grade 10 business test1 Flashcards
Why Businesses Fail
Lack of Demand
Lack of Skill/Knowledge
Forgetting your Roots
Expanding Too Quickly
Lack of Capital
Inability to Stay Competitive
Profit equation
Revenues - Expenses = Profit
How do you measure business success?
- Increasing Profit
- Employee Satisfaction
- Personal Satisfaction
Social Costs of International Business
Outsourcing
Human rights and labour abuses
Environmental degradation
Benefits of International Business
Access to many markets outside of Canada
Cheaper labour reduces production costs
Increased quality of goods
Access to resources
Canada’s economic goals (measures how the economy is doing)
Keep the economy growing over time (measured by GDP)
Limit unemployment (measured by unemployment rate)
Keep prices stable (measured by inflation rate)
Three types of economic systems
- Centrally planned
- Capitalism (Free Market)
- Mixed
Improving Productivity
Training
Capital investments
Pros and Cons to Franchises
Benefits to franchising:
Brand recognition
Share in advertising
Manual on how to run franchise
Disadvantages to franchising:
Fees can be expensive
You can’t run the business the way you want to
Forms of Business Ownership
- Sole proprietorship
- Partnership
- Corporation
Why We Buy
Seven key factors influence consumer buying decisions:
1. Income
2. Price
3. Emotion
4. Trends
5. Customs/Habits
6. Safety
7. Promotion
How do consumers benefit from competition?
Lower prices
Higher quality goods and services
More selection
New innovations
Supply and Demand
Supply > Demand: price of good or service goes down
Demand > Supply: price of good or service goes up
Supply = Demand: success!
Categorizing businesses
Profit or Non-profit?
Large or Small
Forms of Business Ownership
Goods or Services
Channels of Distribution
Business
An organization that produces or sells goods/services to satisfy the needs and wants of consumers for the purpose of making a profit
Needs
Essential for human survival
Wants
Not essential for survival
Real Needs
Basic needs that are tangible (such as food, shelter)
Psychological Needs
Needs that are intangible and emotional (such as companionship, security)
Goods
A tangible product that will be sold, likely for profit.
Services
Anything intangible that someone does for a fee, without a tangible good changing hands.
Turnover
Employees leaving the company and then being replaced by new workers
Profit
(Bottom Line)
Revenues - Expenses = Profit
Revenue
The amount of money a business receives for selling its goods/services
Expense
Costs involved in running a business (electricity, taxes, wages, etc)
Obsolete
A product is replaced by a better, more technologically advanced product. It is no longer sold.
Capital
The money or wealth needed to produce goods and services
Financing
Raising capital to fund your organization
Big-box retailer
A physically large retail establishment, usually part of a chain of stores.
Bricks and Mortar
Physical places that customers visit to make purchases
e-commerce
Virtual store, where business is conducted electronically over the Internet, without a store or showroom
SMEs
Small to medium-sized enterprises
Market
Any arrangement that enables buyers and sellers to get information and to do business with each other
Demand
The amount of a good or service that customers are willing to purchase at a particular prices
Supply
The amount of a good or service available for consumption
Producer
An individual or business that makes a product
Customer
A person who buys goods and services
Consumer
A person who uses goods and services
Royalty
Compensation for usage of your work
CEO
Chief Executive Officer (the highest ranking person in a company)
Conspicuous Consumption
Some people flaunt their purchases just to impress others
Peer Pressure
Feeling pressured by friends to make a purchase
Custom
Special holidays or occasions
Habit
Formed over time and are done repetitively
Sole Proprietorship
One owner is entitled to all profits and is responsible for all liabilities (unlimited liability)
Partnership
Two or more people (partners) share profits and losses according to the partnership agreement
Partnership Agreement
A legal document that allows members of a partnership to establish rules for their relationship and to specify the conditions that will cause the partnership to dissolve.
General partners have unlimited liability and have full management control of the business.
Limited partners have little to no involvement in management, but have liability that’s limited to their investment in the partnership.
Corporation
The ownership of a corporation is divided into many small parts (shares or stock). Individuals can buy a “share” of ownership in the company. The risk of failure is spread among shareholders (who have a share in your company’s future profits).
Stockholder
A person that owns a share of a company.
Private Corporations
Only a few owners control all of the stock. Not listed on a stock exchange.
Public Corporations
Shares are available to the entire public on the stock exchange. Lots of owners!
Crown Corporations
Operated by the provincial/federal government
Ex: Via Rail, Canada Post, CBC
Franchise
The franchiser licenses the rights to its name, operating procedures, designs and business expertise to another business (the franchisee).
Resources (factors of production)
Natural Resources — raw materials (Ex: soil, gold, trees, fish, grain)
Human Resources — people
Capital Resources — needed to produce goods/services (Ex: buildings, equipment, trucks, money)
Management
Allocates the factors of production to make the business successful
Productivity
The quantity and quality of work performance
Effective
An output measure (was the task completed or the goal accomplished?)
Efficient
An input measure (were the costs associated with completing the task done at a minimum?)
Interdependence
Businesses relying on other businesses to help them produce goods & services that satisfy consumer needs and wants.
Economy
The independent system where government and businesses work together to provide goods and services to consumers
Economic System
A way of dealing with the selection, production, distribution, and consumption of goods and services
Centrally planned
Government controls all economic decision making
Capitalism (free market)
A business is “free” to own private property and make a profit. Consumers are “free” to buy goods/services from whomever they choose (freedom of choice)
Mixed Economy
No economic system exists in pure form. Most economies are mixed, with private and public companies.
Public sector
Government that provides services
Private sector
Businesses that are individually owned and operated whose purpose is to make a profit
Privatization
Public sector organizations are sold to the private sector
Inflation
Occurs when the price of many products goes up while the purchasing power of money decreases
Purchasing Power
The amount and quality of goods and services that money can buy
GDP
The total market value of all goods and services produced within a country in one year
Unemployment Rate
The number of able-to-work people who don’t have jobs as a % of the labour force
International Business (globalization)
All business activities needed to create, ship, and sell goods and services across national borders.
Domestic business
Business that takes place entirely within a country’s borders
Trade
Allows countries to expand their markets and access goods and services that otherwise may not have been available domestically
Import
Bringing in goods/services to sell in Canada
Export
Selling goods/services from Canada to another country
Trading Partner
When a business in Canada develops a relationship with a business in another country
Tariff
A tax imposed by the local government on goods and services coming into a country
CAD
Canadian dollar
Free trade
Removing tariffs on certain goods traded between countries
NAFTA
North American Free Trade Agreement
Created a Canada/U.S./Mexico free-trade zone
Eliminates duties, barriers, and restrictions on almost all products and services traded
USMCA
US/Mexico/Canada Agreement (which replaced NAFTA)
Culture
The sum of a country’s way of life, beliefs, and customs
Economies of Scale
The more products you can make using the same factory, the cheaper each product becomes
