Unit 1: Business Fundamentals

Comprehensive vocabulary flashcards covering Unit 1: Business Fundamentals, including core business terms, consumer motives, ownership structures, factors of production, productivity, economic systems, macro indicators, and the production process.

Business

An organization that produces or sells goods/services to satisfy the needs and wants of consumers for the purpose of making a profit.

Needs

Goods or services that are essential for human survival.

Wants

Goods or services that are not essential for survival.

Real Needs

Basic needs that are tangible (such as food, shelter).

Psychological Needs

Needs that are intangible and emotional (such as companionship, security).

Goods

A tangible product that will be sold, likely for profit.

Services

Anything intangible that someone does for a fee, without a tangible good changing hands.

Bricks and Mortar

Physical places that customers visit to make purchases.

E-commerce

A virtual store, where business is conducted electronically over the Internet, without a store or showroom.

SMEs

Small to medium-sized enterprises.

Market

Any arrangement that enables buyers and sellers to get information and to do business with each other.

Demand

The amount of a good or service that customers are willing to purchase at a particular price.

Supply

The amount of a good or service available for consumption.

Producer

An individual or business that makes a product.

Customer

A person who buys goods and services.

Consumer

A person who uses goods and services.

Royalty

Compensation for usage of your work.

CEO

Chief Executive Officer (the highest ranking person in a company).

Conspicuous Consumption

When some people flaunt their purchases just to impress others.

Peer Pressure

Feeling pressured by friends to make a purchase.

Custom

Purchasing behavior tied to special holidays or occasions.

Habit

Consumer behaviors that are formed over time and are done repetitively.

Sole Proprietorship

A business structure where one owner is entitled to all profits and is responsible for all liabilities (unlimited liability).

Partnership

A business structure where two or more people (partners) share profits and losses according to the partnership agreement.

Partnership Agreement

A legal document that allows members of a partnership to establish rules for their relationship and to specify the conditions that will cause the partnership to dissolve.

General Partners

Partners who have unlimited liability and have full management control of the business.

Limited Partners

Partners who have little to no involvement in management, but have liability that is limited to their investment in the partnership.

Corporation

A business where ownership is divided into many small parts (shares or stock) and individuals can buy a share of ownership, spreading the risk of failure among shareholders who have a share in future profits.

Stockholder

A person that owns a share of a company.

Private Corporations

Corporations where only a few owners control all of the stock, which is not listed on a stock exchange.

Public Corporations

Corporations whose shares are available to the entire public on the stock exchange, having lots of owners.

Crown Corporations / State-owned Businesses

Businesses operated by the provincial/federal government (e.g., US Postal Service, Canada Post).

Franchise

A business model where the franchisor licenses the rights to its name, operating procedures, designs, and business expertise to another business (the franchisee).

Natural Resources

Raw materials that act as factors of production (e.g., soil, gold, trees, fish, grain).

Human Resources

The people who provide labor as a factor of production.

Capital Resources

Resources needed to produce goods/services (e.g., buildings, equipment, trucks, money).

Management

Allocates the factors of production to make the business successful.

Productivity

The quantity and quality of work performance.

Effective

An output measure determining if the task was completed or the goal was accomplished.

Efficient

An input measure determining if the costs associated with completing the task were done at a minimum.

Interdependence

Businesses relying on other businesses to help them produce goods and services that satisfy consumer needs and wants.

Economy

The independent system where government and businesses work together to provide goods and services to consumers.

Economic System

A way of dealing with the selection, production, distribution, and consumption of goods and services.

Centrally Planned Economy

An economic system where the government controls all economic decision making.

Capitalism (Free Market)

An economic system where a business is free to own private property and make a profit, and consumers have freedom of choice to buy goods/services from whomever they choose.

Mixed Economy

An economic system where private and public companies coexist, recognizing that no economic system exists in pure form.

Public Sector

The part of the economy consisting of government that provides services.

Private Sector

Businesses that are individually owned and operated whose purpose is to make a profit.

Privatization

The process by which public sector organizations are sold to the private sector.

Gross Domestic Product (GDP)

The total market value of all goods and services produced within a country in one year, used to measure economic growth over time.

Inflation

An economic condition that occurs when the price of many products goes up while the purchasing power of money decreases.

Purchasing Power

The amount and quality of goods and services that money can buy.

Unemployment Rate

The number of able-to-work people who do not have jobs expressed as a percentage of the labor force.

Input (Production Process)

Materials, components, labour, research, and development utilized at the start of the production process.

Processing (Production Process)

The stage of the production process involving production lines, assembly lines, management, and skills.

Output (Production Process)

The end product, customer satisfaction, and employee satisfaction generated by the production process.

Feedback (Production Process)

Information, new ideas, expertise, and customer feedback looped back to improve inputs and processing.

Methods for Improving Productivity

1. Training; 2. Capital investments.

Country's Economic Goals

1. Keep the economy growing over time (measured by GDP); 2. Limit unemployment (measured by unemployment rate); 3. Keep prices stable (measured by inflation rate).

Benefits of International Business

1. Access to many markets outside of this country; 2. Cheaper labor reduces production costs; 3. Increased quality of goods; 4. Access to resources.

Social Costs of International Business

1. Outsourcing; 2. Human rights and labor abuses; 3. Environmental degradation.

Measures of Business Success

1. Increasing Profit; 2. Employee Satisfaction; 3. Personal Satisfaction.

Profit Equation

$$\text{Revenues} - \text{Expenses} = \text{Profit}$$

Reasons Why Businesses Fail

1. Lack of Demand; 2. Lack of Skill/Knowledge; 3. Forgetting your Roots; 4. Expanding Too Quickly; 5. Lack of Capital; 6. Inability to Stay Competitive.