than all other countries.

Trade Balance

The economic total value of a nation's exports compared against its imports measured over a particular timeframe.

Dumping

Selling products in a foreign market at lower prices than those charged in the producing domestic country, or below production cost.

Foreign Direct Investment

The direct investment and buying of permanent property, facilities, and businesses in foreign nations.

Tariffs

Taxes levied on imported goods to make foreign products more expensive and protect domestic industries.

Embargo

A government order imposing a complete ban on the import or export of a specific product or halting all trade with a specific country.

GATT and WTO

The General Agreement on Tariffs and Trade (GATT), an agreement that reduced trade barriers, and its successor, the World Trade Organization (WTO), an international body mediating trade disputes and enforcing global trade rules.

Ethics

Standards of moral behavior accepted by society as right versus wrong.

Compliance-based Ethics

Ethical codes that emphasize preventing unlawful behavior by establishing clear rules, increasing organizational control, and penalizing violators.

Integrity-based Ethics

Ethical standards that define an organization's core values, foster an environment supporting ethical conduct, and emphasize shared accountability among employees.

Whistleblowers

Insiders who report illegal, unethical, or improper activities within an organization.

Corporate Social Responsibility

A business's broader commitment and concern for the welfare of society beyond its basic legal obligations and profit goals.

Insider Trading

The illegal practice of using private, non-public company information to buy or sell securities for personal financial gain.

Sole proprietor

An unincorporated business owned and typically managed by a single person.

Partnership

A legal form of business ownership between two or more individuals who agree to operate a business together.

Corporation

A legal entity chartered by a state, possessing authority to act and assume liabilities separate from its individual owners.

Limited liability

A legal condition in which the owners of a business are responsible for company losses and debts only up to the amount of capital they invested.

Horizontal Merger

The joining together of two or more firms operating within the same industry and producing similar goods or services.

Vertical Merger

The joining together of two or more firms operating at different stages of the supply chain or related business functions.

Conglomerate Merger

The combination of two or more firms operating in completely unrelated industries.

Franchise

A contractual arrangement where a business owner sells the right to use its business name, brand, and operating model to another party in a specified territory.

Entrepreneurship

The process of accepting the financial, operational, and personal risks of initiating and running a new business venture.

Intrapreneurs

Creative employees who use company resources to act as entrepreneurs and create new products, services, or ventures within an existing corporation.