Chapter 1: Taking Risks and Making Profits Within the Dynamic Business Environment

business

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

goods

tangible products; products that you can physically interact with

services

intangible products; products that you cannot physically interact with

entrepreneur

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

revenue

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

profit

the amount of money a business earns after accounting for salaries and expenses

loss

when a business expenses outweigh their revenue amount

risk

the chance an entrepreneur takes of losing time and money on a business that may not prove profitable

standard of living

the amount of goods and services people can buy with the money they have

quality of life

the general well-being of a society in terms related to political freedom, natural environment, education, healthcare, safety, amount of leisure, and rewards that add to overall satisfaction and joy

stakeholders

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

Who are the stakeholders?

customers, employees, stockholders, suppliers, dealers, bankers, people in the surrounding community, the media, environmentalists, competitors, unions, critics, and elected government leaders

What is the primary challenge for 21st century organizations?

to recognize and respond to the needs of their stakeholders

outsourcing

contracting with other companies to do some or all of the functions of a firm

insourcing

assigning some or all the functions of a firm to personnel within the company

nonprofit organization

an organization whose goals do not include making a personal profit for its owners or organizers

Is making profit the top priority for a nonprofit organization?

yes, but it is for social or educational causes instead of personal profit

What is the five factors of production?

land, labor, capital, entrepreneurship, knowledge

What two factors of production are considered the most important?

entrepreneurship and knowledge

What are the benefits to being an entreprenuer?

freedom in decision-making, opportunity, and possible wealth

What benefits are lost when becoming an entreprenur?

paid vacation time, child care, company transportation, and health insurance

business envirornment

the surrounding factors that either help or hinder the development of business

What are the five factors in the business environment?

1. economic and legal

2. technological

3. competitive

4. social

5. global business

How can a government promote entrepreneurship?

1. allowing private ownership of businesses

2. minimizing interference with the free exchange of goods and service

3. passing laws that allow businesspeople to write enforceable contracts

4. establishing a currency that can be traded in world markets

5. minimizing corruption

6. keeping taxes and regulations to a minimum

technology

everything from phones to computers, mobile devices, medical imaging machines, robots, the Internet, artificial intelligence, social media, and various software programs and apps

effectiveness

producing the desired result

effciency

producing goods and services using the least amount of resources

productitvy

the amount of output you generate given the amount of input

e-commerce

the buying and selling of goods online

What are the types of e-commerce?

business-to-consumer and business-to-business

database

an electronic storage file for information

identity theft

obtaining of individuals’ personal information for illegal purposes

empowerment

businesses allowing workers to make decisions essential to producing high-quality goods and services by giving them better training, responsibility, and authority

demography

the statistical study of the human population in reference to size, density, and other characteristics such as age, race, gender, and income

diversity

recruiting from any demographic

inclusion

allowing employees to feel heard and listened to

belonging

feeling a part of a community

globalization

world trade

What benefit is there to world trade?

it can result in greatly reduced costs of parts and products

What is the disadvantage of world trade?

major disruptions if there are supply chain issues

climate change

the movement of the temperature of the planet up or down over time

greening

saving energy and producing products that cause less harm to the environment

What are some major issues that are affecting the global economy?

war and terrorism and climate change

intellectual capital

an employee’s knowledge and skills that can be used to create new products, attract new customers, and increase profits

Why have workers been changing from industry to industry?

the progression of technology

What countries are creating the greatest competiitve challenges?

China and India