Chapter 1-4 ,7,8 Flashcards
Goods
Tangible products; ex. Items
Business
Activity that seeks to provide good while operating a profit
Services
Intangible products; ex. Healthcare
Entrepreneur
A person who risks time and money to start a business
Profit
The amount of money a business earns above and beyond what it spends for salaries and other expenses
Revenue
The total amount of money a business takes in
Loss
When expenses are more than received
Quality of Life
General well-being of society in terms of its political freedom
Standard of living
Amount of goods you can buy with the money you have
Stakeholders
All the people who stand to gain or lose by the activities of a business
Outsourcing
Contracting with other companies to do functions of the firm
Insourcing
Foreign companies bringing forth tasks to the U.S
Sig- helps create jobs
Non-Profit Organization
Goals do not include making a personal profit
Factors of Production
The resources used to create wealth;
1. Land 2.labor 3.capital 4.entrepeneurship and 5.knowledge
Productivity
The amount of output you generate given the amount of input
E-commerce
Buying and selling goods over the Internet.
Database
An electric storage file for information
Identity Theft
Obtaining someone’s information for illegal purposes
Empowerment
Giving frontline workers responsibility
Demography
Statical study of the human population
Climate change
Movement if temperature
Greening
A trend toward saving energy
Economics
The study of how society chooses to employ resources to produce goods and distribute them amongst individuals
Macroeconomics
Looks at the operation of a nations economy as a whole
Microeconomics
Looks at the behavior of people and organizations in particular markets
Resource Development
Study of how to increase resources and to create the conditions that will make better use of those resources
Invisible hand
The process that turns self directed gain into social and economic benefits for all ((dubbed by Adam Smith))
Capitalism
An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit
Supply
The quantity of products that manufacturers or owners are willing to sell at different prices in a specific time
Market price
Determined by supply and demand
Perfect competition
The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of the product
Ex: agriculture
Monopolistic competition
A large number of sellers produce very similar products that buyers nevertheless perceive as different
Ex: hotdogs
Oligopoly
A degree of competition in which just a few sellers dominate the market
Ex: airlines
Monopoly
Only one seller controls the total supply of a product or service and sets the price
Socialism
An economic system based on the premise that some, if not most, basic business should be owned by the government so that profits can be more evenly distributed among the people
Brain drain
The loss of the best and brightest people to other coubtries
Communism
An economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production
Free market economics
The market largely determines what goods and services get produced, who gets them, and how the economy grows
Command economies
Economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow
Gross domestic product (GDP)
The total value of final goods and services produced in a country in a given year
Unemployment rate
The number of civilians at least 16 years of ages who are unemployed but attempted to find a job within the past 4 weeks
Inflation
A general rise in goods and services over time
Frictional unemployment
Those who have quit work and have yet to find a new job
Structural unemployment
Caused by businesses restructuring themselves
Cyclical unemployment
Due to the recession or business cycle
Seasonal unemployment
Demand varies over the uears
Disinflation
Price increases slowly
Deflation
Prices are declining
Stagflation
When the economy is slowing but the prices are still going up
Consumer price index (CPI)
Monthly statistics that measure the pace of inflation and deflation
Producer price index (PPI)
Measures prices at a wholesale level
Business cycle
The periodic rises and falls that occur in economics over time
Recession
Two or more consecutive quarters of decline in the GDP
Depression
A severe recession, usually accompanied by deflation
Fiscal policy
The federal governments efforts to keep the economy stable by increasing or decreasing taxes or government spending
National Debt
The sum of government deficits over time
Keynesian Economic Theory
The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession
Monetary Policy
The management of the money supply and interest rates by the Federal Reserve
Importing
Buying products from another country
Exporting
Selling products to another country
Free trade
The movement of goods and services along nations without political or economic barriers
Comparative Advantage Theory
A country should sell to other countries those products that it produces the best and to buy from other countries products they aren’t as goods in producing
Absolute advantage
The advantage that exists when a country has a monopoly on producing a product more than others
Balance of trade
The total value of a nations exports compared to its imports over a particular period
Trade surplus
A favorable balance of trade; when exports exceeds imports
Trade deficit
An unfavorable balance of trade; imports exceed exports
Balance of payments
The difference between money coming into the country and money leaving the country.
Remember: money flows from other things too such as tourism, foreign aid, foreign investments, etc
Dumping
Selling products in a foreign country at lower prices that the producing country
Licensing
A firm allows a foreign company to produce its product for a royalty fee
Contract manufacturing
Private label goods a company attached its name to. A type of outsourcing
Joint venture
2 or more companies undertake a project
Strategic alliance
A long term partnership between 2 or more companies to have competitive market advantages
Foreign direct investments (FDI)
The buying if permanent property and businesses in foreign nations
Foreign subsidiary
Company owned by another company. Aka the parent company
Multinational corporation
A company that manufactures in many different countries
Sovereign wealth funds
Funds controlled by government holding large stakes
Exchange rate
The value of one nation’s currency relative to another nation’s currency
Devaluation
Lowering the value of a nations currency relative to other currencies
Countertrading
Forms of bartering goods or services
Ex. Pepsi trades drinks for Russian vodka
Trade protectionism
Government regulations that limit imports
Tariffs
Tax imposed on imports
Import quota
A limit on the number of products in certain categories that a nation can import
Embargo
A complete ban on the import or export of a certain product
General Agreement on Tariffs and Trade (GATT)
In 1948, an international forum for negotiating mutual reductions in trade restrictions
World trade organization (WTO)
replaced the GATT and was assigned to mediate trade disputes
Common market
A regional group of countries that have a common external tariff
North American free trade agreement (NAFTA)
Created a free trade area among the United States, Canada, and Mexico
Ethics
Standards of moral behavior accepted by society as right vs wrong
Compliance-based ethics codes-
ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers
Integrity-based ethics codes
Ethical standards that define the organization’s guiding values. Stresses shared accountability between employees
Whistleblowers
Insiders who report illegal or unethical behavior
Corporate social responsibility (CSR)
A business’s concern for the welfare of society
Corporate philanthropy
The dimension of social responsibility that includes charitable donations
Corporate social initiatives
Enhanced forms of corporate philanthropy directly related to the company’s competencies
Corporate responsibility
The dimension of social responsibility that refers to the position a firm takes on in social and political issues
Insider trading
An unethical activity in which insiders use private company information to further their own fortunes or fortunes of family and friends
Social audit
A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs
Sole proprietorship
A business that is owned and usually managed by one person
Partnership
A legal form of business with 2 or more owners
Corporation
A legal entity with authority to act and have liability apart of its owners
Unlimited liability
The responsibility of business owners for all of the debts from its owners
General partnership
All owners share divided debt and responsibility
Limited partner
An owners who invests money in the business but does not have any management responsibility for losses beyond the investment
Limited liability
The responsibility of a business’s owners for losses only up to the amount they invest
Ex: shareholders
Master limited partnership (MLP)
A partnership that acts like a corporation (is traded on a stock exchange) but is taxed like a partnership, this avoiding corporate income tax
Limited liability partnership (LLP)
A partnership that limits partners risk of losing their personal assets to only their own acts and omissions
Conventional “c” corporation
A state chartered legal entity with authority to act and have liability separate grind its owners
S corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorship and partnerships
Limited liability company
A company similar to a s corporation but without the requirements
Merger
Result of 2 firms forming one company
Acquisition
One company’s purchase of the property and obligations of another company
Vertical merger
The joining of 2 companies involved in different stages of related businesses
Ex. Soft drink company buys an artificial sweetener company
Horizontal merger
The joining of 2 firms in the same industry
Ex. Soft drink company buys a mineral water company
Conglomerate merger
The joining of firms unrelated but offers benefits
Ex.soft drink company buys a snack food company
Cooperative
A business owned and controlled by the people who use it; producers, consumers, or workers with similar needs who pool their resources for mutual gain
Entrepreneurship
Accepting the risk of starting and running a business
Entrepeneurial team
A group of experienced people from different areas of business who join together to form a managerial team with the skills needed to develop, make, and market a new product.
Microoreneurs
Entrepreneurs willing to accept the risk of starting and managing the type of business that remains small, lets them do the kind of work they want to do, and offers them a balanced lifestyle
Affiliate marketing
An Internet based marketing strategy in which a business rewards Individuals or other businesses for each visitor or customer the affiliate sends to its website
Ex. Bloggers receive free clothes of clothing websites to get their brand out.
Enterprise zones
Specific geographic areas to which governments try to attract private business investment by offering lower taxes and other government support
Business plan
A detailed written statement that describes the nature of the business, the advantages, the resources, and the qualifications.
Venture capitalists
Individuals of companies that invest in new businesses in exchange for partial ownership of this businesses
Small business administration (SBA)
A US government agency that advises and assists small businesses by providing management training and financial advice and loans
Management
The process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources
Planning
A management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives
Organizing
A management function that includes designing the structure of the organization and creating a system in each everyone and thing works together
Leading
Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve goals
Controlling
A management function that involves establishing clear standards to determine whether or not there is progression.
Vision
An encompassing explanation of why the organization exists and where it’s trying to head
Mission statement
An outline of the fundamental purposes of an organization
Goals
The broad, long term accomplishments an organization wishes to attain
Objective
Specific short term statements detailing how to achieve the organization goals
SWOT ANALYSIS
S-trengths W-eaknesses O-ppurtunities T-hreats
A planning tool used to analyze an organizations
SWOT STRENGTHS TO VIEW
strengths- competencies An acknowledged leader Functional areas Proven management Cost advantages Effective advertisinng
SWOT WEAKNESSES
weaknesses- no strategic direction Obsolete facilities Subpar profitability Lack of managerial depth and talent Weak market image Too narrow a product line
SWOT POTENTIAL OPPUTINITIES
Ability to serve additional customer groups
Expand product lines
Ability to transfer skills to new products
Falling trade barriers in attractive foreign markets
Complacency among rival firms
Ability to grow due to increasing in market demand
SWOT EXTERNAL THREATS
Entry of lower cost foreign competitors Rising sales on substitute product Slower market growth Costly requirements Vulnerability to recession Changing buyer needsj
Strategic planning
The process of determining the major goals of the organization and the policies and strategies for obtaining and using resources to achieve those goals
Tactical planning
The process of developing short term statements about was is to be done
Operational planning
The process of setting work standards and schedules necessary to implement the company’s tactical objectives
Contingency planning
The process of preparing alternative courses of action that may be used if the primary plans don’t achieve meeting objectives
Decision making
Choosing among two or more alternatives
Problem solving
The process of solving the everyday problems that occur. Problem solving is less formal than decision making
Brainstorming
Coming up with as many solutions as possible in a short period of time
PMI
Plus and minus chart
Organizational chart
A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom
Top management
Highest level of management consisting of the president and other key company executives who develop strategic plans
Middle management
The level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning
Supervisory management
Managers who are directly responsible for supervising workers and evaluating their daily performance
Technical skills
Skills that involve the ability to perform tasks in a specific discipline or department
Human relations skills
Skills that involve communication and motivation
Conceptual skills
Skills that involve the ability to picture the organization as a whole
Staffing
A management function that includes hiring, motivating, and retaining the best people
Transparency
The presentation of a company’s facts and figured in a way that is clear for the stakeholders
Autocratic leadership
Making managerial decisions without consulting others
Participative (democratic) leadership
Consists of managers and employees working together to make decisions
Free reign leadership
Managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives
Enabling
Giving workers the education and tools they need to make decisions
Knowledge management
Finding the right information, keeping the information in an accessible place, and making information know to everyone
External customers
Dealers who buy products to sell to others, and ultimate customers, who buy products for their own personal use
Internal customers
Individuals and units within the firm that receive services from other units
economies of scale
the situation which companies can reduce their production costs if they purchase raw materials in bulk; the average cost of goods goes down as production levels increase
Fayol’s Principles of Organization
Division of Labor
Hierarchy of Authority- (know who you report to)
Unity of Command- (1 and only 1 boss)
Subordination of individual interest to general interest- (goals as a TEAM)
Authority- (managers can give orders) ** whenever authority is exercised, responsibility arises.
Degree of Centralization- Specific and fixed responsibility to certain people in top management
Clear communication
Order
Equity- treat employees with respect
Max Weber’s Principles
employees need to do what they are told
addition to Fayol:
- job descriptions
- written rules
- consistent procedures
- staffing and promotion based on QUALITY
hierarchy
one personal at the top with a rank from top to bottom of managers who are responsible to a person
chain of command
the line of authority that moves from the top of hierarchy to bottom
bureaucracy
an organization with many layers of managers who set rules and regulations and oversee all decisions
centralized authority
an organization structure in which decision-making authority is maintained at the top level of management
decentralized authority
an organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarter management could be
span of control
the optimal number of subordinates a manager supervises or should supervise
tall organization structure
an organizational structure in which there are various levels of managers
flat organization structure
an organizational structure that has few levels of management
departmentalization
the dividing of organizational functions into separate units
line organization
an organization that has direct 2-way lines of responsibility, with all people reporting to only one supervisor.
*** hard to use in large businesses
line personnel
employees who are part of the chain of command that is responsible for achieving organizational goals
staff personnel
employees who advise and assist line personnel
matrix organization
specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure
cross-functional self-managed teams
groups of employees who work together on a long-term basis.
networking
using communications technology and other means to link organizations and allow them to work together
real time
the present moment
virtual corporation
a temporary networked organization made up of replaceable firms that join and leave as needed
benchmarking
comparing an organization’s practices,processes, and products against the world’s best
core competencies
those functions that the organization can do as well as or as better than any other organization in the world
digital natives
young people who grew up on the internet
restructuring
redesigning an organization to be more effective
inverted organization
an organization that has contacted people at the top and the chief executive officer at the bottom
organizational (corporate) culture
widely shared values within an organization that achieves common goals and provide unity
formal organization
the structure that details lines of responsibility, authority, and position.
informal organization
the system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority
