Business Midterm

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Profit-Making Business

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196 Terms

1

Profit-Making Business

motive is making a profit (earning more revenue than expenses)

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2

non-profit organization

A business whose goal is to provide a service rather than to make a profit, such as the American Red Cross.

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3

for-profit social enterprise

A business that, beyond the profit motive, has a social mission built into its business model.

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4

Socialism

A system in which society, usually in the form of the government, owns and controls the means of production.

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5

Capitalism

An economic system based on private ownership of capital

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6

mixed market economy

economic system that combines both private ownership and government ownership of the means of production

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7

perfect competition

exists when there are many consumers buying a standardized product from numerous small businesses.

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8

demand curve

a graph of the relationship between the price of a good and the quantity demanded

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9

supply curve

a curve that shows the relationship between the price of a product and the quantity of the product supplied.

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10

equilibrium price

the price that balances quantity supplied and quantity demanded

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11

monopolistic competition

a market structure in which many companies sell products that are similar but not identical

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12

Oligopoly

A market structure in which a few large firms dominate a market

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13

Monopoly

A market in which there are many buyers but only one seller.

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14

natural monopoly

a market that runs most efficiently when one large firm supplies all of the output without competition

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15

legal monopoly

monopoly in which one seller supplies a product or technology to which it holds a patent.

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16

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

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17

Recession

A slowdown in a nation's economy

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18

Depression

A long-term economic state characterized by unemployment and low prices and low levels of trade and investment

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19

Inflation

A general and progressive increase in prices

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20

Deflation

A situation in which prices are declining

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21

CPI

(consumer price index) a measure of the overall cost of the goods and services bought by a typical consumer

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22

Lagging Economic Indicators

statistics that report the status of the economy a few months in the past

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23

leading economic indicators

predict the status of the economy three to twelve months in the future

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24

monetary policy

the government exerts its power to regulate the money supply and level of interest rates

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25

fiscal policy

the government uses its power to tax and to spend.

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26

absolute advantage

the ability to produce a good using fewer inputs than another producer

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27

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

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28

opportunity cost

whatever must be given up to obtain some item

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29

balance of trade

the difference between a country's total exports and total imports

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30

trade surplus

when a country exports more than it imports

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31

trade deficit

situation in which a country imports more than it exports

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32

balance of payments

the difference between the flow of money into and out of a country

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33

International Licensing Agreement

Agreement that allows a foreign company to sell a domestic company's products or use its intellectual property in exchange for royalty fees.

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34

International Franchise Agreement

a company (the franchiser) grants a foreign company (the franchisee) the right to use its brand name and to sell its products or services

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35

International contract manufacturing

Practice by which a company produces goods through an independent contractor in a foreign country.

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36

Strategic alliance

A long-term partnership between two or more companies established to help each company build competitive market advantages.

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37

Joint ventures

alliances where the partners fund a separate entity (partnership or corporation) to manage their joint operations

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38

Foreign direct investment

Investment made by a foreign company in the economy of another country.

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39

offshoring

Moving operations from the country where a company is headquartered to a country where pay rates are lower but the necessary skills are available.

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40

foregin subsidiary

a company owned in a foreign country by another company, called the parent company

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41

multinational corporation

An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management

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42

high-context culture

cultures in which personal and family connects have an effect on most interactions

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43

low-context culture

culture where personal life isn't discussed

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44

exchange rate

the price of one currency in terms of another

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45

Foreign Corrupt Practices Act

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

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46

subsides

government payments given to certain industries to help offset some of their costs

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47

trade controls

Government policies that restrict free trade.

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48

protecionism

Trade that enables quotas and tariffs to protect one domestic economy

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49

Tariffs

Taxes on imported goods

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50

Quota

A limit placed on the quantities of a product that can be imported

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51

Embargo

A ban on trade

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52

Dumping

Selling goods in another country below market prices

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53

General Agreement on Tariffs and Trade (GATT)

International trade agreement that encourages free trade by regulating and reducing tariffs and provides a forum for resolving trade disputes.

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54

World Trade Organization (WTO)

International organization that monitors trade policies and whose members work together to enforce rules of trade and resolve trade disputes.

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55

International Monetary Funds (IMF)

International organization sets up to lend money to countries with troubled economics

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56

World Bank

an international bank that offers low-interest loans, advice, and information to developing nations

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57

trading bloc

A group of neighboring countries that promote trade with each other and erect barriers to limit trade with other blocs

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58

USA-Mexico-Canada Agreemnet

agreement among the governments of the USA, Mexico, Canada to open their borders to unrestricted trade

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59

European Union

association of European countries that joined together to eliminate trade barriers among themselves

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60

Entrepreneur

A person who organizes, manages, and takes on the risks of a business.

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61

Small Business Administration (SBA)

A U.S. government agency that advises and assists small businesses by providing management training and financial advice and loans.

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62

small business

one that is independently owned and operated for profit and is not dominant in its field

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63

good producing sector

all businesses that produce tangible goods

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64

service-producing sector

all businesses that provide services but don't make tangible goods

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65

business plan

a formal written document that describes the nature of a business and how it will operate

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66

Franchise

A business established or operated under an authorization to sell or distribute a company's goods or services in a particular area

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67

Sole Proprietorship

A business owned by one person

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68

unlimited liability

the responsibility of business owners for all of the debts of the business

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69

partnership

a business owned by two or more people

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70

limited partnership

A partnership with one or more general partners and one or more limited partners.

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71

Corporation

legal entity that is entirely separate form the parties who own it and that is responsible for its own debts

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72

shareholder

A person who invests in a corporation by buying stock and is a partial owner

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73

stock

A share of ownership in a corporation.

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74

board of directors

a group of persons elected by the stockholders to manage a corporation

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75

dividends

earnings distributed to stockholders

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76

limited liability

Legal condition under which an owner or investor can't lose more than the amount invested.

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77

privately held corporation

Corporation that restricts the transferability of its stock.

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78

public corporation

a corporation whose stock anyone may buy, sell, or trade

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79

manager

a person who has the upper hand; a person who is in charge of someone or something

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80

Managemnet

The process of accomplishing the goals of an organization through the effective use of people and other resources.

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81

role of planning

planning, organizing, directing, controlling

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82

Strategic Planning

Process of establishing an overall plan or course of action for an organization.

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83

SWOT analysis

strengths, weaknesses, opportunities, threats

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84

objectives

Specific, short-term statements detailing how to achieve the organization's goals.

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85

tactical plans

short-range plans designed to implement the activities and objectives specified in the strategic plan

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86

operational plans

detailed actions steps to be taken by individuals or groups to implement tactical plans

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87

contingency planning

process of identifying sources of action to e taken in the event that a business is adversely affected by a change

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88

crisis management

organization's methods for dealing with emergencies

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89

Top Managers

top of the management hierarchy who are responsible for the health and performance of the organization

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90

Middle Managers

implement the policies and plans of the top managers above them and supervise and coordinate the activities of the first-line managers below them

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91

First Line Manager

a manager who coordinates and supervises the activities of operating employees

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92

organization structure

a framework that enables managers to divide responsibilities, ensure employee accountability, and distribute decision-making authority

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93

Reconstructing

thinking about a problem in a new way in order to solve it

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94

Specialization

A focus on a particular activity or area of study

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95

Departmentalization

the grouping of jobs into working units usually called departments, units, groups, or divisions

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96

Functional Organization

An organizational structure in which staff is grouped by areas of specialization and the project manager has limited authority to assign work and apply resources.

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97

divisional organization

Form of organization that groups people into several smaller, self-contained units, or divisions, which are accountable for their own performance.

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98

customer division

Organizational structure that groups employees into customer-based business segments.

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99

product division

Organizational structure made up of divisions based on product lines.

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100

geographical division

Organizational structure that groups people into divisions based on location.

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