Chapter 1 Flashcards
Business
Any activity that provides goods and services in an effort to earn a profit.
Profit
The financial reward that comes from starting and running a business. The money that a business earns in sales minus expenses such as costs of goods and the costs of salaries.
Loss
When a business brings in less money than it needs to cover expenses.
Entrepreneur
People who risk their time, money, and other resources to start and manage a business.
Standard of living
The quality and quantity of goods and services available to a population
Quality of life
The overall sense of well-being experienced by either an individual or a group.
for people world wide.
Entrepreneurship Era (1800s)
Large-scale entrepreneurs emerged in the second half of the 1800s, building business empires on the foundation of the industrial revolution. Due to these entrepreneurs amassing enormous wealth and raising the standard of living across the country, The government stepped into the business realm passing laws to regulate business and protect consumers and workers, creating more balance in the economy.
Production Era (Early 1900s)
Major businesses turned their focus on refining the production process and raising the efficiency. Jobs became more specialized, increasing productivity and lowering costs and prices. In 1913 Henry Ford introduced the assembly line, which quickly became standard across major manufacturing industries.
Marketing Era (Post WW2)
The balance of power shifted from producers to consumers, flooding the market with enticing choices. To differentiate themselves from their competitors, businesses began to develop brands, or distinctive identities, to help consumers understand the differences among various products.
Relationship Era (Present)
Leading-edge firms look beyond each immediate transaction with a customer and aim to build long-term relationships. Satisfied customers can become advocates for a business, spreading the word with more speed and credibility than even the best promotional campaign. Using technology such as the Web and other digital resources, businesses gather detailed data on their customers and use this data to serve them better.
4 Factors of Production
natural resources,
capital,
human resources, entrepreneurship
Natural Resources
Includes all inputs that offer value in their natural state, such as land, fresh water, wind, and mineral deposits. Most natural resources must be extracted, purified, or harnessed; people cannot actually create them.
Capital
The synthetic resources that a business needs to produce goods or services. Includes machines, tools, buildings, information, and technology. Computers and telecommunications capability have become pivotal elements of capital across a surprising range of industries, from financial services to professional sports. You may be surprised to learn that in this context, capital does not include money, but clearly, businesses use money to acquire, maintain, and upgrade their capital.
Human Resources
This factor encompasses the physical, intellectual, and creative contributions of everyone who works within an economy. As technology replaces a growing number of manual labor jobs, education, motivation and especially knowledge have become increasingly important to human resource development.
Entrepreneurship
People who take the risk of launching and operating their own businesses, largely in response to the profit incentive.
They tend to see opportunities where others don’t, and they use their own resources to capitalize on that potential.
Entrepreneurial enterprises can kick-start an economy, creating a tidal wave of opportunity by harnessing the other factors of production.
But entrepreneurs don’t thrive in an environment that does not support them.
The key ingredient is economic freedom: freedom of choice, of excess regulation, from too much taxation. Protection from corruption and unfair competition is another entrepreneurial “must”.
Business environment
The setting in which business operates. The five key components are: economic environment, competitive environment, technological environment, social environment and the global environment
Economic environment
The state in which the economy is in. The actions the government is taking in order to improve the state. The laws in place in the economy to keep Corruption/Bribery down. Corruption raises the risk of running a business due to everyone not playing by the same set of rules.
Technological environment
The effect of business technology has been transformative. Companies have leveraged technology to streamline production and create new efficiencies. Such as computerized billing, digital animation, and robotic manufacturing.
