KSB-100 Exam-01

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Business

Any activity that offers goods or services for sale to customers with the intent of making a profit

Goods

Athletic shoes, equipment - tangible, material item

Services

Banking, Travel, Legal - doesn’t make tangible item

Management

Planning, staffing, and controlling resources to reach goals

Operations

Transforms resources into products

Marketing

Works to identify and satisfy customer needs by way of designing and promoting

Finance

Planning, obtaining, and managing company funds

Accounting

Measuring, summarizing, and communicating financial information

Profit

The money you have left over after paying business expenses

Supply

Quantity of a product that sellers can sell (When ______ is higher, prices decrease)

Demand

Quantity of a product buyers are willing to buy (When prices lower, ______ increases)

Equilibrium Price

Price at which buyers are willing to buy exactly the amount that sellers are willing to sell - reaches when buyers and sellers interact to set it

Perfect Competition

Market in which customers buy products from numerous small businesses - market price is set

Monopolistic Competition

Market in which many sellers supply differentiated products - many sellers, same product

Oligopoly

Market in which few sellers supply large portion of all products sold in the marketplace

Monopoly

Market in which there is only one seller supplying a good

GDP

Measure of the market value of all goods and services produced by a nation’s economy each year

Inflation

A general increase in prices and fall in the value of money

Consumer Price Index

Measures rate of inflation by determining price changes of a hypothetical basket of food

Monetary Policy

Used to control money supply and interest rates

Fiscal policy

Governments power to spend and tax to fix economy

PESTLE

Political, Economic, Social, Technological, Legal, Environmental

Absolute Advantage

Condition whereby a country is the only source of a product, or makes more of a product using fewer resources

Comparative Advantage

One nation can produce a product at a lower opportunity cost compared to another nation

Why nations trade

* Access to lower cost of goods & services
* Diversify supply chain
* Access to goods & services in short term supply

Importing

Practice of buying products overseas and reselling them in one’s own country

Exporting

Practice of selling domestic products to foreign countries

Trade Advantage

Country sells more than it buys

Trade Deficit

Country buys more products than it sells

International Licensing Agreement

Allows foreign company to sell a product of licensor

International Franchise Agreement

Domestic company gives a foreign company the right to use its brand and sell its products

Outsourcing

Using outside vendors to manufacture all of or part of a company’s actual products

Joint Venture

Alliance in which partners fund a separate company together to manage a joint operation

Strategic Alliance

Two companies pool resources to achieve business goals that benefit both partners

Foreign Direct Investment

Formal establishment of business operations on foreign soil

Multinational Corporation

Large corporation that operates in many countries

Tariffs

Government taxes on imports that raises the price of foreign goods and makes them less competitive with domestic goods

Subsidies

Government payments given to certain industries to help offset cost of their production

Quota

Government restriction on the quantity of a good that can be imported

Embargo

Extreme quota banning the import or export of certain goods to a country for political reasons

World Bank

Provides economic assistance to poor and developing nations

International Monetary Fund

Loans money to countries with troubled economies

World Trade Organization

Established Ground rules for trade among nations

Trading Blocs

Groups of countries promote regional free trade by allowing goods and services to flow without restrictions across their borders

Startup Business

* Revenue: $0-200K
* Sole propreitorship

Small Business

* Revenue: $200K-10M
* Partnership

Medium Business

* Revenue: $11M-100M
* Private or publicly owned

Large Business

* Revenue: $100M +
* Private or publicly owned

Why Businesses Fail

* Money
* Security
* Competition
* Lack of Ideas
* Inability to handle growth

Business Plan

Formal document describing a proposed business concept, description of the proposed business, industry analysis, mission statement & core values, management plan, description of goods and services, description of production process, and marketing/financial plans

Sole Proprietorship

* Business owned by one person
* 72% of businesses in the U.S
* Unlimited liability
* Pros: Cheapest form of business, complete control of company
* Cons: Owner must supply everything and is liable for all

General Partnership

* Business jointly owned by 2 or more people
* About 10% of businesses in U.S
* Pros: Inexpensive, financing is easier, pays no income tax
* Cons: More complex to start, disputes, profits shared

Corporations

* Legal entity entirely separate from parties who own it
* 18% of businesses in U.S
* Shareholders → Board of Directors → Company Executives → Managers → Employees

Board of Directors

Govern corporation and oversee major policies and decisions

Shareholders

Owners of a corporation

Working for a Large Business

* Advantages: Stability in job, global operations, company reputation
* Disadvantages: Often a number not a name, more bureaucracy, structure creates tension

Manager

Plans, organizes, directs, and controls resources to achieve

Plan

Gets concepts beyond idea stage; sets goals and determines ways to achieve them

Organize

Make plan become a reality; allocating resources to carry out plans

Directing/Leading

Motivate people to do well

Control

Know things are in fact going well; comparing actual to expected performance

SWOT Analysis

Strengths, Weaknesses, Opportunities, Threats

Executives

Responsible for health and performance of company

Middle Managers

Oversees activities of first-line managers to carry out vision

First Line Managers

Supervise employees and coordinate their activities

Autocratic

Managers who tend to make decisions without soliciting input from subordinates

Democratic

Seek input from subordinates while retaining authority for final decision

Transformational

Mentor and develop subordinates to achieve group goals rather than personal goals

Laissez-faire

hands off approach to management with little direction to subordinates

Functional Structure

Organized around departments who have comparable skills

Divisional Structure

Organized around products or markets

Geographic Structure

Groups are based on location

Matrix Structure

Employees from various areas form to combine skills for projects

Goals

Major accomplishments a company wants to achieve in the long run

Objectives

Short-term performance targets that direct efforts toward reaching a goal

Outcomes

Desired achievement

Operations

Converting resources into goods and services and assuring they are of high quality

External Factors of HR

* Shortages of trained workers
* Shift in employee attitude
* Overseas labor pools

HR Management

All actions that an organization takes to attract, develop, and retain quality employees

Strategic HR Planning

Process of developing a plan for satisfying an organization’s HR needs like how to manage tasks

Human Resource Laws

* Equal Pay
* Age discrimination
* Affordable Care

Recruiting

* Figure out what needs to get done
* Screen candidates
* Start with coffee (talk about it)
* Look beyond your floor
* Let your people grow
* Recruit Strong Talent

Gender Pay Gap

Women earned an estimated 82 cents for every dollar that men earned

Benefits of a Diverse Workforce

People with diverse backgrounds bring fresh point of views

Retaining Employees

Create positive work environment, involve employees in decision making

Maslow’s Hierarchy of Needs

* Self-actualization needs
* Esteem needs
* Social needs
* Safety needs
* Physiological Needs

Wage

Hourly Rate times hours worked

Salary

Paid for fulfilling responsibilities

Piecework

Paid according to quantity produced

Commission

Paid according to quantity sold

Bonus Plans

Annual income in addition to salary

Profit Sharing

Distribution of company profits

Stock Option

Right to buy shares at set price on specified date

Benefits

Legally required - (SSN, paid time off, insurance)

Performance Appraisals

Formal process in which a manager evaluates an employees work performance

360 Degree Feedback

Employees get feedback from all directions including supervisors, subordinates, and coworkers

Annual Review

Measure employee performance by established standards to make decisions for promotions, salaries, etc.

Disorganized Group

* Unsure of roles responsibilities & deadlines
* poor communications & working relationships with members
* not outcome driven

Functioning Team

* Know roles, responsibilities & deadlines
* communicate well
* builds relationships
* focuses on outcomes

Manager Led Team

Team on which manager defines goals and methods, solely responsible for interactions with higher-level management