fashion business practices midterm

Chapters 1, 2, 3, 6, 7, 9

business

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

non-profit

business-like establishments that employ people and product goods and services that sim to contribute to the community rather than generating financial gain

entrepreneurship era

small business to empires

production era

refining production process, specialized jobs

marketing era

consumer-focused development, branding

relationship era

beyond a unique product or service, focus is on experience

consumers

people who purchase goods and services for personal use

gross domestic product

the monetary value of all the finished goods and services produced within a country’s borders in a specific time period

factors of production

capital

capital

synthetic resources that a business needs to produce goods or services

economics

the study of the choices that people, companies, and governments make in allocating society’s resources.

economy

the financial and social system of how resources flow through society, from production to distribution, to consumption

microeconomics

the study of smaller economic units such as individual consumers, families, and individual businesses

macroeconomics

the study of a country’s overall economic dynamics, such as the employment rate, gross domestic product, and taxation policies 

gross domestic product

the monetary value of all finished goods and services produced within a country’s borders within a specific time period (usually annually)

capitalism

right to private property, Right to own a business and keep after-tax profits, right to free choice, right to fair competition

supply and demand

Explains the dynamic interaction between buyers and sellers that directly affects range of products and prices

supply

the quantity of products that producers are willing to offer for sale at different market prices

demand

the quantity of products that consumers are willing to buy at different market prices

equilibrium price

quantity demanded of a product equals the quantity supplied

socialism

Economic system based on the principle that the government owns and operates key enterprises that directly affect public welfare

communism

extremist form of socialism, introduced by Karl Marx

mixed economy

embody elements of both planned and market-based economic systems

fiscal and monetary policy

developed to help achieve the role of controlled and sustained economic growth

fiscal policy

government efforts to influence the economy through taxation and spending (US Congress)

monetary policy

federal Reserve (the nation’s central bank) decisions that shape the economy by influencing interest rates and supply of money

federal budget

financial plan that outlines expected revenue from taxes and fees and expected spending

budget surplus

overage that occurs when revenue is higher than expenses over a given period of time

budget deficit

shortfall that occurs when expenses are higher than revenue over a given period of time

national debt

the total amount of money the government has borrowed and not yet repaid

debt ceiling

the maximum amount Congress lets the government borrow 

the federal reserve

the central bank of the US and the banks, regulates the US economy

commercial banks

privately owned financial institutions

reserve requirement

a rule is set by the Fed which specifies the minimum amount of funds a bank can hold 

the bank for commerical banks

the federal reserve

discount rates

the interest rate the Fed charges on its loans to commercial banks

Monetary policy

decisions that shape the economy by influencing interest rates and supply of money

Open market operations

federal reserve function of buying and selling government securities

reserve requirement

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

why international trade?

growth, access to factors of production, reduced risk, inflow of innovation

exchange rates

measure the value of one nation’s currency relative to the currency of other nations

strategies for expansion

foreign outsourcing, importing, exporting

international strategies for expansion

franchise agreements

joint venture

companies join forces and contribute resources to persue specific opportunities

partnership

voluntary agreement in which two or more people act as co-owners of a business for profit

strategic alliance

agreement between two or more firms to jointly pursue a specific opportunity without merging their businesses 

free trade

the unrestricted movement of goods and services across international borders

general agreement on tariffs and trade

international trade treaty designed to encourage worldwide trade among its members 

world trade organization

a permanent global institution to promote international trade and settle international trade disputes

world bank

international cooperative of 188 member countries, working together to reduce poverty in the developing world

international monetary fund

an international organization that promotes international economic cooperation and stable growth. Current Director: Kristalina Georgieva

trading blocs

groups of countries that have reduced or eliminated all tariffs, allowing free flow of goods among member nations

common markets

groups of countries that have reduced or eliminated all tariffs

barriers to global trade

sociocultural differences, population, economic differences, political and legal differences

protectionism

national policies designed to limit international trade

tariffs

taxies levied against imports

quotas

limitations on the amount of specific products that may be imported

voluntary export restraints

limitations on the amount of specific products that one nation will export to another nation

embargo

complete ban on international trade of a certain item or with a particular nation, “death sentence”

ethics

a set of beliefs about right and wrong, good and bad.

universal ethical standards

Ethical norms that apply to all people across a broad spectrum of situations.

business ethics

The application of right and wrong, good and bad, in a business setting.

code of ethics

A formal, written document that defines the ethical standards of an organization and gives employees the information they need to make ethical decisions across a range of situations.

whistle blowers

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

stakeholders

Any groups that have a stake—or a personal interest—in the performance and actions of an organization.

consumerism

A social movement that focuses on four key consumer rights: (1) the right to be safe, (2) the right to be informed, (3) the right to choose, and (4) the right to be heard.

planned obsolescence

The strategy of deliberately designing products to fail in order to shorten the time between purchases.

sarbanes-oxley act

Federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms. Key provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the validity of their financial statements.

corporate philanthropy

All business donations to nonprofit groups, including money, products, and employee time.

cause-related marketing

Marketing partnerships between businesses and nonprofit organizations, designed to spike sales for the company and raise money for the nonprofit.

green marketing

Developing and promoting environmentally sound products and practices to gain a competitive edge.

social audit

A systematic evaluation of how well a firm is meeting its ethics and social responsibility goals.

price sensitivity

when consumers are highly aware of the price and price changes of a product.

acquisition

one firm buys another firm

merger

two formerly independent business entities combine to form a new organization

divestiture

transfer of total or partial ownership of some of a firm’s operations to investors or to another company

horizontal merger

combination of firms in the same industry

vertical merger

combination of firms that are at different stages in the production of a good or service, creating a buyer-seller relationship

conglomerate merger

combination of firms in unrelated industries

joint venture

two or more companies pool their resources together for the purpose of accomplishing a specific task (a new product or any other business activity)

licensing

the granting of permission to use intellectual property rights, such as trademarks, logos, patents, under defined conditions

luxottica

the 4th largest luxury group in the world

franchising

licensing arrangement in which a franchisor allows franchisees to use its name, trademark, products, and business methods in exchange for monetary payments