BMG100 Flashcards
What is a business?
Individuals or organizations trying to earn a profit by providing products that satisfy peoples needs.
What are examples of tangible goods?
Things you can hold: Loaf of bread, TV, Car, Computer.
What are examples of services?
Dry cleaning, photo processing, checkups at the doctor, concerts, ski pass.
What is the primary goal of a business?
To earn profit.
What are stake holders?
Those that have a stake in the success and outcomes of a business are considered stake holders. Customers, employees, investors, government regulators, community and society.
What are the 4 P’s
Product: Picking the right product, if product doesn’t sell well, get rid of it.
Price: Selecting the right price for products. Relates to profitability.
Place: Making sure products are available for customers in the right place at the right time. Promotion: Advertising, personal selling, sales, promotion and publicity
Tangible Goods
A physical object
Ex. Cars, Phones, Clothes
Command economy
Economic system the government decides what goods and services will be produced, how, whom they are available.
Socialism
Economic system which the key industries are owned/controlled by the government. (Sweden, Israel, India).
Comunism
An economic system where all property/profits are owned by the government which decides what goods/services will be produced. (Cuba).
Capitalism
Economic system individuals own/operate majority of businesses.
Free-market economy
Economic systems in which business + individuals decide what to produce/buy and the market determines prices/quantities that are sold.
Mixed economy
Economic systems where most land/business are privately owned but with various levels of government involvement.
Invisible hand
Describes how an individuals personal gain benefits others and a country’s economy.
Competition
Rivalry among businesses for consumer dollars
Affects # of choices an individual has and the prices he/she pay for products
Helps business owners/employees to choose effective business strategies
Monopoly
One business providing a product in a given market
Ex. LCBO, SAQ, HydroOne
Oligopoly
Market/industry with few large sellers
Ex. Air Canda vs WestJet
Rogers vs Bell
Monopolistic competition
Many buyers with a large # of sellers
All competing for the same customers
Ex. Adidas, Nike
Pure/Perfect competition
Many small businesses in the same product market
Market prices determined by consumer demand
Ex. Farm, Stockmarket
Concept of supply and demand
Market situation in which there are many buyers/sellers of a product
No buyer/seller is powerful enough to affect the price of a product
Distribution of resources/products and prices are decided by supply and demand
Demand
of good services consumers are willing to buyout a given price and a specific time.
Supply
of products businesses are willing to sell at a different prices at a specific time.
Economic cycles/productivity
Economy expansion: Economy = growing and consumers are spending money
Economy contraction: Spending declines layoffs, economy slows down.
Gross Domestic Product (GDP)
Total dollar value of goods and services produced by all people within the boundaries of a country during a 1 year period
Consumer Price Index (CPI)
Monthly index that measures change in prices of a fixed basket of goods purchased by a typical consumer in a urban area
Inflation / Deflation
Inflation: Tracks increase in general level of prices of goods and services over a period of time
Low inflation (2%)= Stable economy high inflation (10%)= trouble because rising prices cause loss of purchasing power
Deflation: Decrease price of goods and services
Lead to declining profit for companies or unemployment
Depression
High unemployment rates
Consumer spending low
Unemployment / Rate
Unemployment: % of population that want to work but are unable to find jobs
Ethical Issue
An identifiable problem, solution, or opportunity that requires a person to choose from several actions, that are wrong, ethical, or unethical.
Key ethical term: Whisleblower
An employee who exposes an employers wrong doing to outsiders, such as media or government regulatory agency
Corporate Citizenship
Extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by stakeholders
4 dimensions of social responsibility
1) Economic (Earning profits)
2) Legal (Complying with the law)
3) Ethical (Doing what is right and fair)
4) Voluntary (non required activities that promote human activities and good will)
Why Do Nations Trade?
To obtain raw materials and goods that are unavailable to them in their religion but can be produced elsewhere at a lower price then they can produce themselves
Multinational Corporation (MNC)
Corporation that operates on a world wide scale, without significant ties to any one nation or religion
Absolute advantage
A monopoly that exist when a country is the only source of an item, the only producer / most efficient producer of an item.
Comparative advantage
When a country specializes in products that it can supply more efficiently at a lower cost that it can produce other items
Trade deficit
“Negative balance of trade”
Harmful because can mean failure at a business, loss of Jobs, lower standard of living
Trade surplus
Nation that exports more goods than it imports
“favourable balance of trade”
Tariff and trade restrictions
Part of nations legal structure
Maybe established / removed for political reasons
Import tariff
A tax levied by a nation on goods imported into the country
Exchange control
Regulations that restrict the amount of currency that can be bought or sold
Quota
A restriction on the # of units of a particular product that can be imported into a country
Embargo
A prohibition on trade for a particular product
Dumping
The act of a country / business selling products at less than what it costs
Cartel
Groups of firms or nations that agree to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world marcels
Trading monopoly
Buys goods in one country and sells them to buyers of another country
Handles all activities required to move products from one country to another
Licensing
Trade arrangement where one company allows another company name, products, brands, m etc. in exchange for fee or royalty
Franchising
Form of licensing where a company agrees to provide a franchise name, logo, etc. In return for financial commitment.
Contract Manufacturing
Hiring a foreign company to provide a specified volume of the initiating company product to specification
Final product carries domestic firms name
common in high tech industries automotive and food
Joint venture
The sharing of the costs of operations of a business between foreign company and a local partner
strategic alliance
A partnership formed to create competitive advantage on a worldwide basis
Direct investment
Ownership of overseas facilities
