chapter 1 Flashcards
Business definition
An activity that seeks to provide goods and services to
others while operating at a profit.
Businesses take in revenue in order to gain a profit
while avoiding a loss.
what purpose do entrepreneurs serve?
They earn money for themselves by taking risks.
They employ others.
They pay taxes and help their communities.
standard of living
the material well being of the average person in a given population. It is typically measured using gross domestic product (GDP) per capita
varies in different countries.
Affected by the level of taxation and regulation.
revenue
the total amount of income generated by the sale of goods and services related to the primary operations of the business.
Stakeholders
Are anyone who gains or loses from the business’s policies.
Businesses need to recognize and respond to the needs of their stakeholders.
employees, customers, shareholders, suppliers, communities, and governments.
Nonprofit organizations
Include public schools, civic
associations, charities, and others.
Their financial gains are used to meet their goals, not for personal profit.
difference between revenue and
profit?
Profit is the amount of income that remains after accounting for all expenses, debts, additional income streams, and operating costs.
Revenue, also known simply as “sales”, doesn’t deduct any costs or expenses associated with operating the business.
risk
the degree of uncertainty and/or potential financial loss inherent in an investment decision.
no risk no reward
how many elements of Business Environment and what?
5
- The economic and legal environment.
- The technological environment.
- The competitive environment.
- The social environment.
- The global business environment.
The Economic and Legal Environment
A country’s economic system and laws can have a strong
impact on the level of risk.
- Private ownership of business.
- The legal system.
The Technological Environment
Includes everything from phones to computers, mobile
devices, medical imaging machines, robots, the Internet,
social media, and various software programs and apps.
- Technology can make businesses more effective and efficient.
- Productivity is the amount of output generated vs. amount of
input.
The Competitive Environment
Companies need high-quality products and service at
competitive prices.
* Companies must understand their customers’ wants and
needs.
* Companies need strong relationships with suppliers.
* Companies must differentiate themselves.
The Social Environment
The population’s demography impacts buying patterns.
* Includes size, density, age, race, gender, and income.
* Population shifts create new opportunities for some, declining
opportunities for others.
The Global Environment
Includes trade agreements, international economic
conditions, pandemics, war and terrorism, climate
change.
- It surrounds all other environmental influences.
Diversity
The U.S. Equal Employment Opportunity
Commission prohibits laws discriminating against:
* Age.
* Disability.
* Genetic information.
* National origin.
* Pregnancy.
* Race.
* Religion.
* Sex.
What’s the difference between effectiveness,
efficiency, and productivity?
productivity is simply the correlation between input and output, efficiency denotes doing things well enough. Effectiveness, however, stands for doing the right things.
types of Economics
3
Macroeconomics
Microeconomics
Resource Development.
Macroeconomics
Example: What should the U.S. do to lower its national debt?
* Include gross domestic product (GDP), unemployment rate, and
price indexes.
Microeconomics
Example: Why do people buy smaller cars when gas prices go
up?
5 factors of production
Factors of production.
* Land.
* Labor.
* Capital.
* Entrepreneurship.
* Knowledge.
