Chapter 1: Taking risk & making profits

Nonprofit Organizations

An organization whose goals do not include making a personal profit but focusing on social or educational objectives.

Financial Management in Nonprofits

The process of generating financial gains to meet and further social or educational goals.

Positives of an Entrepreneur

Benefits such as freedom to succeed, ability to make decisions, and the possibility of accumulating wealth.

Negatives of an Entrepreneur

Challenges including fewer benefits, lack of health insurance, no paid vacations, and the freedom to fail.

Importance of an Entrepreneur

Entrepreneurs create wealth for citizens by producing goods and services.

Factors of Production

The five elements necessary for production:

• Land (natural resources),

• Labor (workers),

• Capital (machines, tools, buildings),

• Entrepreneurship (business innovation),

• Knowledge (expertise and skills).

Economic Environment

The conditions that allow private ownership of businesses, encouraging entrepreneurship and minimizing government interference.

Tradable Currency

Currency that facilitates international trade and investment, allowing for entrepreneurial opportunities.

Minimizing Corruption

Ensuring a fair and transparent business environment where merit and innovation are rewarded.

Productivity

The amount of output generated given the amount of input, which technology increases.

E-commerce

The buying and selling of goods online, including Business-to-Consumer (B2C) and Business-to-Business (B2B) transactions.

Database

An electronic storage file for information that organizes, stores, and retrieves vast amounts of customer data.

Identity Theft

The illegal acquisition of someone’s personal information, such as Social Security and credit card info.

Exceeding Customer Expectations

Strategies like low prices and great customer service to outperform competitors.

Empowerment

Giving frontline workers the responsibility, authority, and resources to respond quickly to customer requests.

Demography

The statistical study of human population characteristics, including size and density.

Managing Diversity

The practice of inclusion and fostering a sense of belonging within a community.

Global Challenges

Issues like war and terrorism that create economic uncertainty and impact business expansion.

Climate Change

The long-term movement of the planet's temperature, affecting ecological environments.

Greening

The trend towards energy conservation and producing environmentally friendly products.

Past Trends

Historical economic shifts, such as the movement from agriculture to factories, that influence future decisions and perspectives

Dismal Science

What Thomas Caryle called economics the reading the early work of Thomas Malthus

Adam Smith

assumed that the wealthy would naturally help others (this realization hasn’t been realized and has led to inequality between the wealth and poor)

Government Regulation affects on business sucess economically

an increae or decrease in this due to the cost of adhering these regulations

Capitalism

an economic system where all or more factor of production and distribution are owned by individuals

Free market system: Decisionmakers

the market, consisting of buyers and sellers

Thomas Malthus

believed fast population growth seemed to surpass the growth of food supply

Adam smith’s essentials to the surviival of an economy

Freedom to keep a business’s profits and freedom to own land or property

Degrees of competition

perfect, monopolistic, oligopoly & monopoly

Benefits of free markets

Open competition among companies, encouraging efficiency, opportunity for people to work out of poverty, and competition that benefits consumers with better price & service

Demand

the quantity of products that people are willing to buy at a specific time

Benefits of socialism

reduction of inequality through taxation to support poorer people

nationally supported child care

nationally supported health care for all

Brain Drain

the loss of the best and brightest people to other countries

Communism: Government control

the government owns almost all factors of production,

makes almost all economic decisions,

chooses religion

where people live

jobs for its citizens

Socialism: Government Control

government owns and operates some , if not most

basic industries (postal service or transporation)

GDP (Gross Domestic Product)

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

Ex. those produced by domestically owned companies

foreign-owned companies located in the country

Unemployment rate

the percentage of civillians at least 16 years old who are unemployed and tried to find a job within the prior four weeks

Productivity in the state of the economy

An influx of machinery in the service industry may add to the quality of the service but not to the output per worker

Business cycles

the periodic rises and falls that occur in economies over time

Fiscal policy

the government tries to keep the economy stable by increasing or decreasing taxes and/or government spending

Monetary policy

the management of the money supply and raising and lowering interest rates by the Federal Reserve Bank

Taxes influencing the economy

High taxes draw money way from the private sector

Low tax rates give the economy a boost

The raising and lowering of tax rates are used to stabilize the economy