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A set of vocabulary flashcards covering core terms and concepts from the lecture notes across business, economics, ethics, and global trade.
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Profit
The financial gain from business activities; essential for growth, funding operations, salaries, investments, and sustainability.
Business
An activity that provides goods and services to others while seeking a profit.
Goods
Tangible items that can be owned (e.g., shoes, cars, televisions).
Services
Intangible activities that require the consumer's presence (e.g., haircut, legal advice, car repair).
Economic ripple effect of profits
When salaries are spent in the economy, fueling spending, job creation, and higher living standards.
Private ownership
Economies where consumers decide what to buy; firms produce based on demand, influencing living standards.
Value
The worth of a product to a buyer; to be successful, value must exceed price.
Stakeholders
Anyone affected by a business: customers, employees, stockholders, suppliers, communities, environmental groups.
Stakeholder wheel
A visual model showing the need to balance diverse stakeholder demands around a business.
For-profit vs. non-profit
For-profits pursue personal profits; non-profits fund programs or causes; both require sound finances.
Non-profit employee considerations
Talented workers may accept lower salaries in exchange for meaningful work and non-monetary benefits.
Demographics in business
Trends like more working women and rising numbers of female CEOs.
Internal environment
controllable factors inside a business (employees, structure, culture).
External environment
Uncontrollable factors outside a business (economic, legal, technology, social, global events).
GDPR analogy
Example of external environment: new data privacy laws changing data handling and costs.
Technology
Tech advances that boost efficiency (AI, cloud computing, e-commerce).
Productivity
Output divided by input; higher productivity lowers costs and prices.
Supply Curve
Shows how price affects the quantity suppliers are willing to sell; typically upward sloping.
Demand Curve
Shows how price affects the quantity consumers are willing to buy; typically downward sloping.
Market Equilibrium
Point where the supply and demand curves intersect; Qs equals Qd.
Surplus
When price is above equilibrium, excess supply occurs.
Shortage
When price is below equilibrium, excess demand occurs.
Five factors of production
Land, Labor, Capital, Entrepreneurship, Knowledge – the sources of wealth creation.
Economic systems
Command, Free Market (Capitalism), Socialism, Communism, Mixed Economy.
Invisible Hand
Adam Smith's idea that self‑interested action unintentionally benefits society through resource allocation.
Capitalist rights
Four basic rights: private property, private business/profits, freedom of competition, freedom of choice.
Pros of capitalism
Encourages risk-taking, competition, innovation, and quality/fair prices.
Cons of capitalism
Can lead to income inequality and disadvantages for some groups.
GDP
Gross Domestic Product: total value of goods/services produced in a country in a year.
Productivity indicators
Output per input; higher productivity lowers costs and prices.
Unemployment types
Structural, cyclical, seasonal, frictional.
Inflation/Deflation/Stagflation
Inflation: general price rise; Deflation: price decline; Stagflation: slow economy with rising prices.
CPI
Consumer Price Index; measures pace of inflation/deflation.
PPI
Producer Price Index; measures wholesale price changes.
Fiscal Policy
Government taxation and spending to stabilize the economy.
Monetary Policy
Central Bank actions to manage money supply and interest rates.
US debt-to-GDP
Ratio of national debt to GDP; a high ratio can be unsustainable.
Manufacturing to services shift
Economies move from manufacturing to services; service productivity measurement is complex.
Service productivity/data challenges
Measuring service productivity and handling data on individuals can be difficult.
Global market size
Approximately 8 billion people; projected growth toward 9+ billion, creating international opportunities.
Importing/Exporting
Importing: buying foreign goods for domestic use; Exporting: selling domestically produced goods abroad.
Free trade benefits
Stronger comparative advantage, increased innovation, efficiency, lower prices, greater variety.
Free trade drawbacks
Possible displacement of domestic workers; may prompt protectionism.
Comparative advantage
Country specializes where it has lower opportunity cost, boosting global production.
Absolute advantage
Country produces a good more efficiently or at lower cost than others.
Trade deficits/creditors
US trade deficit persists; China emerges as a major creditor.
Fair Trade
Ethical trading practices beyond simple free trade.
Dumping
Selling a good in a foreign market below cost or below home-market price; often illegal.
Global expansion modes
Licensing, Franchising, Exporting, Contract Manufacturing, Joint Ventures, Strategic Alliances, Direct Foreign Investment.
Offshoring
Relocating a business process to another country for cost or capability reasons.
Pros of offshoring
Cost savings, focus on core activities, efficiency, competitiveness, access to global talent.
Cons of offshoring
Domestic job losses, quality control issues, supply-chain risk, reduced managerial control, ethical concerns.
CSR
Corporate Social Responsibility; businesses address societal welfare beyond profit.
Ethical dilemma
A situation with conflicting moral choices, often involving legality vs. ethics.
Ethics vs law
Ethical behavior goes beyond mere legality; legality does not guarantee ethics.
Code of ethics
Guidelines to promote ethical conduct: compliance-based (controls/penalties) vs integrity-based (values-driven).
Six steps to improve ethics
Top management support; clear expectations; training; ethics office; supplier codes; walk the talk.
Whistleblowing protections
Reporting unethical conduct with safeguards against retaliation.
Kennedy’s consumer rights
Right to safety, right to be informed, right to choose, right to be heard.
CSR vs profit
Profit and CSR can align long-term when focused on value, trust, and customer loyalty.
Insider trading
Using nonpublic information for personal gain; example: Martha Stewart case.
Turnover costs
Costs of losing and replacing employees; strategic benefits like better benefits can reduce turnover.
Social audits/watchdogs
Groups that monitor ethics: investors, researchers, environmentalists, unions, consumers.
Supply chain responsibility
Multinational suppliers must meet codes of conduct and ensure worker safety and fair wages.
FCPA
Foreign Corrupt Practices Act; prohibits bribery of foreign officials by U.S. companies; enforcement globally.
Moral of the chapter
Adapt, understand the business environment, and apply economic principles to create value and societal well-being.