Untitled Flashcards Set

barriers to entry

Factors, such as technological or legal conditions, that prevent new firms from competing equally with an existing firm.

business

An organization that strives for a profit by providing goods and services desired by its customers.

business cycles

Upward and downward changes in the level of economic activity.

capital

The inputs, such as tools, machinery, equipment, and buildings, used to produce goods and services and get them to the customer.

capitalism

An economic system based on competition in the marketplace and private ownership of the factors of production (resources); also known as the private enterprise system.

circular flow

The movement of inputs and outputs among households, businesses, and governments; a way of showing how the sectors of the economy interact.

communism

An economic system characterized by government ownership of virtually all resources, government control of all markets, and economic decision-making by central government planning.

consumer price index (CPI)

An index of the prices of a “market basket” of goods and services purchased by typical urban consumers.

contractionary policy

The use of monetary policy by the Fed to tighten the money supply by selling government securities or raising interest rates.

cost-push inflation

Inflation that occurs when increases in production costs push up the prices of final goods and services.

costs

Expenses incurred from creating and selling goods and services.

crowding out

The situation that occurs when government spending replaces spending by the private sector.

cyclical unemployment

Unemployment that occurs when a downturn in the business cycle reduces the demand for labor throughout the economy.

demand

The quantity of a good or service that people are willing to buy at various prices.

demand curve

A graph showing the quantity of a good or service that people are willing to buy at various prices.

demand-pull inflation

Inflation that occurs when the demand for goods and services is greater than the supply.

demography

The study of people’s vital statistics, such as their age, gender, race and ethnicity, and location.

economic growth

An increase in a nation’s output of goods and services.

economic system

The combination of policies, laws, and choices made by a nation’s government to establish the systems that determine what goods and services are produced and how they are allocated.

economics

The study of how a society uses scarce resources to produce and distribute goods and services.

entrepreneurs

People who combine the inputs of natural resources, labor, and capital to produce goods or services with the intention of making a profit or accomplishing a not-for-profit goal.

equilibrium

The point at which quantity demanded equals quantity supplied.

expansionary policy

The use of monetary policy by the Fed to increase, or loosen, the growth of the money supply.

factors of production

The resources used to create goods and services.

federal budget deficit

The condition that occurs when the federal government spends more for programs than it collects in taxes.

Federal Reserve System (the Fed)

The central banking system of the United States.

fiscal policy

The government’s use of taxation and spending to affect the economy.

frictional unemployment

Short-term unemployment that is not related to the business cycle.

full employment

The condition when all people who want to work and can work have jobs.

goods

Tangible items manufactured by businesses.

gross domestic product (GDP)

The total market value of all final goods and services produced within a nation’s borders each year.

inflation

The situation in which the average of all prices of goods and services is rising.

knowledge

The combined talents and skills of the workforce.

knowledge workers

Workers who create, distribute, and apply knowledge.

macroeconomics

The subarea of economics that focuses on the economy as a whole by looking at aggregate data for large groups of people, companies, or products.

market structure

The number of suppliers in a market.

microeconomics

The subarea of economics that focuses on individual parts of the economy, such as households or firms.

mixed economies

Economies that combine several economic systems; for example, an economy where the government owns certain industries but others are owned by the private sector.

monetary policy

A government’s programs for controlling the amount of money circulating in the economy and interest rates.

monopolistic competition

A market structure in which many firms offer products that are close substitutes and in which entry is relatively easy.

national debt

The accumulated total of all of the federal government’s annual budget deficits.

not-for-profit organization

An organization that exists to achieve some goal other than the usual business goal of profit.

oligopoly

A market structure in which a few firms produce most or all of the output and in which large capital requirements or other factors limit the number of firms.

perfect (pure) competition

A market structure in which a large number of small firms sell similar products, buyers and sellers have good information, and businesses can be easily opened or closed.

producer price index (PPI)

An index of the prices paid by producers and wholesalers for various commodities, such as raw materials, partially finished goods, and finished products.

productivity

The amount of goods and services one worker can produce.

profit

The money left over after all costs are paid.

purchasing power

The value of what money can buy.

pure monopoly

A market structure in which a single firm accounts for all industry sales of a particular good or service and in which there are barriers to entry.

quality of life

The general level of human happiness based on such things as life expectancy, educational standards, health, sanitation, and leisure time.

recession

A decline in GDP that lasts for at least two consecutive quarters.

relationship management

The practice of building, maintaining, and enhancing interactions with customers and other parties to develop long-term satisfaction through mutually beneficial partnerships.

revenue

The money a company receives by providing services or selling goods to customers.

risk

The potential to lose time and money or otherwise not be able to accomplish an organization’s goals.

savings bonds

Government bonds issued in relatively small denominations.

seasonal unemployment

Unemployment that occurs during specific seasons in certain industries.

services

Intangible offerings of businesses that can’t be held, touched, or stored.

socialism

An economic system in which the basic industries are owned either by the government itself or by the private sector under strong government control.

standard of living

A country’s output of goods and services that people can buy with the money they have.

strategic alliance

A cooperative agreement between business firms; sometimes called a strategic partnership.

structural unemployment

Unemployment that is caused by a mismatch between available jobs and the skills of available workers in an industry or region; not related to the business cycle.

supply

The quantity of a good or service that businesses will make available at various prices.

supply curve

A graph showing the quantity of a good or service that businesses will make available at various prices.

technology

The application of science and engineering skills and knowledge to solve production and organizational problems.

unemployment rate

The percentage of the total labor force that is not working but is actively looking for work.

absolute advantage

The situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product.

balance of payments

A summary of a country’s international financial transactions showing the difference between the country’s total payments to and its total receipts from other countries.

balance of trade

The difference between the value of a country’s exports and the value of its imports during a specific time.

buy-national regulations

Government rules that give special privileges to domestic manufacturers and retailers.

contract manufacturing

The practice in which a foreign firm manufactures private-label goods under a domestic firm’s brand name.

countertrade

A form of international trade in which part or all of the payment for goods or services is in the form of other goods and services.

devaluation

A lowering of the value of a nation’s currency relative to other currencies.

direct foreign investment

Active ownership of a foreign company or of manufacturing or marketing facilities in a foreign country.

dumping

The practice of charging a lower price for a product in foreign markets than in the firm’s home market.

embargo

A total ban on imports or exports of a product.

European integration

The delegation of limited sovereignty by European Union member states to the EU so that common laws and policies can be created at the European level.

European Union

Trade agreement among 28 European nations.

exchange controls

Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank.

exporting

The practice of selling domestically produced goods to buyers in another country.

exports

Goods and services produced in one country and sold to other countries.

floating exchange rates

A system in which prices of currencies move up and down based upon the demand for and supply of the various currencies.

free trade

The policy of permitting the people and businesses of a country to buy and sell where they please without restrictions.

free-trade zone

An area where the nations allow free, or almost free, trade among each other while imposing tariffs on goods of nations outside the zone.

G20

Informal group that brings together 19 countries and the European Union—the 20 leading economies in the world.

global vision

The ability to recognize and react to international business opportunities, be aware of threats from foreign competition, and effectively use international distribution networks to obtain raw materials and move finished products to customers.

import quota

A limit on the quantity of a certain good that can be imported.

imports

Goods and services that are bought from other countries.

infrastructure

The basic institutions and public facilities upon which an economy’s development depends.

International Monetary Fund (IMF)

An international organization, founded in 1945, that promotes trade, makes short-term loans to member nations, and acts as a lender of last resort for troubled nations.

joint venture

An agreement in which a domestic firm buys part of a foreign firm or joins with a foreign firm to create a new entity.

licensing

The legal process whereby a firm agrees to allow another firm to use a manufacturing process, trademark, patent, trade secret, or other proprietary knowledge in exchange for the payment of a royalty.

Mercosur

Trade agreement between Peru, Brazil, Argentina, Uruguay, and Paraguay.

multinational corporations

Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located.

nationalism

A sense of national consciousness that boosts the culture and interests of one country over those of all other countries.

North American Free Trade Agreement (NAFTA)

A 1993 agreement creating a free-trade zone including Canada, Mexico, and the United States.

outsourcing

Sending work functions to another country, resulting in domestic workers losing their jobs.

preferential tariff

A tariff that is lower for some nations than for others.

principle of comparative advantage

The concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.

protectionism

The policy of protecting home industries from outside competition by establishing artificial barriers such as tariffs and quotas.

protective tariffs

Tariffs that are imposed in order to make imports less attractive to buyers than domestic products are.

tariff

A tax imposed on imported goods.

trade deficit

An unfavorable balance of trade that occurs when a country imports more than it exports.

trade surplus

A favorable balance of trade that occurs when a country exports more than it imports.

Uruguay Round

A 1994 agreement originally signed by 117 nations to lower trade barriers worldwide.

World Bank

An international bank that offers low-interest loans, as well as advice and information, to developing nations.

World Trade Organization (WTO)

An organization established by the Uruguay Round in 1994 to oversee international trade, reduce trade barriers, and resolve disputes among member nations.

authority

Legitimate power, granted by the organization and acknowledged by employees, that allows an individual to request action and expect compliance.

centralization

The degree to which formal authority is concentrated in one area or level of an organization. Top management makes most of the decisions.

chain of command

The line of authority that extends from one level of an organization’s hierarchy to the next, from top to bottom, and makes clear who reports to whom.

committee structure

An organizational structure in which authority and responsibility are held by a group rather than an individual.

cross-functional team

Members from the same organizational level but from different functional areas.

customer departmentalization

Departmentalization that is based on the primary type of customer served by the organizational unit.

decentralization

The process of pushing decision-making authority down the organizational hierarchy.

delegation of authority

The assignment of some degree of authority and responsibility to persons lower in the chain of command.

departmentalization

The process of grouping jobs together so that similar or associated tasks and activities can be coordinated.

division of labor

The process of dividing work into separate jobs and assigning tasks to workers.

formal organization

The order and design of relationships within a firm; consists of two or more people working together with a common objective and clarity of purpose.

functional departmentalization

Departmentalization that is based on the primary functions performed within an organizational unit.

geographic departmentalization

Departmentalization that is based on the geographic segmentation of the organizational units.

group cohesiveness

The degree to which group members want to stay in the group and tend to resist outside influences.

informal organization

The network of connections and channels of communication based on the informal relationships of individuals inside an organization.

line organization

An organizational structure with direct, clear lines of authority and communication flowing from the top managers downward.

line positions

All positions in the organization directly concerned with producing goods and services and that are directly connected from top to bottom.

line-and-staff organization

An organizational structure that includes both line and staff positions.

managerial hierarchy

The levels of management within an organization; typically includes top, middle, and supervisory management.

matrix structure (project management)

An organizational structure that combines functional and product departmentalization by bringing together people from different functional areas of the organization to work on a special project.

mechanistic organization

An organizational structure that is characterized by a relatively high degree of job specialization, rigid departmentalization, many layers of management, narrow spans of control, centralized decision-making, and a long chain of command.

organic organization

An organizational structure that is characterized by a relatively low degree of job specialization, loose departmentalization, few levels of management, wide spans of control, decentralized decision-making, and a short chain of command.

organization

The order and design of relationships within a firm; consists of two or more people working together with a common objective and clarity of purpose.

organization chart

A visual representation of the structured relationships among tasks and the people given the authority to do those tasks.

problem-solving teams

Usually members of the same department who meet regularly to suggest ways to improve operations and solve specific problems.

process departmentalization

Departmentalization that is based on the production process used by the organizational unit.

product departmentalization

Departmentalization that is based on the goods or services produced or sold by the organizational unit.

reengineering

The complete redesign of business structures and processes in order to improve operations.

self-managed work teams

Teams without formal supervision that plan, select alternatives, and evaluate their own performance.

span of control

The number of employees a manager directly supervises; also called span of management.

specialization

The degree to which tasks are subdivided into smaller jobs.

staff positions

Positions in an organization held by individuals who provide the administrative and support services that line employees need to achieve the firm’s goals.

virtual corporation

A network of independent companies linked by information technology to share skills, costs, and access to one another’s markets; allows the companies to come together quickly to exploit rapidly changing opportunities.

work groups

The groups that share resources and coordinate efforts to help members better perform their individual jobs.

work teams

Like a work group but also requires the pooling of knowledge, skills, abilities, and resources to achieve a common goal.

assembly process

A production process in which the basic inputs are either combined to create the output or transformed into the output.

bill of material

A list of the items and the number of each required to make a given product.

blockchain technology

Refers to a decentralized “public ledger” of all transactions that have ever been executed. It is constantly expanding, as “completed” blocks are added to the ledger with each new transaction.

business process management (BPM)

A unified system that has the power to integrate and optimize a company’s sprawling functions by automating much of what it does.

CAD/CAM systems

Linked computer systems that combine the advantages of computer-aided design and computer-aided manufacturing. The system helps design the product, control the flow of resources needed to produce the product, and operate the production process.

cellular manufacturing

Production technique that uses small, self-contained production units, each performing all or most of the tasks necessary to complete a manufacturing order.

computer-aided design (CAD)

The use of computers to design and test new products and modify existing ones.

computer-aided manufacturing (CAM)

The use of computers to develop and control the production process.

computer-integrated manufacturing (CIM)

The combination of computerized manufacturing processes (such as robots and flexible manufacturing systems) with other computerized systems that control design, inventory, production, and purchasing.

continuous improvement

A commitment to constantly seek better ways of doing things in order to achieve greater efficiency and improve quality.

continuous process

A production process that uses long production runs lasting days, weeks, or months without equipment shutdowns; generally used for high-volume, low-variety products with standardized parts.

critical path

In a critical path method network, the longest path through the linked activities.

critical path method (CPM)

A scheduling tool that enables a manager to determine the critical path of activities for a project—the activities that will cause the entire project to fall behind schedule if they are not completed on time.

customization

The production of goods or services one at a time according to the specific needs or wants of individual customers.

e-procurement

The process of purchasing supplies and materials online using the internet.

electronic data interchange (EDI)

The electronic exchange of information between two trading partners.

enterprise resource planning (ERP)

A computerized resource-planning system that incorporates information about the firm’s suppliers and customers with its internally generated data.

fixed-position layout

A facility arrangement in which the product stays in one place and workers and machinery move to it as needed.

flexible manufacturing system (FMS)

A system that combines automated workstations with computer-controlled transportation devices—automatic guided vehicles (AGV)—that move materials between workstations and into and out of the system.

Gantt charts

Bar graphs plotted on a time line that show the relationship between scheduled and actual production.

intermittent process

A production process that uses short production runs to make batches of different products; generally used for low-volume, high-variety products.

inventory

The supply of goods that a firm holds for use in production or for sale to customers.

inventory management

The determination of how much of each type of inventory a firm will keep on hand and the ordering, receiving, storing, and tracking of inventory.

ISO 14000

A set of technical standards designed by the International Organization for Standardization to promote clean production processes to protect the environment.

ISO 9000

A set of five technical standards of quality management created by the International Organization for Standardization to provide a uniform way of determining whether manufacturing plants and service organizations conform to sound quality procedures.

job shop

A manufacturing firm that produces goods in response to customer orders.

just-in-time (JIT)

A system in which materials arrive exactly when they are needed for production, rather than being stored on-site.

lean manufacturing

Streamlining production by eliminating steps in the production process that do not add benefits that customers want.

make-or-buy decision

The determination by a firm of whether to make its own production materials or to buy them from outside sources.

Malcolm Baldrige National Quality Award

An award given to recognize U.S. companies that offer goods and services of world-class quality; established by Congress in 1987 and named for a former secretary of commerce.

manufacturing resource planning II (MRPII)

A complex computerized system that integrates data from many departments to allow managers to more accurately forecast and assess the impact of production plans on profitability.

mass customization

A manufacturing process in which goods are mass-produced up to a point and then custom-tailored to the needs or desires of individual customers.

mass production

The manufacture of many identical goods at once.

materials requirement planning (MRP)

A computerized system of controlling the flow of resources and inventory. A master schedule is used to ensure that the materials, labor, and equipment needed for production are at the right places in the right amounts at the right times.

operations management

Management of the production process.

outsourcing

The purchase of items from an outside source rather than making them internally.

perpetual inventory

A continuously updated list of inventory levels, orders, sales, and receipts.

process layout

A facility arrangement in which work flows according to the production process. All workers performing similar tasks are grouped together, and products pass from one workstation to another.

process manufacturing

A production process in which the basic input is broken down into one or more outputs (products).

product (or assembly-line) layout

A facility arrangement in which workstations or departments are arranged in a line with products moving along the line.

production

The creation of products and services by turning inputs, such as natural resources, raw materials, human resources, and capital, into outputs, which are products and services.

production planning

The aspect of operations management in which the firm considers the competitive environment and its own strategic goals in an effort to find the best production methods.

production process

The way a good or service is created.

program evaluation and review technique (PERT)

A scheduling tool that is similar to the CPM method but assigns three time estimates for each activity (optimistic, most probable, and pessimistic); allows managers to anticipate delays and potential problems and schedule accordingly.

purchasing

The process of buying production inputs from various sources; also called procurement.

quality

Goods and services that meet customer expectations by providing reliable performance.

quality control

The process of creating quality standards, producing goods that meet them, and measuring finished goods and services against them.

robotics

The technology involved in designing, constructing, and operating computer-controlled machines that can perform tasks independently.

routing

The aspect of production control that involves setting out the work flow—the sequence of machines and operations through which the product or service progresses from start to finish.

scheduling

The aspect of production control that involves specifying and controlling the time required for each step in the production process.

Six Sigma

A quality-control process that relies on defining what needs to be done to ensure quality, measuring and analyzing production results statistically, and finding ways to improve and control quality.

supply chain

The entire sequence of securing inputs, producing goods, and delivering goods to customers.

supply-chain management

The process of smoothing transitions along the supply chain so that the firm can satisfy its customers with quality products and services; focuses on developing tight bonds with suppliers.

Total Quality Management (TQM)

The use of quality principles in all aspects of a company’s production and operations.

value-stream mapping

Routing technique that uses simple icons to visually represent the flow of materials and information from suppliers through the factory to customers.

benefit segmentation

The differentiation of markets based on what a product will do rather than on customer characteristics.

big data

Large data sets and systems and solutions developed to manage large accumulations of data.

brainstorming

A method of generating ideas in which group members suggest as many possibilities as they can without criticizing or evaluating any of the suggestions.

bundling

The strategy of grouping two or more related products together and pricing them as a single product.

buyer behavior

The actions people take in buying and using goods and services.

capital products

Large, expensive items with a long life span that are purchased by businesses for use in making other products or providing a service.

competitive advantage

A set of unique features of a company and its products that are perceived by the target market as significant and superior to those of the competition; also called differential advantage.

convenience products

Relatively inexpensive items that require little shopping effort and are purchased routinely without planning.

cost competitive advantage

A firm’s ability to produce a product or service at a lower cost than all other competitors in an industry while maintaining satisfactory profit margins.

culture

The set of values, ideas, attitudes, and other symbols created to shape human behavior.

customer satisfaction

The customer’s feeling that a product has met or exceeded expectations.

customer value

The ratio of benefits to the sacrifice necessary to obtain those benefits, as determined by the customer; reflects the willingness of customers to actually buy a product.

demographic segmentation

The differentiation of markets through the use of categories such as age, education, gender, income, and household size.

differential competitive advantage

A firm’s ability to provide a unique product or service with a set of features that the target market perceives as important and better than the competitor’s.

distribution strategy

Creating the means by which products flow from the producer to the consumer.

dynamic pricing

Computer algorithms that allow for prices to change based on demand.

environmental scanning

The process in which a firm continually collects and evaluates information about its external environment.

exchange

The process in which two parties give something of value to each other to satisfy their respective needs.

expense items

Items (purchased by businesses) that are smaller and less expensive than capital products and usually have a life span of less than one year.

experiment

A marketing research method in which the investigator changes one or more variables—price, packaging, design, shelf space, advertising theme, or advertising expenditures—while observing the effects of these changes on another variable (usually sales).

five Ps

The traditional 4Ps of marketing: product, price, promotion, place (distribution), now with people added as a key marketing component, which together make up the marketing mix.

focus group

A group of eight to 12 participants led by a moderator in an in-depth discussion on one particular topic or concept.

geographic segmentation

The differentiation of markets by region of the country, city or county size, market density, or climate.

leader pricing

The strategy of pricing products below the normal markup or even below cost to attract customers to a store where they would not otherwise shop.

line extension

A new flavor, size, or model using an existing brand name in an existing category.

loss leader

A product priced below cost as part of a leader-pricing strategy.

market segmentation

The process of separating, identifying, and evaluating the layers of a market in order to identify a target market.

marketing

The process of discovering the needs and wants of potential buyers and customers and then providing goods and services that meet or exceed their expectations.

marketing concept

Identifying consumer needs and then producing the goods or services that will satisfy them while making a profit for the organization.

marketing database

Computerized file of customers’ and potential customers’ profiles and purchase patterns.

marketing mix

The blend of product offering, pricing, promotional methods, distribution system, and strategies for utilizing people that creates an offering that brings a specific group of consumers superior value.

marketing research

The process of planning, collecting, and analyzing data relevant to a marketing decision.

niche competitive advantage

A firm’s ability to target and effectively serve a single segment of the market, often within a limited geographic area.

observation research

A marketing research method in which the investigator monitors respondents’ actions without interacting directly with the respondents; for example, by using cash registers with scanners.

odd-even (psychological) pricing

The strategy of setting a price at an odd number to connote a bargain and at an even number to suggest quality.

one-to-one marketing

Creating a unique marketing mix for every customer.

penetration pricing

The strategy of selling new products at low prices in the hope of achieving a large sales volume.

personality

A way of organizing and grouping how an individual reacts to situations.

prestige pricing

The strategy of increasing the price of a product so that consumers will perceive it as being of higher quality, status, or value.

price skimming

The strategy of introducing a product with a high initial price and lowering the price over time as the product moves through its life cycle.

pricing strategy

Setting a price based upon the demand for and cost of a good or service.

product

In marketing, a good, service or idea, along with its perceived attributes and benefits, that creates value for the customer.

product life cycle

The pattern of sales and profits over time for a product or product category; consists of an introductory stage, growth stage, maturity, and decline (and death).

product manager

The person who develops and implements a complete strategy and marketing program for a specific product or brand.

product strategy

Taking the good or service and selecting a brand name, packaging, colors, a warranty, accessories, and a service program.

promotion strategy

The unique combination of personal selling, traditional advertising, publicity, sales promotion, social media, and e-commerce to stimulate the target market to buy a product. Sometimes referred to as the promotion mix.

psychographic segmentation

The differentiation of markets by personality or lifestyle.

reference groups

Formal and informal groups that influence buyer behavior.

relationship marketing

A strategy that focuses on forging long-term partnerships with customers by offering value and providing customer satisfaction.

shopping products

Items that are bought after considerable planning, including brand-to-brand and store-to-store comparisons of price, suitability, and style.

specialty products

Items for which consumers search long and hard and for which they refuse to accept substitutes.

survey research

A marketing research method in which data is gathered from respondents, either in person, by telephone, by mail, at a mall, or through the internet to obtain facts, opinions, and attitudes.

target market

The specific group of consumers toward which a firm could direct its marketing efforts. It is often divided into segments so that marketing strategies can be directed to a more specific target.

test marketing

The process of testing a new product among potential users.

unsought products

Products that either are not planned as a purchase by a potential buyer or are known but the buyer does not actively seek them, such as funeral services.

volume segmentation

The differentiation of markets based on the amount of the product purchased.