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brand

a name, term, sign, symbol, design, or some combination that identifies the products of one firm and shows how they differ from competitors’ offering

branding

the process of creating in consumers’ minds an identity for a good, service, or company; a major marketing tool in contemporary business

business

all profit-seeking activities and enterprises that provide goods and services necessary to an economic system

capital

capital inputs consisting of technology, tools, information, and physical facilities

capitalism

an economic system that rewards firms for their ability to perceive and serve the needs and demands of consumers; also called the private enterprise system 

competition

the battle among businesses for consumer acceptance

competitive differentiation

the unique combination of organizational abilities, products, and approaches that sets one company apart from its competitors in the minds of customers

consumer orientation

a business philosophy that focuses first on consumers’ unmet wants and needs, and then designs products to meet those needs

creativity

the capacity to develop novel solutions to perceived organizational problems

critical thinking

the ability to analyze and assess information to pinpoint problems or opportunities

diversity

the blending of individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities to enhance a firm’s chances of success

entrepreneur

a person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business

entrepreneurship

the willingness to take risks to create and operate a business

factors of production

four basic inputs for effective economic operation: natural resources, capital, human resources, and entrepreneurship

human resources

production inputs consisting of anyone who works, including both the physical labour and the intellectual inputs contributed by workers

natural resources

all production inputs that are useful in their natural states, including agricultural land, building sites, forests, and mineral deposits

nearshoring

the outsourcing of production or services to locations near a firm’s home base

not-for-profit organizations

organizations whose primary aims are public service, not returning a profit to their owners

offshoring

the relocation of business processes to lower-cost locations overseas

outsourcing

using outside vendors to produce goods or fulfill services and functions that were previously handled in-house

private enterprise system

an economic system that rewards firms for their ability to identify and serve the needs and demands of customers

private property

the most basic freedom under the private enterprise system; the right to own, use, buy, sell, and hand down land, buildings, machinery, equipment, patents, individual possessions, and various intangible kinds of property

profits

rewards for businesspeople who take the risks involved in offering goods and services to customers

relationship era

the business era where firms seek to actively promote customer loyalty by carefully managing every interaction

relationship management

the collection of activities that build and maintain ongoing, mutually beneficial ties with customers and other parties

social era

the business era in which firms seek ways to connect and interact with customers using technology

strategic alliance

a partnership formed to create a competitive advantage for the businesses involved; in international business, a business strategy in which a company finds a partner in the country where it wants to do business

transaction management

building and promoting products in the hope that enough customers will buy them to cover costs and earn profits

vision

the ability to perceive marketplace needs and what an organization must do to satisfy them

balanced budget

a situation in which total revenues raised and fees equal the total proposed spending for the year

budget

an organization’s plan for how it will raise and spend money during a given period of time

budget deficit

a situation in which the government spends more than the amount it raises through taxes and fees

budget surplus

excess funding that occurs when the government spends less than the amount of funds raised through taxes and fees

communism

an economic system in which all property is shared equally by the people of a community under the direction of a strong central goverment

consumer price index (cpi)

a measurement of the monthly average change in prices of goods and services

core inflation rate

the inflation rate of an economy after energy and food prices are removed

cyclical unemployment

people who are out of work because of a cyclical contraction in the economy

deflation

when prices continue to fall

demand

the willingness and ability of buyers to purchase goods and services at different prices

demand curve

a graph of the amount of a product that buyers will purchase at different prices

economics

a social science that analyzes the choices people and governments make in allocating scarce resources

equilibrium price

the current market price for an item

expansionary monetary policy

government actions to increase the money supply in an effort to cut the cost of borrowing, which encourages business decision makers to make new investments, in turn stimulating employment and economic growth

fiscal policy

government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth

frictional unemployment

applies to members of the workforce who are temporarily not working but are looking for jobs

gross domestic product (gdp)

the sum of all goods and services produced within a country’s borders during a specific time period, such as a year

hyperinflation

an economic situation characterized by soaring prices

inflation

an economic situation characterized by rising prices caused by a combination of excess consumer demand and increases in the costs of raw materials, component parts, human resources, and other factors of production

macroeconomics

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

mixed market economics

economic systems that draw from both types of economies to different degrees

monetary policy

government actions to increase or decrease the money supply and to change banking requirements and interest rates to influence bankers’ willingness to make loans

monopolistic competition

a market structure in which large numbers of buyers and sellers exchange heterogeneous products, so each participant has some control over price

monopoly

a market situation in which a single seller dominates trade in a good or service for which buyers can find no close substitutes

national debt

money owed by the government to individuals, businesses, and government agencies who purchase Treasury bills, Treasury notes, and Treasury bonds sold to cover expenditures

oligopoly

a market situation in which relatively few sellers compete and high start-up costs form barriers to keep out new competitors

planned economy

an economic system in which government controls determine business ownership, profits, and resource allocation to accomplish government goals rather than those set by individual firms

privatization

the conversion of government-owned and operated companies to privately held businesses

producer price index (ppi)

a measurement of the average change in prices of goods and services received by domestic producers

productivity

the relationship between the number of units produced and the number of human and other production inputs necessary to produce them

pure competition

a market structure in which large numbers of buyers and sellers exchange homogeneous products and no single participant has a significant influence on price

quantitative easing

an expansionary monetary policy whereby a central bank buys back predetermined amounts of government bonds or other financial assets to increase liquidity and stimulate the economy

recession

a cyclical economic contraction that lasts six months or longer

regulated monopoly

a market situation in which a local, provincial, or federal government grants exclusive rights in a certain market to a single firm

restrictive monetary policy

government actions to reduce the money supply to curb rising prices, over expansion, and concerns about overly rapid economic growth

seasonal unemployment

joblessness of workers in a seasonal industry

socialism

an economic system characterized by government ownership and operation of major industries such as communications

structural unemployment

people who remain unemployed for long periods of time, often with little hope of finding new jobs like their old ones 

supply

the willingness and ability of sellers to provide goods and services at different prices

supply curve

a graph that shows the relationship between different prices and the amount of goods that sellers will offer for sale regardless of demand

unemployment rate

the percentage of the total workforce actively seeking work but currently unemployed

balance of payments

the overall money flows into and out of a country

balance of trade

the difference between a nation’s exports and imports

canada - united states - mexico agreement (cusma)

an agreement between canada, the us, and mexico reached in 2018 to break down tariffs and trade restrictions

central america - dominican republic free trade agreement (cafta-dr)

an agreement between the us, costa rica, the dominican republic, el salvador, guatemala, honduras, and nicaragua to reduce tariffs and trade restrictions

countertrade

a barter agreement whereby trade between two or more nations involves payment made in the form of local products instead of currency

devaluation

a reduction in a currency’s value in terms of other currencies or in terms of a fixed standard

dumping

selling products in other countries at prices below production costs or below typical prices in the home market to capture market share from domestic competitors

embargo

a total ban on importing specific products or a total stop to trading with a particular country

european union (eu)

a 27-nation european economic alliance

exchange control

a restriction on importing certain products or a restriction against certain companies to reduce trade and the spending of foreign currency

exchange rate

the value of one nation’s currency in terms of the currencies of other countries

exports

domestically produced goods and services that are sold to other countries

foreign licensing agreement

an international agreement in which one firm allows another firm to produce or sell its product or use its trademark, patent, or manufacturing processes in a specific geographical area in return for royalties or other compensation

franchise

a contract-based agreement in which a franchisee can produce or sell the franchisor’s products under that company’s brand name if the franchisee agrees to the operating terms and requirements

general agreement on tariffs and trade (gatt)

an international trade accord that has greatly reduced worldwide tariffs and other trade barriers

global business strategy

the offering of a standardized worldwide product and the selling of it in basically the same way throughout a firm’s domestic and foreign markets

imports

foreign goods and services purchased by domestic customers

infrastructure

the basic systems of a country’s communications, transportation, and energy facilities

international monetary fund (imf)

an organization created to promote trade, eliminate barriers, and make short-term loans to member nations that are unable to meet their budgets

joint venture

a partnership between companies formed for a specific undertaking

multidomestic business strategy

a plan to develop and market products to serve different needs and tastes in separate national markets

multinational corporation (mnc)

a firm with many operations and marketing activities outside its home country

north american free trade agreement (nafta)

an agreement between canada, the united states, and mexico reached in 1994 to break down tariffs and trade restrictions

quotas

a limit set on the amounts of particular products that can be imported

subcontracting

an agreement that involves hiring other companies to produce, distribute, or sell goods or services; in international subcontracting, local companies in a specific country or geographical region are hired to produce, distribute, or sell goods or services

tariffs

taxes imposed on imported goods

world bank

an organization established by industrialized nations to lend money to less-developed countries

world trade organization (wto)

a 159 member international institution that monitors gatt agreements and mediates international trade disputes

business ethics

standards of conduct and moral values regarding right and wrong actions in the business environment

code of conduct

a formal statement that defines how an organization expects its employees to resolve ethical issues