Chapter 1-5 Flashcards
5 factors of production
1) Labour
2) Capital
3) Entrepreneurs
4) Natural Resources
5) Information
2 types of economic systems that manage the factors of production in different ways.
Command Economics and Market Economics
6 ways that governments influences business by the role they play
1) Government as a customer
2) Government as a competitor
3) Government as a regulator
4) Government as a taxation agent
5) Government as a provider of incentives and financial assistant
6) Government as a provider of essential services
3 ways of how businesses influence government
1) Lobbyists
2) Trade associations
3) advertising
4 required elements of a private enterprise system
1) Private Property
2) Freedom of choice
3) Profits
4) Competition
4 degrees of competition in a private enterprise system
1) Perfect Competition
2) Monopolistic Competition
3) Oligopoly
4) Monopoly
2 key goals of the Canadian economic system
1) Economic growth
2) Economic stability
4 phases of the business cycle
1) peak
2) recession
3) trough
4) recovery
3 factors that threaten economic stability
1) Inflammation- prices increase
2) Deflation- prices decrease
3) Unemployment
4 categories of unemployment
1) Frictional- temporary out of work
2) Seasonal- seasonal work
3) Cyclical- downturn in the business cycle
4) Structural- skills not in demand
2 sets of policies used by federal government to manage the Canadian economic system
1) Fiscal Policies- government collect and spend revenues
2) Monetary Policies- government controls the size of the nations money supply
5 important sources of competitive pressure (Porters 5 forces)
1) Industry Rivalry —> 2)Bargaining Power of supplier
- –> 3)Bargaining Power of consumer
- –> 4)Threat of New entrants
- –> 5)Threat of substitutes
3 types of mergers which is a consolidation of 2 firms
1) Horizontal merger- same industry merger
2) Vertical merger- merge with supplier or customer
3) Conglomerate merger- Unrelated merger
3 broad categories for classifying managerial ethics
1) Behaviour towards employees
2) Behaviour towards the organization
3) Behaviour towards other economic agents
4 ethical norms available to assess ethical behavior
1) Utility: does a particular act optimize what is best for those who are affected by it.
2) Rights: Does it respect the rights of the individuals involved.
3) Justice: is it consistent with what we regard to be fair.
4) Caring. Is it consistent with peoples responsibilities to each other.
5 stakeholder groups that most companies strive to be socially responsible to
1) Customers
2) Employees
3) Investors
4) Suppliers
5) Local communities
3 types of pollution that are the subjects of most anti-pollution efforts
Air, water and land
6 rights of consumers in dealing with business.
1) Right to safe products
2) Right to be informed
3) Right to be heard
4) Right to choose
5) Right to be educated of purchase
6) Right to courteous service
4 stances an organization can take concerning its obligations to society
1) Obstruction stance- does as little as possible
2) Defensive stance- does everything required, nothing more
3) Accommodative stance- does everything required, and more
4) Proactive stance- goes above and beyond
3 key elements in the entrepreneurial process
1) the entrepreneur
2) the opportunity
3) the resources
2 mains types of financing
Debt and Equity
4 most common sources of equity financing
1) Personal savings
2) Love money
3) Private investors
4) Venture capitalists
2 most common sources of debt financing
1) Financial institutions
2) Suppliers
4 forms of legal ownerships of business organizations that are available
1) Sole proprietorship
2) Partnership
3) Corporation
4) Co-operative
3 ways in which most entrepreneurs start up a small business
1) Starting from scratch
2) Buying existing business
3) Buying a franchise
4 advantages of sole proprietorship
1) Freedom
2) Easy to form
3) Low start-up costs
4) Tax benefits
3 disadvantages of sole proprietorship
1) Unlimited liability
2) Lack of continuity
3) Dependant on 2 persons
2 types of partnerships
1) General partners- actively involved
2) Limited partners- liability is limited to the amount invested
3 advantages of partnerships
1) Ability to grow by adding talent and money
2) Easier to borrow funds
3) Easy to organize
4 disadvantages of partnerships
1) Unlimited liability
2) Lack of continuity
3) Difficulty transferring ownership
4) Partner provides little guidance resolving conflicts between partners
3 advantages of the corporation
1) Limited liability
2) Continuity
3) Raising money
3 disadvantages of the corporation
1) Cost
2) Need legal help
3) Double taxation
4 reasons for success of small business owners
1) Hard work
2) Product demand
3) Managerial Competence
4) Luck
4 reasons for failure of small business owners
1) Managerial Incompetence
2) Neglect
3) Weak control system
4) Insufficient capital
2 traditional forms of Competitive Advantage that economists use to explain why various nations import and export the way they do
1) Absolute advantage-the ability to produce something more efficiently than another country
2) Comparative advantage- the ability to produce some products more efficiently than others.
4 conditions that create a national competitive advantage
1) Factor conditions
2) Demand conditions
3) Related and supporting industries
4) Strategies, structures and rivalries
3 basic levels of involvement a firm can use when it decides to go international
1) Gauging international demand
2) Adapting to customer needs
3) Exporting and importing
5 types of international organizational strategies a firm may use
1) Independent agents
2) licensing arrangements
3) Branch officers
4) Strategic alliances
5) Independent agents
3 barriers to international trade
1) Social and cultural
2) Economic
3) Legal and political
3 goals of the World Trade Organization
1) Promote trade
2) Reduce trade barriers
3) Establish fair procedures
