General Business

Midterm for Business!! You got this (probably)

Business

organization that makes money by providing goods and services.

Goods

tangible offerings (things that are physical)

Services

intangible (things that aren’t physical)

Standard of Living

measured by the output of goods and services people can buy with their money.

Quality of Life

general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, etc.

Risk

losing time and money to accomplish company goals. The greater the risk the greater opportunity for profit (or loss).

Non-profit Organization

is made in mind to complete another goal (no profit).

What do you need to to provide goods/services for any type of business?

Factors of Production

Types of Resources

labor, natural, capital, and entrepreneurship

Entrepreneurs

people who know how to manage natural resources, labor, and capital to produce goods/services.

Ethical Business Influences

Technological, economic, political/legal, demographic, social, competitive, global

Internal Business Influences

entrepreneurs, managers, workers, customers

Economic System

combination of policies, laws, and choices made by its government to establish a system that determines what’s made and where it goes.

Basic Economic Systems of the World

capitalism, Communism, socialism, and mixed economy

What factors within the economic environment affect business?

inflation, price changes, business, cycles, unemployment rates, etc.

Why do demographic/technological developments create challenges and opportunities?

They allows for more markets to be reached as well as easier access to them. They are difficult to learn or appeal to sometimes.

Economics

choices we make and how they affect money.

Economic Growth

increase in nations output of goods and services.

Gross Domestic Product

total marker value of all finale sales of goods/services (how we measure economic growth).

Business Cycles

the up/down trend of economic activity. All vary in length.

Recession

decline in GDP that lasts 2 consecutive quarters (75% of the year).

Unemployment Rate

total labor force that is not working but looking for work.

Frictional unemployment

short-term unemployment not related to the business cycle (re-entering job, waiting to start job, going to get a 1st job).

Structural Unemployment

also unrelated to business cycle. Mismatch between available jobs and skills (More A.I. for IT jobs; less hired IT technicians).

Cyclical Unemployment

when downturn in business cycle reduces demand of labor throughout the economy.

Seasonal Unemployment

occurs during specific months of the year (waterpark worker not working in winter).

Inflation

average price of goods/services goes up.

Purchasing Power

value of what money can buy

Demand pull inflation

type of inflation that occurs when the demand for goods and services is greater than the supply.

Cost-push inflation

increase in production costs.

Consumer Price Index (CPI)

what inflation is measured by index of the prices of a “market basket”.

Producer price index (PPI)

measures prices paid by producers/wholesalers for various commodities.

Monetary Policy

government programs for controlling amount of money circulating in the eco.

Federal Reserve System

projects likely demand doe new currency and makes money.

contractionary policy

FED restricts/tightens the money supply by selling government securities or raising interest rates. Results in unemployment and slower economic growth but does lower inflation.

Expansionary policy

lossens/expands growth in the money supply. Stimulates economy. Unemployment goes down, spending goes up but it also increases inflation.

Fiscal Policy

program of taxation and spending.

Crowding Out

when other sectors private (gets less financial help and therefore attention on it).

Federal Budget Deficit

government spends more on programs than it collects on taxes.

National Debt

accumulated net loss of all past net losses.

Demand Curve

relationship between price and quantity demanded.

Supply curve

relationship between price and how much the supplier need to offer.

Market Structure

number of suppliers in a market.

4 types of Market structures

perfect competition, pure monopoly, monopoly competition, and oligopoly

what is perfect competition?

large number of small firms sell similar products, buyers/sellers in the market are transparent, prices are relatively the same, easy to open/close business in this market.

what is pure monopoly?

single firm is in charge of all industry sales of a particular good/service.

Barriers to entry

factors preventing new firms from competing equally with existing firms.

Monopolistic Competition

many firms are in market, offer products that are close substitutes but still differ from each other, relatively easy to enter the market.

Oligopoly

few firms produce most or most of the output, large capital requirements or other factors limit the number of firms.

Relationship Management

building, maintaining, and enhancing interactions with customers.

Strategic alliance

forming cooperative agreements between firms.

Ethics

judging whether something is right or wrong.

What are the 11 main unethical business activities?

1) stealing things 2) spreading rumors 3) giving or allowing false impressions 4) buying influence or engaging in a conflict of interest 5) hiding or divulging information 6) taking unfair advantage 7) committing improper personal behavior 8) Abusing power and mistreating individuals 9) Permitting organizational abuse 10) Violating rules 11) condoning unethical actions.

Utilitarianism

consequences of an action taken by a person or organization.

Deontology

people should meet their obligations and duties when analyzing an ethical dilemma

Code of Ethics

can differ from profession but its a set of terms/responsibilities the firm experts you to follow.

Corporate Social Responsibility (CSR)

concern of business for the welfare of society as a whole (voluntary and board). If the company makes no money the ethics, law, and social aspects don’t matter.

what are the two sides of business?

responsibilities and legalities

Social investing

limiting investments to securities that coincide with their beliefs about ethical/social responsibility.

Strategic Giving

ties philanthropy and corporate social responsibility to incorporate company goals/targets.

Social contract between employer and employee

compensation, management, culture, and learning and development.

Global vision

recognizing and reacting to international business opportunities.

Exports

goods/services made in one country and sold to another.

Imports

goods/services bought from other countries.

Balance of Trade

difference between countries exports and imports during specific time.

Trade surplus

exports more than imports (favorable balance).

Trade deficits

imports more than exports (unfavorable balance).

Balance of payments

summary of countries international financial transactions showing differences between total payment to receipts.

Floating exchange rates

currencies float up and down based upon the demand for and supply of each currency.

Devaluation

nation lowers the value of its currencies relative to other currencies.

absolute advantage

when a country has the lowest cost on making a certain product.

comparative advantage

trading based on who loses less.

Free Trade

policy permitting people and business of a country to buy and sell where they please.

Protectionism

nation protects home industries from outside competition (such as tariffs and quotas).

Outsourcing

sending domestic jobs to another country

Tariff

tax imposed by a nation on imported goods.

Protective Tariffs

make imported products less attractive to buyers than domestic products.

Import Quota

limits on quantity of a certain good that can be imported.

Embargo

complete ban on importing/exporting that thing.

Exchange controls

laws requiring forgien money from exports be sold to a control agency (such as central bank).

Dumping

practice of charging lower for a product in foreign market.

Free-Trade zone

few duties or rules restrict trade among the partners, but nations outside the zone must pay tariffs.

North American Free Trade Agreement (NAFTA)

worlds largest free trade zone between U.S., Mexico, and Canada.

Mercosur

largest new trade agreement between peru, brazil, argentina, uruguay, paraguay.

European Integration

pooling of sovereignty to delegate decisions.

Licensing

legal process where a firm agrees to let another firm use their manufacturing process, trademark, or other propiertary knowledge.

Contract Manufacturing

foreign firm manufactures private-label goods under a domestic firms brand.

Joint Venture

domestic firm buys part of a foreign company or joins foreign company to create a new entity.

Direct Foreign Investment

investors have either a controlling interest or a large minority interest in the firm.

Countertrade

part or all payments are made with goods/services on both ends.

Trends in Global Competition

market expansion, resources aquisition, and nations that are already on the top (China and India).

General partnership

all partners share in the management and profits. They co-own asset and each can act on behalf of the firm.

Limited partnership

two types of partners (general and limited) limited liability is limited to the amount of their investment. General partners take part of day to day activities (LLP and LLLP also exist).

Board of Directors

govern and handals the overall management of the corporation.

C Corporation

conventional or basic form of corporate organizations.

S corporation

hybrid entity, allowing smaller corporations to avoid double taxation of corporate profits as long as they meet certain size and ownership requirements.

LLC

same liability protection as cooperations as well as the option of being taxed like a partnership.

cooperative

legal entity with limited liability, unlimited life span, elected board of directors, and administrative staff.

buyer cooperative

combine members purchasing power. They pool buying power to buy in volume.

seller cooperatives

individual producers join to compete more effectively with large producers.