Principles of Business Chapters 1-4

A Business

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

Goods

Tangible products

Services

Intangible products

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 by selling goods and services

Profit

The amount of money a business earns above and beyond what it spends for salaries and other expenses needed to run the operation

Loss

When the business’s expenses are more than its revenues

Risk

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

Standard of Living

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 of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide

Stakeholders

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

Types of Stakeholders

Stockholders, bankers, media, suppliers, gov. leaders, employees, customers, surrounding community, environmentalists, retailers/dealers

Outsourcing

Contracting with other companies to do some or all of the functions of a firm, like its production or accounting tasks (occasionally other countries)

Insourcing

Other countries contract USA companies to do things for them

Nonprofit Organization

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

Five Factors of Production

The resources used to create wealth

Name the Five Factors of Production

Land, labor, capital, risk, knowledge

Business Environment

The surrounding factors that either help or hinder the development of businesses

What are the Elements of Business Environment?

Economic and legal, technological, competitive, social, global

Ways governments can help businesses

Minimize spending and keep taxes and regulations to a minimum, allow private ownership of businesses, sell government businesses to individuals, minimize interference with the free exchange of goods and services, pass laws, create currency that is tradeable around the world

Effectiveness

Producing the desired result

Circular economy

Reusing, redistributing, refurbishing, and recycling products instead of dumping them in a landfill

Efficiency

Producing goods and services using the least amount of resources

Productivity

The amount of output you generate given the amount of input

E-commerce

The buying and selling of goods over the internet

Database

An electronic storage file for information

Identity theft

The obtaining of individuals’ personal information, such as Social Security and credit card numbers, for illegal purposes

Empowerment

Giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests

Demography

The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income

Diversity

Older people, races, disabilities, sexual orientations, and marital situation

Inclusion

Having a voice that is heard

Belonging

Feeling apart of a community

Globalization

World trade

Uncertainty

Considered the biggest risk in business

Climate change

The movement of the temperature of the planet up and down over time

Greening

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

Intellectual capital

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

Economics

The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals