Midterm Study Guide Business

Types of Unemployment & Economic Impact

• Frictional Unemployment: Temporary unemployment that occurs during job transitions.

• Structural Unemployment: Results from skills mismatch caused by industry changes, workers may need retraining.

• Cyclical Unemployment: Caused by economic downturns; demand for goods and services decreases, leading to layoffs.

• Seasonal Unemployment: Related to seasonal fluctuations in demand, such as tourism or agriculture.

• Economic Impact: High unemployment rates lead to reduced consumer spending and slowed economic growth.

Millennial Workforce Influence & Business Challenges

• Millennial Priorities: Emphasis on work-life balance, flexible working conditions, and ethical company practices.

• Challenges for Businesses: High turnover rates, the need for digital transformation, and demands for remote work options create difficulties in retention and adaptability.

Strategies for Global Competitiveness

• Innovation & Technology: Adoption of the latest technologies is essential for staying relevant.

• Cost Leadership & Differentiation: Companies must find a way to reduce costs while offering unique products.

• Branding & Customer Loyalty: Strong brand recognition and loyalty programs enhance customer retention.

• Global Expansion: Companies should pursue international markets and optimize their supply chain for efficiency.

Barriers to Entry & Market Structures

• Barriers to Entry: Can include high startup costs, patents that protect innovations, established brand loyalty, and government regulations.

• Market Structures:

  • Perfect Competition: Many firms exist, and no single firm can influence prices.

  • Monopolistic Competition: Many firms sell similar but slightly differentiated products.

  • Oligopoly: A few firms dominate the market, high entry barriers exist.

  • Monopoly: One firm controls the market, facing very high barriers to entry.

GDP & Economic Growth

• GDP (Gross Domestic Product): Measures a nation's total economic output, reflecting overall economic health.

• Economic Growth: Indicates increased productivity, greater employment opportunities, and improved living standards for citizens.

Types of Inflation & Impact

• Demand-Pull Inflation: Occurs when demand exceeds supply, leading to higher prices.

• Cost-Push Inflation: Results from rising production costs that drive prices up.

• Impact of Inflation: Both forms reduce purchasing power and increase costs for businesses.

Federal Reserve System & Economic Stability

• Monetary Regulation: The Federal Reserve controls the money supply through interest rates and open market operations.

• Stabilizing Economy: Focuses on preventing inflation and mitigating the impacts of economic recessions.

Market Equilibrium & Its Importance

• Market Equilibrium: Occurs when supply meets demand effectively, preventing shortages or surpluses in the market.

Utilitarianism & Business Decisions

• Utilitarian Approach: Ethics in business focus on maximizing overall good—includes considerations like accessibility and fair wages.

Human Rights & Ethical Business Practices

• Core Aspects of Ethics: Ensuring fair wages, safe working conditions, and preventing exploitation of workers are fundamental ethical practices in business.

Distribution of Burdens & Rewards Across Societies

• Variation Factors: Distribution of economic burdens and rewards varies based on economic systems, cultural values, and government policies.

Ethical Decision-Making & Leadership

• Leadership Influence: The company’s ethical culture is influenced primarily by top executives rather than being confined to specific departments.

Encouraging Ethical Behavior in Organizations

• Strategies: Implementing codes of conduct, providing ethics training, and establishing whistleblower protections to promote ethical behavior.

Legal vs. Ethical Responsibilities to Stakeholders

• Legal Responsibilities: Involves ensuring compliance with laws and regulations.

• Ethical Responsibilities: Covers broader corporate social responsibility and commitment to environmental sustainability.

Corporate Social Responsibility (CSR)

• Voluntary Commitment: CSR initiatives may enhance corporate reputation and ensure long-term success in business.

Purpose & Influence of a Code of Ethics

• Guiding Behavior: A well-crafted code of ethics directs employee behavior, fosters trust, and prevents misconduct within the organization.

Corporate Philanthropy & Strategic Giving

• Impact of Donations: Philanthropic acts such as donations, scholarships, and sustainability programs can benefit both society and the organization's brand image.

Business Responsibilities to Stakeholders

• Key Groups: Responsibility extends to employees, customers, investors, and communities; balancing interests among these groups is essential.

Multinational Corporations & Challenges

• Global Operations: Multinational corporations face challenges related to regulatory differences, cultural variations, and economic conditions in different countries.

Culture’s Role in International Business

• Influence on Strategies: Culture affects negotiation tactics, management approaches, and marketing efforts across borders.

Countertrade & Its Use

• Definition: Involves the exchange of goods and services instead of cash, often utilized in developing economies.

Contract Manufacturing & Its Benefits

• Outsourcing Production: Engaging in contract manufacturing can reduce production costs, but it may introduce risks concerning quality control.

Exporting as a Global Strategy

• Advantages: Expanding into foreign markets can increase revenue opportunities.

• Challenges: Exporting involves considerations like tariffs, transportation costs, and risks associated with exchange rates.

Impact of NAFTA/USMCA on Trade

• Trade Benefits: Agreements like NAFTA and USMCA have reduced tariffs and increased trade volumes between the U.S., Canada, and Mexico.

World Bank’s Role in Developing Nations

• Financial Support: Provides loans aimed at improving infrastructure, reducing poverty, and stimulating economic growth in developing regions.

Effects of Trade Restrictions (Tariffs, Quotas, Embargoes)

• Trade Barriers: These restrictions may raise prices, limit competition, and protect domestic industries.

Outsourcing & Its Impact

• Economic Effects: While outsourcing can significantly lower costs for businesses, it can lead to job losses domestically.

Exchange Rates & International Business

• Raising Concerns: Exchange rates affect prices for imports and exports, investment decisions, and overall profitability of businesses operating internationally.

Types of Business Ownership

• Sole Proprietorship: Easy to establish but involves full liability for the owner.

• Partnership: Shares control and profits/losses among partners, but introduces shared liability and potential for conflicts.

• Corporation: Offers limited liability but has a more complex operational structure.

• Cooperative: Owned and controlled by its members, who share profits and decision-making.

Partnerships: Pros & Cons

• Advantages of Partnerships: Include shared resources and easier access to financing.

• Disadvantages: Include shared liability and potential conflicts between partners.

Cooperatives & Their Benefits

• Member Advantage: Members collectively share ownership, profits, and have a say in decision-making, leading to equitable business practices.

Franchisors vs. Franchisees

• Franchisor: Owns the brand and offers support to franchisees.

• Franchisee: Operates individual locations and must adhere to the franchisor’s operational guidelines.

Types of Mergers & Business Impact

• Horizontal Mergers: Occurs within the same industry (e.g., airline mergers).

• Vertical Mergers: Involves a merger between a supplier and manufacturer.

• Conglomerate Mergers: Involves companies from unrelated industries coming together.

Demographics & Franchising Growth

• Influential Factors: The aging population and urbanization trends influence the demand and growth opportunities in franchising.

Corporate Governance & Board of Directors

• Responsibilities: Ensures accountability of the organization and sets strategic policies for company direction.

Factors for Choosing Business Structures

• Considerations Include: Tax implications, liability concerns, growth potential, and adherence to legal requirements.

Entrepreneurial Characteristics

• Key Traits: Successful entrepreneurs typically exhibit risk-taking behavior, innovation, strong leadership abilities, and adaptability.

Small Business Contributions

• Economic Role: Small businesses contribute significantly to job creation, foster innovation, and stimulate local economic growth.

Risks of Starting a Small Business

• Main Risks: Include financial failure due to mismanagement, intense competition, and potential legal issues.

Key Steps to Starting a Business

• Initial Steps: Conduct thorough market research, develop a solid business plan, secure funding, and establish the legal framework for the business.

SBA’s Role in Supporting Small Businesses

• Support Services: The Small Business Administration provides loans, mentorship opportunities, and training programs to assist small business growth.

Trends in Entrepreneurship

• Emerging Areas: Current trends include a focus on e-commerce, artificial intelligence-driven startups, and sustainability-oriented businesses.

Competitive Strategies for Small Businesses

• Effective Approaches: Engage in niche market targeting, provide personalized services, and utilize digital marketing strategies to compete effectively.

Four Main Functions of Management

• Management Functions: Encompass Planning, Organizing, Leading, and Controlling crucial for successful business operations.

Strategic vs. Tactical Planning

• Planning Distinction: Strategic planning focuses on long-term goals, while tactical planning is short-term and action-oriented.

Organizing’s Role in Efficiency

• Structure Importance: Proper organizational structure enhances productivity and improves communication across the business.

Leadership Styles & Workplace Culture

• Leadership Types: Includes Autocratic (directive), Democratic (collaborative), and Laissez-faire (hands-off) approaches.

Managerial Control & Business Success

• Control Mechanisms: Maintaining control ensures quality in operations, enhances efficiency, and helps meet company goals.

Key Management Skills

• Essential Skills: Effective management requires strong communication, adept problem-solving abilities, decision-making skills, and adaptability to change.

Managerial Roles & Decision-Making

• Three Main Roles: Interpersonal, informational, and decisional roles contribute significantly to effective strategic decision-making in business.

Adapting to Global Business Environments

• Cultural Awareness: Understanding cultural differences, navigating global markets, and ensuring legal compliance are vital for success in international business.