Business - Exam 1

Value

 price, and benefits (the higher the benefit the higher the value)

Business

“organization or activity that provides goods and services in an effort to earn a profit.”

Profit

The money you earn (P=R-C)

Loss

 The money you lose 

Entrepreneurs

Risk time, money, and other resources to open and manage  their businesses

Standard of living

 quality, and quantity of goods and services available to the population 

Quality of life

a sense of well-being experienced by the population 

Socially responsible firms

firms that actively advocate for the well-being of their customers and workers. 

Industrial revolution:

• rapid industrialization

• Mass production

• Semiskilled workers 

• Repetitive jobs 

• Production efficiency 

• Loss of personal pride

Entrepreneurship Era:

• Enormous wealth concentrated 

• A higher standard of living

• Workers exploration

• Government steps in

• Laws to regulate business 

• More balanced economy 

The Production Era:

• Refined production

• More and more efficiency 

• Jobs even more specialized 

• Low costs and prices 

• Assembly line (Henry Ford) 

The Marketing Era: 

• Consumers have the power

• Competition

• Distinctive identities 

• Marketing

The Relationship Era:

• Long-term relationships with customers 

• Technology

• Digital resources

• Customer service 

Nonprofits

 organizations that do not hold profit as their main goal, ain to community contribution 

Factors of production

  capital (technology, money, information, tools), raw materials (natural resources), human resources, entrepreneurship = business success

Business environment

settings: economic, competitive, technological, social, and global environment

• Economic: 

  • Government help

  • Reduce starting risks 

  • Competition flourished

  • SBA (small business adm.)

  • Legislation

  • Beware of corruption

• Competitive: 

  • Customer satisfaction 

  • Long-term relationships

  • Product Value → benefits   price

  • Value = quality 

  • Speed-to-market production

  • Bleeding-edge: fail, products too far ahead what the market wants 

  • Leading-edge: success, has their product just as the market needs 

• Workforce: 

  • Employees

  • Happy employee = higher profit 

  • Best talent = company success 

  • Cultivate human resources 

• Technological: 

  • Business technology

  • More efficvinet 

  • More effective 

  • Tech = competitive advantage

  • Internet 

  • E-commerce

  • Individualized experience for consumers 

  • Change = victory 

• Social: 

  • Values

  • Attitude

  • Customs

  • Beliefs 

  • Demographics 

  • Changes from place to place 

  • Understand the different social aspects = business success 

  • Diversity

  • Manage the aging population

  • Top talent

  • Sustainability 

• Global: 

  • Technology

  • Free trade

  • Lowest bidder and highest quality 

  • GATT - lower tariffs and restrictions

  • Europen Union, NAFTA

Speed-to-market

 products delivered as the consumers require (rate: product moves from conception to commercialization)

Business technology

all tech to make them more efficient and effective 

World Wide Web

Internet

E-commerce

 Business online transactions 

Demographics

factors: population size, density, age, gender, race, education, and income 

Diversity

 inclusion of different genders, ages, religions, nationalities…

Free trade

goods and services flow easily though borders 

General Agreement on Tariffs and Trade (GATT)

 lower tariffs and promote free trade worldwide.

Economy

financial and social system, shows how production, distribution, and consumption floes though society

Economics

Choices companies make in distributing those resources

Macroeconomics

 broader view of the economy, country’s economies 

Microeconomics

smaller and punctual, individual businesses 

Managing crisis

effort to avert recession by increasing the money supply and encouraging investment. 

Subprime loans

borrowers with low credit scores, might not pay back, higher return, low risk.

Fiscal policy

gov regulations though taxation and spending , trade balance

Budget surplus

gov acquired more money than they spend (revenue > spending)

Budget deficit

gov spend more money than they acquired (spending > revenue)

Debt Ceiling

 the maximum amount congress lets the government borrow 

Federal debt

the sum of all the money the government borrowed and have NOT payed back.

Monetary policy

country’s money, money, price, interest rate, gold reserve, Central Bank.

Commercial banks

 private, accept deposits and lend loans to people 

Money supply

 total of money in the economy

Money

 anything accepted as exchange, value, or payment 

M1 money supply

all currency 

M2 money supply

 M1 + savings accounts 

Open market operation

 Fed function of buying and selling gov. Securities (treasury bills, notes) 

Discount rate

interest loans (the fed charges on banks)

Federal Deposit Insurance Corporation (FDIC)

insures deposits in banks and thirift institutions.

Econimic systeam

 structure for allocating limited resources. How the gov organizes and distribute \

Capitalism

• free market 

• Private enterprise 

• Competition 

Pure competition:

  many competitors selling almost the same product

Monopolistic competition:

many competitors selling different products  

Oligopoly

few competitors seeling equal or different products

Monopoly

 one producer only selling everything

Natural monopoly

 one supplier but because is more efficient that way 

Supply

 quantity of products offered 

• Supply curve: graph interactions on price x quantity for supply

Demand

 quantity of products wanted 

• Demand curve: graph interactions on price x quantity for demand

Equilibrium point

supply = demand 

Socialism

government should own enterprises that affect the public welfare

Communism

 public ownership of everything (enterprise)  under the leadership of a strong central government

Mixed economies:

panned + market-based economic systems

Privatization:

government-owned → private owned business

GDP

 total valued of goods and services of a nation throughout a year

Unemployment rate

percentage of the work force that is NOT working but is seeking work

Business cycles:

contractions and expansion of businesses throughout time in evey economy

Contraction

economic downturn

Recession

 ↓GDP for 2 quarters

Depression

long-lasting recession

Recovery

rising economy

Expansion

robust economic growth

Inflation

rising average prices

Hyperinflation

 inflation > 50%

Desinflation

 slow price increase

Deflation

falling average prices

CPI

inflation on consumers goods (price x quantity)

PPI

inflation on business goods  (price x quantity)

Productivity

output divided by input

Sole proprietorship

single owner manages everything

Partnership

voluntary co-workers agreement 

General partnership

both partners have active role and unlimited liability

corporation

business separate from the owners (limited liability)

Articles of incorporation

a document filled with a state gov that establishes the existence of a new business

LLC

limited liability for the owners and flexible tax treatment

Limited partnership

one active partner (unlimited liability) and one limited partner (limited liability) - safe for the limited

LLP

active partners with limited liability for company debt

C corporation

limited liability for its stockholders

Corporate bylaws

rules for organizing and conducting a business

Stockholder

owner of a corporation

Institutional investor

organization that buy stocks

Board of directors (CEO’s)

chosen by stockholders to represent their interests

S Corporation

avoid double taxation

Statutory Close

a limited number of owners, operates with less formal rules than C corporations

Nonprofit corporation

do NOT seek to earn profit

Acquisition

one firms by another

Merger

2 companies agree to combine, forming a new company

Disventure

firm transfers its ownership of some operations to investors in other countries

Horizontal merge

combination of 2 firms in the SAME industry

Vertical merge

combination of firms that produce the different stages of the same product (compra todo o processo de producao)

Conglomerate merge

combination of 2 firms of different industries

Franchise

arrangement in which the franchiSOR allows the franchiSEES to use its name, trademark, products… in exchange of money

franchisor

the business that allows the other to use its resources

Franchisee

pays the rights to use the franchisor's resources

Distributorship

franchisor makes a product and licenses the franchisee to sell it

Business format franchise

a broad franchisee agreement