Exam 1 Flashcards
Ch. 1-4
Who are stakeholders?
Any individual, group or organization that has an interest in a company’s activities and can be affected by its decisions.
What are the advantages and disadvantages of entrepreneurship?
Pro: freedom to make your own decisions, possible wealth
Con: no benefits from the company, risk of failure
What are the five factors of production?
Capital
Knowledge
Land
Labor
Entrepreneurship
What can government from less developed countries do to help entrepreneurs by reducing the risk of?
Allowing private ownership of businesses, pass laws that enable businesspeople to write contracts that are enforceable in court, establish a currency that’s tradable in world markets, help lessen corruption, and keep taxes and regulations to a minimum.
What are some ways businesses meet and beat competition?
Empowering frontline workers by giving them more training, responsibility and authority
How have social changes affected businesses?
Including older adults, people with disabilities, with different sexual orientations, different religions. Managing diversity means dealing sensitively with workers and cultures around the world
Which countries are creating the greatest competitive challenges?
China and India
What will be the impacts of future wars and terrorism?
Businesses such as the defense industry may prosper however, others such as tourism may suffer.
What is the history of our economic development in the US and what does it say about the future?
Technology replaced agricultural workers who then went to factories. The improved productivity increased competition. The service era is now giving way to an information-based revolution that will affect all sectors in the economy.
Define a business
Any activity that seeks to provide goods and/or services to others while operating a profit
Define entrepreneur
Someone who risks time and money to start & manage a business
Define standard of living
the amount of goods and services people can buy with their money
Define quality of life
the well being of a society in regards to political freedom, natural environment, education, health care, safety, amount of leisure and rewards
Define Outsourcing
contracts with other companies to do some or all of the functions of a firm
Define Insourcing
the other side of outsourcing; when firms contract their operations within the US
What are the two ways to succeed in business
rise through the ranks of a company or become an entrepreneur
Which factors of production are the most important
Entrepreneurship and knowledge
What are the factors of the business environment
Economic & Legal, Technological, Competitive, Social and Global
What has had a lasting impact on business?
Technology
Effectiveness vs Efficiency
Effectiveness is producing the desired result
Efficiency is producing goods/services using the least amount of resources
What is a circular economy?
Reusing, redistributing, refurbishing and recycling products instead of dumping them in landfills
What are the two types of E-Commerce?
B2B - Business to Business
B2C - Business to Consumer
Define Economics
The study of how society chooses to employ resources to produce goods/services and distribute them for consumption amount various people
Macroeconomics
looks at the operation of a nation’s economy as a whole
Microeconomics
looks at the behavior of people and organizations in markets for goods/services
Define Capitalism
All or most of the factors of production and distribution are owned by individuals
What is state capitalism?
a combination of freer markets and some government control
What are the rights of Free Market Capitalism?
- Own private property
- Own and keep profits of a business
- Freedom of competition
- Freedom of choice
What is the equilibrium point?
Where the supply and demand converge/intersect and are equal
What are the degrees of competition?
- Perfect
- Monopolistic
- Oligopoly
- Monopoly
What is monopolistic competition?
When there are a large number of sellers producing very similar products that consumers perceive as different
What is monopoly competition?
When one seller controls the total supply of a product or service and sets the price
What is perfect competition?
When there are many sellers and none are large enough to dictate the price of a product
What is oligopoly competition?
A few sellers dominate a market - often because the initial investment is tremendous
Define Socialism
an economic system based on the premise that some basic businesses should be owned by the government so that profits can be more evenly distributed among the people
Define Communism
An economic and political system in which the government makes all economic decisions and owns almost all of the major factors of production
What is Free market economics?
When the market determines what goods and services get produced, who gets them and how the economy grows “capitalism”
What are command economies?
The government largely decides what goods and services will be produced, who gets them, how the economy grows. This includes Socialism and Communism.
What is a mixed economy?
When some resource allocations are made by the market and some by government
What are the indicators of economic conditions?
- GDP
- Unemployment rate
- Price indexes
- increase or decrease in productivity
What is the GDP?
The Gross Domestic Product is the total value of final goods/services produced annually in a country
What is gross output?
A measure of total sales volume at all stages of production
What are the 4 types of unemployment?
- Frictional
- Structural
- Cyclical
- Seasonal
What is Stagflation?
When the economy is slowing but prices rise
Define PPI
Producer Price Index measures the change in prices at the wholesale level
What are the business cycles?
periodic rises and falls over time, economic boom - recession - recovery - depression
Define Fiscal Policy
Government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending
What is the Keynesian economic theory?
A government policy of increasing spending and cutting taxes could stimulate the economy in a recession
What is a Monetary Policy?
the management of money supply and interest rates by the Federal Reserve Bank
What is Free Trade?
The movement of goods and services among nations without political or economic barriers
What is the Comparative Advantage theory?
A country should sell to other countries those products it produces most effectively & efficiently; buy from other countries those products it cannot produce ass effectively/efficiently
What is an Absolute advantage?
When a country produces a specific product more efficiently than others - it does not last forever
What is the balance of trade?
The total value of a nation’s exports compared to its imports measured over a particular period
What is a Trade Defecit?
When the value of a country’s exports is less than its imports
Define Trade surplus
When a country’s exports exceed its imports
What is the balance of payments?
The difference between money coming into a country vs leaving the country
What is Dumping
selling products in a foreign country at lower prices than those charged in the producing company
Define Licensing
contracts to use trademarks (intellectual property) in a single activity for a fee. Cheaper than franchising
Define Franchising
an arrangement to buy rights to use a business name and sell its products
What is FDI
Foreign Direct Investment is the buying of permanent property and businesses in foreign nations, the most common is a foreign subsidiary.
What is countertrading>
A complex form of bartering; think domino transplant
What are successful factors to global trade
- Sociocultural differences
- Economic/financial forces
- Legal and regulatory barriers
- Physical/environmental
What is GATT?
General Agreement on Tariffs & Trade (formed in 1948) is an international agreement to reduce or eliminate trade barriers like tariffs and quotas
What is the WTO
The World Trade Organization is an independent entity of 164 nations to oversee cross-border trade issues and global business practices
What is the common market?
A trading bloc, regional group of countries with a common external tariff, no internal tariffs and coordinated laws to facilitate exchange.
What countries are included in CAFTA
The US, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua
What is NAFTA
the North American Free Trade Agreement facilitation trade among the US, Canada and MExico
What are the strategies for reaching global markets?
- Licensing
- Exporting
- Franchising
- Contract manufacturing
- Joint ventures/strategic alliances
- FDI
What is the EAC and what does it do?
Export Assistance Center gives assistance in managing/training and exporting to small businesses
Compliance vs Integrity based compliance codes
Compliance emphasizes preventing unlawfulness by increasing control and strict punishments
Integrity is creating an environment that supports ethically sound behavior and shared accountability
Define Ethics
Society’s accepted standards for moral behavior
Corporate responsibility:
acting responsibly within society, treating employees fairly and ethically
Corporate policy:
the position a firm takes on social and political issues
Triple bottom line:
“people, profit, planet” a way of measuring corporate performance
Basic rights of consumers
- to safety
- to be informed
- to choose
- to be heard
What is one of the most powerful influences on a company’s effectiveness and financial performance?
responsible human resource management
What are the two branches of economics?
Macroeconomics and Microeconomics
how does capitalism help economic growth?
people’s efforts to improve their own situation act like an invisible hand to help the economy grow through production of needed goods, services and ideas
What are key economic indicators in the US?
- GDP
- Unemployment rate
- CPI
What is trade protectionism?
use of government regulations to limit the import of goods and services. Tariffs, quotas, embargoes
What are the point of Tariffs?
They raise the price of foreign products and protect domestic industries; revenue tariffs raise money for the government
What is an embargo?
prohibits importing/exporting of certain products to specific country
How can we tell if our business decisions are ethical?
- Is it legal?
- Is it balanced?
- How will it make me feel?
