Chapter 2 Flashcards
Study midterm
External environment
Everything outside an organization that might affect it.
Organizational boundary
Boundary that separates the organization from its environment
Economic environment
current state of the economic environment
Condition of the economic system in which an organization operates.
(low growth, low unemployment rates, and low inflation)
Aggregate output
Way to measure economic growth. Total quantity of goods and serviced produced by an economic system in a given period.
Standard of living
Total quantity of goods and services people can purchase with the given currency.
Business cycle
short term ups and downs in an economy. Recognizable phases include peak, recession, trough, and recovery.
Gross domestic products (GDP)
Total value of all goods/services produced by a national through DOMESTIC factors of production.
Gross national products (GNP)
Total value of all goods/services produced by a nation, regardless of where the factors of production is located.
Real growth rates
Growth rate of GDP that has been adjusted for inflation and changes in value of country’s currency.
GDP per capita
GDP/total population. Measures economic well-being of an average person.
Real GDP
GDP that has been adjusted
Purchasing power parity (PPP)
Principle on which exchange rates are set so prices of similar products are about the same in different countries. Compares economic productivity and the standards of living between countries.
Productivity
How much a system produces with the resources needed to produce it. Higher productivity&fewer factors of production = improved standard of living
Balance of trade
Economic value of country’s exports - Economic value of country’s imports
National debt (how does it affect economic growth)
Amount of money the government owes its creditors.
(Government is forced to compete with individual borrowers, for the loanable money. Less money for individuals means less investments being done to increase productivity)
Stability
Key goal in any economic system. Condition where amount of money available in a system is growing at the same rate as the quantity of goods/services in the system.
Inflation
Occurs when money injected into an economic system is more than the output. =people have too much to spend but the quantity of available products remain the same. It is the increase in prices of the same “basket” of goods/services over time.
Consumer Price Index (CPI)
Way to measure inflation. Measures the average change in prices over the “basket of goods/services” over time.
Deflation
Occurs when amount of money injected into an economic system is less than the actual output. This can either be good or bad for the consumers.
Four types of unemployment
Frictional: Jobless while searching for a job.
Seasonal: Jobless due to the seasonal nature of their jobs.
Cyclical: Jobless due to the business cycle
Structural: Jobless due to people’s incompetence in the skills required for available jobs
Fiscal Policies
Way federal government manage the Canadian economic system. Collecting/spending of government revenues.
Monetary policies
“tight” and “easy”?
Way federal government manage the Canadian economic system. Works primarily through Bank of Canada, influencing their willingness/ability to loan out money.
Tight monetary policy is when the interest rate is high, thus companies/consumers spend less.
Easy monetary policy is when the interest rate is low, increasing spending by both the companies/consumers.
Research and development (R&D) (two types of R&D)
The innovation process of technological improvement, providing new ideas for products, services and processes.
(Basic/Pure: R&D in an area without considering its marketability.
Applied: Focusing on how a tech could be used to sell products/services)
Technology Transfer
The process of getting a new tech from the lab into the market for profit.
Political-legal environment
The relationship between business and government, including government regulations.
Socio-cultural environment
Customs, values, attitudes, and demographic characteristics of the society a company operates in.
Porter’s five forces model
A popular tool to analyze the competitive situation in an industry (Rivalry among existing competitors Threat of potential entrants Suppliers Buyers Substitutes)
