Business Lecture Notes Vocabulary

Business and Wealth Building

• Business: Any activity that seeks to provide goods and services to others while operating at a profit.
• Goods: Tangible products (e.g., computers, food, clothing, cars, appliances).
• Services: Intangible products (e.g., education, health care, insurance, recreation, travel).
• Successfully filling a market need can generate profit.
• Entrepreneur: A person who risks time and money to start and manage a business.
• Revenue: The total amount of money a business takes in during a given period by selling goods and services.
• Profit: The amount of money a business earns above and beyond its expenses (salaries, etc.).
• Loss: When a business's expenses exceed its revenues.
• Risk: The chance an entrepreneur takes of losing time and money on a business that may not be profitable.
• Businesses take risks, and potentially, bigger risks could lead to bigger profits.
• Standard of Living: The amount of goods and services people can buy with the money they have.
  • The United States has one of the highest standards of living in the world.
  • Workers in other countries might earn more, but prices for products could be higher.
• Quality of Life: The general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, and amount of leisure.
  • A high quality of life requires combined efforts of businesses, nonprofits, and government agencies.
• Stakeholders: All the constituencies affected by the decisions and actions of a business or that could affect the business.
• Stakeholder Management: Recognizing and responding to the needs of stakeholders.
• Outsourcing: Contracting with other companies (often in other countries) to perform some functions of a firm, such as production or accounting.
• Insourcing: When foreign companies open offices and factories in the United States.
• Nonprofit Organization: An organization whose goals do not include making a personal profit for its owners or organizers. They use financial gains to meet social or educational goals.
• Non-profits attract talent by:
  • Offering flexible schedules.
  • Addressing a good cause.
  • Finding ways to celebrate their employees good work.

The Importance of Entrepreneurs

• Positives of Being an Entrepreneur:
  • The freedom to succeed.
  • Making your own decisions.
  • Potential for wealth.
• Negatives of Being an Entrepreneur:
  • The freedom to fail.
  • No paid vacations.
  • No health insurance.
• To create wealth, a country needs entrepreneurs, skill, and knowledge to produce goods and services.
• Governments can support entrepreneurship and the spread of knowledge.
• Factors of Production: The resources used to create wealth.
  • The five factors:
    • Land (or natural resources).
    • Labor (workers).
    • Capital.
    • Entrepreneurship.
    • Knowledge.
• Entrepreneurship and knowledge contribute to rich countries.

The Business Environment

• Business Environment: The surrounding factors that either help or hinder the development of businesses.
  • Economic and legal environment.
  • Technological environment.
  • Competitive environment.
  • Social environment.
  • Global business environment.
• Economic and Legal Environment:
  • Government can promote entrepreneurship by:
    • Allowing private ownership of businesses.
    • Minimizing interference with the free exchange of goods and services.
    • Passing laws that enable businesspeople to write enforceable contracts.
    • Establishing a currency that's tradable in world markets.
    • Minimizing corruption.
• Technological Environment:
  • Technology: Everything from phones to computers and the various software programs that make business processes more effective, efficient, and productive.
  • Effectiveness: Producing the desired result.
  • Efficiency: Producing goods and services using the least amount of resources.
  • Productivity: The amount of output you generate given the amount of input (e.g., hours worked).
  • E-commerce: The buying and selling of goods over the Internet.
    • Business-to-consumer (B2C).
    • Business-to-business (B2B).
  • Database: An electronic storage file for information. Used to be responsive to customers
• Competitive Environment:
  • Customers want good quality products at low prices with great customer service.
  • Empowerment: Giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests.
• Social Environment:
  • Demography: The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.
  • More and more working families consist of single parents who must juggle the demands of a job and the responsibilities of raising children.

The Evolution of U.S. Business

• The agricultural industry led economic development in the 1800s.
  • Technology made large-scale farming successful which led to fewer farmers with larger farms (dropped from 33% to 1% of the population).
• Industrialization in the 19th and 20th centuries moved jobs from farms to factories.
• As technology improved productivity, fewer workers were needed in factories.
• Services make up over 80 percent of the value of the U.S. economy.
• Since the mid-1980s, the service industry generated almost all the increases in employment.
• There are more high-paying jobs in service industries.
• We're in the midst of an information-based global and technical revolution.