afm 132 practice exam

EQ (Emotional Quotient, also know as emotional intelligence)

Focuses on the strength of certain soft skills, and involves developing greater self-awareness and self-control, and developing the ability to empathize and see a variety of perspectives.

Intrapreneurship

Entrepreneurial activity within a corporate setting, where one is able to help grow their company by being creative to evolve processes or launch new products/services using the company's existing resources and reputation.

Sustainability

Business practices that leave a positive impact on the environment to protect the world for future generations.

Balance of trade

The relationship between importing and exporting

Favourable balance of trade (trade surplus)

When exports are greater than imports.

Unfavourable balance of trade (trade deficit)

When imports are greater than exports.

Business

An activity that you intend to carry on for profit (e.g., providing goods and services).

Comparative advantage

Countries should sell (export) what they can produce most efficiently, and buy (import) when they cannot.

Contract manufacturing

Involves finding a foreign manufacturer to make your product and then have your own brand name or trademark attached. Also known as outsourcing.

Corporation

An incorporated business that's considered a separate legal entity apart from its owners. Shareholders of the corporation are not personally liable for debts or acts of the corporation.

Crown corporation

A company owned by the federal or provincial government (also referred to as publicly owned)

Embargo

A ban on the import or export of specific products.

Exporting

The sale of goods and services to another country.

Foreign direct investment (FDI)

Buying permanent property (or a business) and operating in a foreign country.

Foreign subsidiary

A company that is owned by a parent company located in another country.

Franchising

Where someone with a business concept (the franchisor) sells the rights to use the business name and to sell a product or service to another party (known as the franchisee).

Free market economy

Where the market determines what goods and services to produce and who gets them.

Free trade

Where goods and services can be traded between countries without any political or economic obstruction.

Importing

The purchase of goods and services from another country.

Import quota

A limit on the quantity of products that a country imports.

Joint venture

Two or more companies that form a partnership to take on a major project.

Licensing

When a domestic company (known as the licensor) allows a foreign company (known as the licensee) to make its product in exchange for a fee (typically a royalty).

Multinational corporations

Manufacture and market their products in many different countries where they also have a physical presence.

Mixed economy

An economic system where some allocation of resources are made by the market, and some are made by the various levels of government that play an active role in the economy.

Non-tariff barriers

Hinder trade and include regulations such as restrictive standards that detail exactly how a product must be sold in a country.

Partnership

A business created with two or more people who can share knowledge and resources in launching the business.

Privatization

The sale of a publicly-owned corporation.

Small business

An organization that

is independently owned and operated,

is not dominant in its field, and

meets certain standards of size (typically 1 to 99 employees).

Sole proprietorship

A business owned and operated by one person, and exists once you start selling a product or service.

Strategic alliance

Two or more companies that form a long-term partnership to support each other in building competitive market advantages.

Tariffs

Taxes on imports, which raise the price of imported products.

Trade protectionism

Limits the import of goods and services through the use of government regulations.

Benchmark interest rate

The rate at which the Bank of Canada loans money to Canada's financial institutions.

Business cycles

The rise and fall in economic activity over time, and each cycle can vary in terms of time and severity. The cycles include: expansionary, peak, contraction, trough, and recovery.

Consumer Price Index (CPI)

A price index that compares the change in prices for a basket of commonly purchased goods, including items such as food, housing, clothing, transportation, and recreation.

Depression

A severe form of a recession characterized with a longer period of declining economic activity.

Deregulation

Removal of some laws and regulations which can allow for more competition.

Economies of scale

Advantages of having the cost of production spread over a larger number of units produced, so the cost of production per unit declines as the number of units produced increases.

Environmental scan

An assessment of the business environment to see what factors could impact the growth and success of a business in achieving its organizational goals.

Factors of production

Land, labour, capital, entrepreneurship, and knowledge.

Fiscal policy

How the government keeps the economy stable through increases and decreases in both taxes and government spending.

Gross Domestic Product (GDP)

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

GDP per capita

The GDP per person in a country.

Inflation

The rise in the price of goods and services over time.

Macroeconomics

Studies what can impact an economy as a whole, including employment levels, interest rates, inflation, and GDP.

Microeconomics

Studies the decisions made by individuals and businesses within the economy.

Monetary policy

Management of the money supply and interest rates.

National debt

The accumulation of government deficits over time.

PEST

An acronym to review the Political, Economic, Social, and Technological factors that could impact how an organization achieves its goal.

Porter's five forces

To help you assess the competitive landscape reviewing: current competitors, potential competitors, substitutes, bargaining power of suppliers, and bargaining power of customers.

Recession

A period where there are two or more consecutive quarters of a decline in GDP.

Stakeholders

Individuals or entities that have an interest or stake in what an organization does. Stakeholders can include customers, suppliers, employees, competitors, government, and unions.

Switching costs

The monetary and psychological costs to change from one product/supplier to another.

SWOT

An assessment of the Strengths, Weaknesses, Opportunities, and Threats for an organization.

Triple bottom line reporting

Where a company reports on their performance with social, environmental, and economic factors. This is also known as reporting around people, planet, and profit.

Unemployment rate

Measured as the percentage of people who are unemployed out of the total labour force (those actively seeking work or working).

Corporate philanthropy

When a company donates money or time/skills to various causes.

Corporate Social Responsibility (CSR)

How a company steps up to take care of those around them in society.

Ethical dilemma

A problem where a difficult choice has to be made with potentially no desirable alternatives.

Ethics

Guiding principles that help us navigate decision-making in a given situation or context.

Fair trade

Ensures producers in developing countries are paid a fair price for the goods that we purchase from them.

Laws

Established rules and regulations within a jurisdiction that govern actions.

Social audit

Evaluating and reporting on how a company is progressing towards their social responsibility priorities.

Sustainable development

Whether business operations and processes can support the needs for current and future generations without negative consequences.

Triple Bottom Line (TBL)

A framework that can be used by organizations to voluntarily report their progress on social, economic, and environmental results for a reporting period.

Whistleblowers

People that step up to report illegal or unethical behaviour.

Advertising

Media communication that can be used to promote a brand or sell a product, which can include radio/tv commercials and print or digital ads.

Brand

A name, symbol, or design that distinguishes a company and its products from their competition

Brand equity

The overall value for a brand, strengthened by awareness and customer loyalty.

Break-even analysis

Helps evaluate profitability of a product by calculating the break-even point, the point at which sales cover expenses and any units sold above that point is when you start making a profit.

Business-to-Business (B2B)

Involves a company selling to other companies that may or may not be the end users for a product.

Business-to-Customer (B2C)

Involves a company selling directly to consumers who are generally the end users for a product.

Buzz marketing

Encourages consumers to try products and services and then publicly share their reviews and opinions on them.

Concept testing

The process of sharing a product idea with potential customers to obtain feedback.

Crowdsourcing

Where you can mobilize the ideas and perspectives of individual customers to help design a product

Customer Relationship Management (CRM

Systems that capture data to support interactions and encourage engagement with customers to build long-term relationships.

Direct marketing

Promotional activities that link a producer directly with customers, such as telemarketing, mail, or emails.

Distribution channel

How products move from the producer to the consumer.

Intermediaries

Individuals or organizations in the middle of a distribution channel that help move products from producers to consumers.

Market

Defined as customers with wants and needs that have both an interest and resources to make a purchase.

Market research

The process of collecting information to understand customers in order to make informed decisions on how to satisfy their needs with product offerings.

Primary research

Involves gathering your own information directly. This can include the use of surveys you conduct, interviews (including focus groups), or observation.

Secondary research

Examines information and statistics that area already available. This can include published surveys, research studies, datasets, or existing company records.

Market segmentation

The process of dividing a total market into customer segments (groups) that have similar characteristics or needs

Marketing

The process of creating, communicating, and delivering product offerings that have value for customers

Marketing mix (4Ps)

How a company can create interest and influence demand for their products through decisions around the four Ps — product, price, place, and promotion.

Mass marketing

Where a company attempts to reach a wider audience with a single product offering.

Penetration pricing

When introducing a product, setting a low initial price. This can help enter a competitive market or build up a customer base.

Personal selling

Face-to-face promotional interactions between a seller and buyer.

Price skimming

When introducing a product, setting a high initial price (to optimize profit when there's little competition).

Product differentiation

Promotes benefits of a product that make it unique compared to similar offerings from competitors

Product life cycle

Looks at how sales for a product rises and falls over four stages — introduction, growth, maturity, and decline.

Product line

A group of similar products sold by a company

Product mix

A combination of all the product lines sold by a company.

Promotion mix

Activities that a company can use to motivate customers to take action and buy, which includes advertising, public relations, sales promotion, direct marketing, and personal selling (Claessens, 2015).

Public Relations

Activities that drive a positive image and generate publicity for a company and its products.

Relationship marketing

Aims to develop long-term relationships with customers to foster customer loyalty and interaction