Business Final Exam Review

wants

Things person does not have to survive, but would like to have

needs

Things that you must have in order to survive

goods

Physical products

services

Tasks that businesses perform for consumers

resources

Items that people can use to make or obtain what they need or want

business

Any commercial activity that seeks profit by providing goods and services to others in exchange for money

profit

The money left over after a business has paid the cost of providing its goods and services

competition

The contest between businesses to win customers

market research

The gathering and analysis of information on the size, location, and makeup of a product market

consumer

Person who uses goods and services

• identify opportunities for products or services

• evaluate the demand for products or services

• obtain start-up money and operating capital

• manage the production of goods and/or services

• market the goods and/or services

• keep records to satisfy government requirements and improve processes.

The six activities businesses undertake when developing products or services.

1. Identify the situation

2. Identify possible courses of action

3. Determine the pros and cons

4. Make a decision

5. Evaluate your decision

Steps of the decision-Making Process

scarcity

A shortage of resources

factors of production

All the economic resources necessary to produce a society’s goods and services

natural resources

Raw materials from nature used to produce goods

labor resources

Individuals who make the goods and services for which they are paid

capital resources

The things used to produce goods and services

entrepreneurial resources

The people who recognize opportunities and start businesses

entrepreneurship

The process of recognizing a business opportunity, testing it in the market, and gathering the resources necessary to start and run a business

entrepreneur

A person who recognizes a business opportunity and organizes, manages, and assumes the risks of starting and operating a business

economics

The study of how individuals and groups of individuals strive to satisfy their wants and needs through making choices

economic system

The method that a society chooses to use and distribute resources

e-learning

Electronic learning; the process of learning online

market economy

An economic system in which economic decisions are made in the marketplace, where buyers and sellers meet to exchange goods and services, usually for money

price

The amount of money given or asked for when goods and services are bought or sold

supply

The amount of goods and services that producers will provide at various prices

demand

The amount or quantity of goods and services that consumers are willing to buy at various prices

equilibrium price

The point at which the quantity demanded and the quantity supplied meet

command economy

An economic system in which a central authority makes the key economic decisions

mixed economy

A combination of a market economy and a command economy

gross domestic product (GDP)

The total value of the goods and services produced in a country in a given year

standard of living

The level of material comfort as measured by the goods and services that are available

inflation

A general increase in the cost of goods and services

deflation

A general decrease in the cost of goods and services

budget deficit

When the government spends more on programs than it collects in taxes

national debt

The total amount of money a government owes

budget surplus

A situation in which a government’s revenue exceeds its expenditures during a one-year period

business cycle

The rise and fall of economic activity over time

prosperity

A peak of economic activity

recession

A slowdown of economic activity

depression

A deep recession that affects the entire economy and lasts for several years

recovery

A rise in business activity after a recession or depression

early 1600s = service-based economy

1700s = agriculture-based economy

m id-1850s = industry-based economy. where industrial revolution took place

1900s = information-based economy.

U.S. Economic Timeline

Great Depression Start

Begun October 29, 1929, Black Tuesday

ethics

Moral principles by which people conduct themselves personally, socially, or professionally

business ethics

Rules based on moral principles about how businesses and employees ought to conduct themselves

code of ethics

A set of guidelines for maintaining ethics in the workplace

sweatshop

A shop or factory in which workers are employed for long hours at low wages and under unhealthy conditions

conflict of interest

Conflict between self-interest and professional obligation

social responsibility

The duty to do what is best for the good of society

• Is it against the law? Does it violate company or professional policies

• Even if everyone is doing it, how would I feel if someone did this to me?

• Am I sacrificing long-term benefits for short-term gains?

Ethical Questions

1. Identify the ethical dilemma

2. Discover alternative actions

3. Decide who might be affected

4. List the probable effects of the alternatives

5. Select the best alternative

Ethical decision-making process

small business

An independently owned business that usually has the owner as its manager. Most important to U.S. economy for providing goods & services and a majority of jobs

virtual business or dot-com company

A business that operates on the Internet

entrepreneur advantages

Being the boss, doing what you enjoy, having the opportunity to be creative, building an enterprise, and possibly making a substantial income

entrepreneur challenges

Getting start-up funds, risk of failure, and having an uncertain income

business plan

A written description of a new business venture that describes all aspects of the business

executive summary

A brief recounting of the key points contained in a business plan

management team plan

Explains the team’s capabilities and duties defining how they will execute your business concept/idea.

company description

Describes the business opportunity and why it will succeed.  It outlines the basic background information, business concept etc.

product and service plan

Describes the features and benefits of the product or service you want to offer along with possible spin-offs.

vision statement

A statement that establishes the scope and purpose of a company and reflects its values and beliefs

mission statement

A statement that expresses the specific aspirations of a company, the major goals for which it will strive

industry overview

Presents your research of the industry, discusses trends and growth within the industry, include data from companies that provide similar, complementary or different products and services, and describe the size of the industry both in revenue and number of firms and any barriers to entry.

market analysis

Describes the research about your customer profile that defines the traits of your company’s target market. Includes geographic, economic, and demographic data about the target market and business location.

competitor analysis

Explains how your business has an advantage over your competition.

marketing plan

Discusses how a company makes its customers aware of its products or services.

operational plan

Explains how the company will produce and deliver the product or service.

organizational plan

Offers information about the business’s legal structure, methods and responsibilities of record keeping as well as details regarding any legal and insurance issues.

financial plan

Presents the financial forecasts for the business.  This may include startup costs, operating costs, an income statement, a statement of net worth as well financials indicating a return on investment. The plan provides proof that the new business will be financially healthy.

growth plan

Looks at how the business will expand in the future.

Investors and lenders like to know that a business plans to grow and deal with growth.

contingency plan

Looks at likely risks to the business and ways to minimize those risks.

market

A group of customers who share common wants and needs

marketing

The process of creating, promoting, and presenting a product or service to meet the wants and needs of consumers, whatever they are

relationship marketing

A strategy to build customer relations

marketing mix

The four main elements of marketing, also called the four Ps: product, place, price, and promotion. It sometimes includes a fifth P, for people.

channel of distribution

A pathway to direct products to consumers

direct distribution

Distribution of goods or services from the producer directly to the customer

indirect distribution

Distribution involving one or more intermediaries

break-even point

The point at which total revenues, or sales, equal total costs and expenses of making and distributing a product or service

market research

The gathering and analysis of information on the size, location, and makeup of a product market

marketing concept

The process of determining the wants and needs of customers and providing them more efficiently and effectively than competitors

demographics

Facts about the population

target marketing

Marketing that helps companies focus on the people most likely to buy their goods or services.

market segmentation

The division of a market for a product into groups of customers who have the same needs and traits

test-market

Offering a product in a limited market for a limited time

1. Generate ideas

2. Screen ideas

3. Develop a business plan

4. Develop the product

5. Test-market the product

6. Introduce the product

7. Evaluate customer acceptance

steps of product development