BUS121+Final+Exam+Study+Guide-2021

What is the difference between revenue and profit?

Revenue is the total income generated from sales, while profit is the income remaining after deducting expenses.

What are the five factors of production?

Land, labor, capital, entrepreneurship, and knowledge.

Which of the five factors of production is most important in creating wealth?

Entrepreneurship is typically considered the most important.

What is the difference between standard of living and quality of life?

Standard of living measures income and material goods, while quality of life encompasses overall well-being, including health and happiness.

What differentiates the B2B market from the B2C market?

B2B (business-to-business) involves transactions between businesses, while B2C (business-to-consumer) involves transactions directly to consumers.

Give examples of business stakeholders.

Employees, customers, suppliers, stockholders, and the community.

How do stockholders differ from stakeholders?

Stockholders own shares in a company; stakeholders have an interest or investment in the company's operations.

What are the four key elements that make up the business environment?

Economic environment, competitive environment, technological environment, and social environment.

How can the government promote entrepreneurship?

By providing tax incentives, grants, and access to resources.

In what area of business are most new jobs created in the US?

The service sector.

What is the basic definition of economics?

The study of how individuals and societies allocate scarce resources.

Differentiate microeconomics from macroeconomics.

Microeconomics focuses on individual and business decisions, while macroeconomics examines the economy as a whole.

Who is Adam Smith?

A philosopher known as the father of modern economics, famous for the invisible hand theory.

What is the invisible hand theory?

The idea that the pursuit of self-interest in a free market leads to economic well-being.

What is capitalism?

An economic system characterized by private ownership and the free market.

What are the advantages of capitalism?

Increased efficiency, innovation, and consumer choice.

What are the disadvantages of capitalism?

Income inequality and market failures.

What is socialism?

An economic system where the government owns and controls the means of production.

What are the advantages of socialism?

Reduced inequality and provision of public services.

What are the disadvantages of socialism?

Reduced incentives for innovation and economic growth.

What is communism?

A political and economic ideology advocating for a classless society where all property is publicly owned.

What are the advantages of communism?

Elimination of class distinctions and poverty.

What are the disadvantages of communism?

Lack of personal freedom and inefficiencies due to central planning.

To what economic model are most countries moving?

Mixed economies that combine elements of capitalism and socialism.

What is the supply and demand curve?

A graphical representation of the relationship between the price of a good and the quantity demanded or supplied.

What does the equilibrium point represent?

The price at which the quantity demanded equals quantity supplied.

Differentiate monopoly from oligopoly.

A monopoly is when one firm controls the entire market, while an oligopoly is when a few firms dominate.

What is perfect competition?

A market structure where many firms sell identical products.

What is GDP?

Gross Domestic Product, the total value of all goods and services produced in a country.

What is CPI?

Consumer Price Index, a measure of the average change over time in prices paid by consumers for goods and services.

Differentiate monetary policy from fiscal policy.

Monetary policy involves managing the money supply and interest rates, while fiscal policy involves government spending and tax policies.

What is the difference between exports and imports?

Exports are goods sold to foreign countries, while imports are goods bought from foreign countries.

What does a trade deficit imply?

A trade deficit means a country is importing more goods than it is exporting.

What are the advantages of free trade?

Increased market access, economic growth, and lower prices for consumers.

What are the disadvantages of free trade?

Job losses in protected industries and increased competition.

What is comparative advantage theory?

The economic principle that countries should specialize in producing goods they can produce most efficiently.

Provide an example of comparative advantage.

A country specializing in agricultural products due to optimal climate conditions.

What is protectionism?

Economic policy of shielding a country's domestic industries from foreign competition.

Name three forms of protectionism.

Tariffs, quotas, and embargoes.

What are strategies for reaching global markets?

Licensing, exporting, contract manufacturing, and foreign direct investment.

What is dumping in international trade?

Selling goods in a foreign market at below cost to gain market share.

What is ethics in a business context?

Moral principles that govern behavior in the business environment.

What are ethical dilemmas?

Situations where a person must choose between conflicting ethical principles.

Is everything that is legal also ethical?

No, legality and ethics are not the same; some legal actions may be unethical.

With whom does ethical behavior begin?

With individuals and their personal values.

What is a code of ethics?

A set of guidelines for maintaining ethics in the workplace.

What is corporate social responsibility?

A company's commitment to conducting business in an ethical manner.

Differentiate compliance-based ethics from integrity-based ethics.

Compliance-based focuses on following laws and regulations, while integrity-based emphasizes moral values.

What is insider trading?

Buying or selling stocks based on non-public information.

What is a whistleblower?

An employee who reports illegal or unethical actions within the organization.

What is unlimited liability?

A legal obligation of business owners to cover all debts and liabilities.

How does double taxation occur?

Corporate profits are taxed, and then dividends are taxed again when distributed to shareholders.

What are the advantages of a sole proprietorship?

Complete control, easier tax filings, and low startup costs.

What are the disadvantages of a sole proprietorship?

Unlimited liability and difficulty raising capital.

What are the advantages of a partnership?

Shared responsibilities, resources, and diverse skills.

What are the disadvantages of a partnership?

Potential conflicts and shared liability.

What are the advantages of a corporation?

Limited liability and easier access to capital.

What are the disadvantages of a corporation?

Double taxation and more regulations.

What are Limited Liability Companies (LLCs)?

A hybrid business structure that offers limited liability while allowing income to be taxed on the owners' personal tax returns.

What distinguishes a general partner from a limited partner in a limited partnership?

General partners manage the business and have unlimited liability, while limited partners provide capital and have limited liability.

What is an acquisition?

The purchase of one company by another.

Differentiate between horizontal and vertical mergers.

Horizontal mergers combine companies in the same industry; vertical mergers combine companies at different stages of production.

What are the advantages of franchise businesses for franchisees?

Brand recognition and support from the franchisor.

What are the disadvantages of franchise businesses for franchisees?

Limited control and ongoing fees.

Why are entrepreneurs vital to the economy?

They innovate, create jobs, and drive economic growth.

What traits are important in an entrepreneur?

Determination, risk-taking, resilience, and creativity.

What is the next largest source of capital for entrepreneurs after their own money?

Venture capital.

What should entrepreneurs do to prepare for a successful business?

Develop a comprehensive business plan.

Why are business plans important to success?

They provide a roadmap for the business and help manage growth.

What is a venture capitalist?

An investor who provides capital to startups in exchange for equity.

What are the four functions of management?

Planning, organizing, leading, and controlling.

Give an example of planning in management.

Setting sales targets for the upcoming year.

Provide an example of organizing in management.

Creating a team structure for a project.

Provide an example of leading in management.

Motivating employees to achieve company goals.

Provide an example of controlling in management.

Monitoring performance and adjusting strategies.

What is the difference between strategic, tactical, and operational planning?

Strategic planning is long-term and broad; tactical planning is short-term and specific; operational planning focuses on day-to-day operations.

What purpose does a mission/vision serve for an organization?

Guides the direction and decision-making processes.

What is a SWOT analysis?

A strategic planning tool that identifies strengths, weaknesses, opportunities, and threats.

Why is a SWOT analysis used?

To assess the internal and external factors affecting an organization.

Which management skills are most important for top-level managers?

Conceptual skills.

Which management skills are most important for supervisory managers?

Technical skills.

What are economies of scale?

Cost advantages that companies gain due to scale of operation.

How does economies of scale relate to mass production?

Larger production volumes lower the per-unit cost.

What does Fayol’s unity of command principle refer to?

Each employee should receive orders from only one superior.

What is the difference between centralized and decentralized authority?

Centralized authority concentrates decision-making at the top, while decentralized authority disperses it throughout the organization.

How are span of control and tall/flat organizations related?

Span of control refers to the number of subordinates under a manager; tall organizations have narrow spans and more hierarchical layers, while flat organizations have wide spans and fewer layers.

What are the various ways to departmentalize an organization?

By function, product, geography, or customer.

Which departmentalization method is most commonly used?

Functional departmentalization.

Differentiate line personnel from staff personnel.

Line personnel are directly involved in the core operations; staff personnel provide support.

What is an example of line personnel?

Sales representatives.

What is an example of staff personnel?

Human resources specialists.

What is a matrix organization?

An organizational structure that creates a grid where employees report to multiple managers.

What is outsourcing?

The practice of using external suppliers to perform services or produce goods.

How is outsourcing related to core competencies?

Outsourcing allows companies to focus on their core competencies by delegating non-core tasks.

What are the principles of lean manufacturing?

Elimination of waste and maximizing value.

What is ISO 9001?

An international standard that specifies requirements for quality management systems.

What is ISO 14001?

An international standard that specifies requirements for environmental management systems.

What is Six Sigma?

A set of techniques for process improvement and quality management.

What is TQM?

Total Quality Management, an organization-wide approach to continuous improvement.

Contrast MRP with JIT inventory approaches.

MRP (Material Requirements Planning) focuses on inventory management based on forecasts, while JIT (Just-In-Time) aims for zero inventory by receiving goods only as needed.