Ch 1 Introduction to Business Kelly and Williams

value

The relationship between the price of a good or service and the benefits that it offers its customers

business

Any organization or activity that provides good and services in an effort to earn a profit

profit

The money that a business earns in sales (or revenue), minus expenses, such as the cost of good, and the cost of salaries.

Revenue - Expenses = Profit (or loss)

entrepreneurs

People who risk their time, money and other resources to start and mange a business

standard of living

The quality and quantity of goods and services available to a population

quality of life

The overall sense of well-being experienced by either an individual or a group

nonprofits

Business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain

business environment

The setting in which businesses operate. The five key components are economic environment, competitive environment, technological environment, social environment, and global environment.

business technology

Any tools - especially computers, telecommunications, and other digital products - that businesses can use to become more efficient and effective

E-commerce

Buying and selling products on the internet

Distributor

A person or an organization such as a dealer or retailer that helps sell goods and services to customers

Competitive advantage

The ability of an organization to produce goods or services more affectively then its competitors

Profit

Amount of money businesses make after paying salaries and all other costs

Loss

When business expenses are larger than revenue

Technology

Includes not only digital technology/computers, telecommunications, and giant data storage/but also machines required to help a company get things done

speed-to-market

the rate at which a firm transforms concepts into actual products

Free Trade

international economic and political movement designed to help goods and services flow more freely across international boundaries

General Agreement on Tariffs and Trade (GATT)

An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide.

demographics

The measurable characteristics of a population, such as age, gender, income, and education level.

factors of production

Four fundamental elements—natural resources, capital, human resources, and entrepreneurship—that businesses need to achieve their objectives.

economy

Financial and social system of how resources flow through society

economics

study of the choices made by people, companies, and governments to distribute society’s resources

fiscal policy

government efforts to influence the economy through taxation and spending to regulate economic activity and stabilize the economy.

budget surplus

when revenue is higher than expenses over a given period of time resulting in extra funds that can be used for investments or savings.

budget deficit

occurs when expenses are higher than revenue over a given period of time leading to a shortfall that requires borrowing or reduction in spending.

monetary policy

actions by a central bank, like the Federal Reserve, to manage the money supply and interest rates to achieve economic goals, such as maximum employment, price stability, and stable economic growth

money supply

the total amount of physical money (coins and paper currency) and liquid assets (like checking and savings accounts) in an economy at a given time

M1 money supply

all currency plus checking accounts and traveler’s check

M2 money supply

Includes all M1 money supply plus most saving accounts, money market accounts, and certificates of deposit

open market operations

Federal Reserve function of buying and selling government securities

Federal Deposit Insurance Corporation

primary role is to protect depositors from bank failures and maintain public confidence in the financial system.

discount rate

Rate of interest that the Federal Reserve charges when it loans funds to banks

reserve requirement

Rule set by the Federal Reserve, which specifies the minimum amount of reserves a bank is required to hold

economic system

a society's method for determining what goods and services to produce, how to produce them, and how to distribute them to meet the needs and wants of its people

capitalism

an economic and political system in which a country's trade and industry are controlled by private owners for profit

pure competition

Many competitors selling virtually identical products

monopolistic competition

Many competitors selling differentiated products

oligopoly

when a few companies exert significant control over a given market. automobile, airline, wireless carriers, and soft drink industries

monopoly

Single producer dominating the industry, leaving no room for competitors

natural monopoly

arises when a single supplier is more efficient than multiple, competing ones

supply

quantity of a good or service that producers are willing and able to offer for sale at various prices within a given time period

universal ethical standards

ethical norms that apply to people across a broad spectrum of situations

business ethics

applications of right and wrong, good and bad, in a business setting

ethical dilemmas

decisions that involve conflic of values

univeral ehtical standards

trustworthiness, respect, responsibility, fairness, caring, citizenship

code of ethics

Formal, written document that defines the ethical standards of an organization

whistle-blowers

Employees who report their employer’s illegal or unethical behavior to either the authorities or the media

stakeholders

a person with an interest or concern in something, especially a business

planned obsolescence

Deliberately designing products to fail in order to shorten the time between consumer repurchases

Sarbanes-Oxley Act

Sets higher ethical standards for public corporations and accounting firms

corporate philanthropy

business donations to nonprofit groups

cause-related marketing

Marketing partnerships between businesses and nonprofit organizations

corporate responsibility

Contributions through the actions of the business itself rather than donations of money and time

sustainable development

Doing business to meet the needs of the current generation without harming the ability of future generations to meet their needs

green marketing

strategy of promoting products, services, and companies based on their environmental benefits, encouraging sustainable practices throughout the entire business cycle, from production to distribution to gain competitive edge

social audit

Evaluation of how well a firm is meeting its ethics and social responsibility goals