POB Chapters 1-5 Terms

business the organized effort of individuals to produce and sell, for a profit, goods and services that satisfy society's needs profit what remains after all business expenses have been deducted from sales revenue

☐ stakeholders all the different people or groups of people who are affected by an organization's policies,

decisions, and activities

☐ economics the study of how wealth is created and distributed

☐ factors of production the inputs and resources (land, labor, capital, entrepreneurship) used to produce goods and services

☐ entrepreneur a person who risks time, effort, and money to start and operate a business

☐ capitalism an economic system in which individuals own and operate the majority of businesses that provide goods and services

☐ invisible hand Adam Smith's term describing how an individual's own personal gain benefits others and a nation's economy

☐ gross domestic product (GDP) the total dollar value of all goods and services produced within a country during a specified time period

☐ business cycle the recurrence of periods of growth and recession in a nation's economic activity

☐ competition rivalry among businesses for sales to potential customers

☐ monopoly a market (or industry) with only one seller, and customers can only buy the product from that seller

small business an independent business with fewer than 500 employees, depending on its industry

☐ Small Business Administration (SBA)

a government agency that assists, counsels, and protects the interests of small businesses in the United States

☐ Service Corps of Retired

Executives (SCORE) a group of businesspeople who volunteer their services to small businesses through the SBA

☐ Small Business Development Centers (SBDCs)

university-based groups that provide individual counseling and practical training to owners of small businesses

☐ business plan a carefully constructed guide for the person starting a business

☐ franchise a license to operate an individually owned business as though it were part of a chain of outlets or stores

☐ franchisor an individual or organization granting a franchise

☐ franchisee a person or organization purchasing a franchise

☐ equity financing raising funds by promising investors a share of future profits and an ownership stake in the business

☐ debt financing financing that requires the entrepreneur to repay the invested amount at a later date

☐ crowdfunding financing through online sites such as Kickstarter and Indiegogo, where entrepreneurs invite people to contribute ethics the study of right and wrong and of the morality of the choices individuals make

☐ business ethics the application of moral standards to business situations

☐ plagiarism knowingly taking someone else's words, ideas, or other original material without acknowledging the source

☐ conflict of interest when businesspeople take advantage of a situation for their own personal interest rather than for their employer's interest

☐ Sarbanes-Oxley Act of 2002 legislation with tough provisions to deter and punish corporate and accounting fraud and corruption

☐ code of ethics a written guide to acceptable and ethical behavior as defined by an organization

☐ corporate citizenship adopting a strategic approach to fulfilling economic, ethical, environmental, and social responsibilities

☐ caveat emptor a Latin phrase meaning “let the buyer beware”

☐ consumerism all activities undertaken to protect the rights of consumers

☐ affirmative action program a plan designed to increase the number of employees from underrepresented groups at all levels within an organization

☐ social audit a comprehensive report of what an organization has done and is doing with regard to social issues that affect it

sole proprietorship a business that is owned (and usually operated) by one person

☐ unlimited liability a legal concept that holds a business owner personally responsible for all the debts of the

business

☐ partnership a voluntary association of two or more persons to act as co-owners of a business for profit

☐ general partner a person who assumes full or shared responsibility for operating a business

☐ limited partner a person who invests money in a business but has no management responsibility or liability beyond their investment

☐ stock the shares of ownership of a corporation

☐ stockholder a person who owns a corporation's stock

☐ dividend a distribution of earnings to the stockholders of a corporation

☐ board of directors the top governing body of a corporation, the members of which are elected by the stockholders

☐ S corporation a corporation that is taxed as though it were a partnership

☐ limited liability company (LLC) a form of business ownership that combines the benefits of a corporation and a partnership

☐ joint venture an agreement between two or more groups to form a business entity to achieve a specific goal

☐ syndicate a temporary association of individuals or firms organized to perform a specific task that requires a large amount of money

☐ merger the combining of two corporations or other business entities to form one business