Introduction to BA Flashcards
What is a domestic business environment?
= environment in which firm conducts its operations and gets its revenues (e.g. customers, suppliers, competitors, etc)
What are the 6 dimensions of the external environment of a business?
- Economic environment (conditions in current economic system)
- Political-Legal environment (relationship between business & government)
- Sociocultural environment (customs, values, demographics)
- Technological environment (equipment, human knowledge, telecommunications)
- Domestic business environment
- Global business environment
What is a global business environment?
= international forces that affect a business (e.g. trade agreements, international economic conditions, political unrest, etc)
What are the traditional 4 factors of production and what is the 5th one that many economists include nowadays?
5 –> Information Resources
Labor, Capital, Entrepreneurs & Physical Resources
What is the key difference between a planned economy, a market economy and a mixed market economy?
planned –> fully controlled by governments
market –> regulated through supply & demand, exchange between buyer & seller, relies on capitalism and free enterprise
mixed market –> features characteristics of planned and market economy (most countries)
What does Communism refer to?
political system in which the governments owns and operates all factors of production –> government would assign people to jobs and would own all business decisions (North Korea, Vietnam, Laos, Cuba)
What does Privatization mean?
converting government enterprises into privately owned enterprises
What does Socialism refer to?
planned economic system in which government owns and operates only selected major industries (e.g. banking, transportation, oil, etc)
What are the law of demand and the law of supply?
Law of demand –> Buyers will buy more if price is low and buy less if price is high
Law of supply –> Sellers will sell more if price is high and sell less if price is low
What is the Equilibrium?
Profit-Maximizing Quantity, where supply & demand curve meet
What do the expressions “Surplus” and “Shortage” refer to?
Surplus = quantity supplied exceeds quantity demanded
Shortage = quantity demanded exceeds quantity supplid
What are the four elements of a private enterprise system?
- Profits
- Competition
- Freedom of Choice (being able to choose where to buy, who to work for,…)
- Private Property Rights (ownership rights of resources)
What are the 4 degrees of competition?
- Perfect Competition (many competitors, easy entry, identical goods, no level of control, e.g. local farmer)
- Monopolistic Competition (many, but fewer competitors, quite easy entry, similar goods, some control, e.g. stationary store)
- Oligopoly (few competitors, difficult entry, similar to different goods, some control, e.g. steel industry)
- Monopoly (no competitors, regulated by government, no competitors, considerable control, e.g. public utility)
What is a business cycle and how does it measure growth?
= pattern of short-term ups and downs in an economy
–> measured through aggregate output (total quantity of goods and services produced by an economic system during a given period)
–> increase of aggregate output = growth
What is the difference between GDP and GNP?
Bonus: What is real GDP?
GDP –> output needs to be produced domestically
GNP –> output of factories outside the country that belong to a domestic country are included as well
real GDP = adjusted to currency values and price changes (inflation)
What is the difference between fiscal and monetary policies?
Fiscal = manage the collection and spending of revenues through tax rates for example
Monetary = controlling the size of the nation’s money supply (through Federal Reserve System)
What does Consumerism refer to?
= social activism dedicated to protecting the rights of consumers in their dealings with businesses
What is the difference between Obstructionist -, Defensive-, Accommodative- and Proactive Stance?
Obstructionist Stance = approach to social responsibility that involves doing as little as possible (may even involve denying or covering up violations)
Defensive Stance = company meets only minimum legal requirements in SR commitment
Accomodative Stance = exceeds minimum legal requirements
Proactive Stance = actively seeks opportunities to contribute to well-being
How can Entrepreneurship be defined?
process of seeking business opportunities under conditions of risk
What is a Venture Capital Company?
Group of small investors who invest money in companies with rapid growth potential
What are some key differences between a sole proprietorship, a general partnership and a corporation?
Sole Proprietorship –> + freedom + easy to form + low start-up costs + tax benefits
- unlimited liability - managerial & financial limits - hard to expand
Partnership –> owned by more than 1 person
1. general partnership: unlimited liability & ends with death/decision of any partner
2. limited partnership: limited partners can only lose what they invested & have no active role…LP needs at least one general partner
3. master limited partnership: firm sells shares on public market, but master partner retains at least 50%
Corporations –> limited liability, legal life independent of founders, easy to raise money, heavily regulated, double taxation
–> master
What is the difference between a strategic alliance and a joint venture?
Strategic Alliance –> multiple organizations collaborate on a project for mutual gain
Joint Venture –> when partner share ownership of what is essentially a new enterprise
What do the terms Balance of Trade, Trade Deficit and Trade Surplus mean?
Balance of Trade = exports - imports
Trade Deficit = exports < imports
Trade Surplus = exports > imports
What do the terms Outsourcing and Offshoring mean?
Outsourcing = delegating certain business activities to an external provider
Offshoring = outsourcing to a foreign country
What are Hofstede’s 5 Dimensions?
Hint: 5 PUGST
Power Orientation (Respect vs Tolerance)
Uncertainty Orientation (Acceptance vs Avoidance)
Goal Orientation (Aggressive vs Passive )
Social Orientation (Individualism vs Collectivism)
Time Orientation (Long-term vs Short-term)
What is the difference between quotas, embargos and tariffs?
Quota = restriction on the number of products of a certain type that can be imported into a country
Embargo = government order banning exportation/importation of a certain product or all products from a particular country
Tariff = tax on certain imported products
What are the five most fundamental management skills?
- Technical Skills
- Human Relation Skills
- Conceptual Skills
- Decision-Making Skills
- Time-Management Skills
What are the 3 steps that need to be taken for a strategy formulation?
- Set strategic goals
- Analyze the organization & its environment
- Match the organization & its environment
What does Contingency Planning refer to?
Identify aspects of a business or its environment that might change/differ from expectations and plan ahead what to do in case that happens
What are the 3 options of delegation?
- Assigning responsibility (duty to perform an assigned task)
- Granting authority (power to make decisions)
- Create accountability (obligation to successfully complete a task)
What is a learning organization?
organization that works to integrate continuous improvement, transforms itself to respond to changes in demand & needs and upgrades employee talent, skill & knowledge
What does Intrapreneuring mean?
process of creating & maintaining the innovation & flexibility of a small business with the confines of a big business
Intrapreneuring requires 3 roles:
- Inventor (invents and oversees)
- Product Champion (helps to overcome organizational restistance - e.g. Philip)
- Sponsor (top level manager who approves & supports the project - e.g. Uli)
What are the two most prominent characteristics that set apart services from physical goods?
Unstorability –> if service isn’t used when available, its wasted
Intangibility –> services often can’t be touched, tasted, smelled or seen
What does the critical path in the PERT chart refer to?
the most time-consuming set of activities
What do the terms “Lean Production System” and “Just-in-Time Production” refer to?
Lean Production system = designed for smooth production flows that avoid inefficiencies and eliminate unnecessary inventories
JIT-Production = type of lean production system that brings together all materials at the precise time they are required at each production stage
What are the 5 most commonly used tools for Total Quality Management?
(1) Value added analysis –> evaluates all work activities & flows to determine the value they add to reveal unnecessary activities
(2) Quality Improvement Teams –> collaborative group of employees from various work areas who meet to analyze and solve production problems
(3) Getting closer to the Customer –> taking steps to know what their customers want in the products they consume
(4) The ISO Series –> label mark of quality achievement
(5) Business Process Reengineering –> rethinking each business process step from scratch
What are the “Big 5” Personality traits?
Hint: ACEEO
- Agreeableness
- Consciousness
- Emotionality
- Extraversion
- Openness
What are the 4 Myers-Briggs personality dimensions?
- Extraversion (energy from being around others) vs Introversion (energy from being alone)
- Sensing (prefers concrete things) vs Intuition (prefers abstract concepts)
- Thinking (decisions based on logic & reason) vs Feeling (decisions based on emotions)
- Judging (enjoys being finished) vs Perceiving (enjoys the process)
What is the difference between Cognition, Affect and Intention?
–> They are all components of Attitudes <–
Cognition = knowledge a person presumes to have about sth
Affect = person’s feeling towards sth
Intention = part of attitude that guides behavior
What is a psychological contract?
overall set of expectations held by employees and the organization regarding what employees will contribute and what organization will provide in return
What are differences between “Overseer”, “Coach” and “Mentor”?
Overseer –> controls situation, directs work
Coach –> trains employees, helps team to get resources
Mentor –> helps to learn ropes, resolves conflicts
What is strategic leadership?
a leader’s ability to understand complexities of both the organization and its environment and lead through change in the organization to improve its competitiveness
What is the difference between a salary and a wage?
Wage is a compensation in the form of money paid for time worked
Salary is money paid for discharging the responsibilities of a job
What is the difference between objective measures and judgemental measures in performance appraisal?
objective measure –> looks at numbers
judgemental measure –> compares employees directly with each other and orders them from best to worst
What does the opportunity bias in performance appraisal refer to?
If some persons have a better chance to perform than others
What does the “recency error” refer to?
= tendency to base judgements on the employee’s most recent performance because it is most recently recalled
What is a contingent worker?
A worker that works on something other than on a full-time basis
What does COLA stand for and what does it mean?
Cost Of Living Adjustments –> tie wage increases to Consumer Price Index
What do the terms “picketing”, “boycott” and “work slowdown” mean when thinking about union tactics?
Picketing = workers march at entrance of organization with signs explaining their reason for striking
Boycott = when union members agree to not buy products of a targeted employer
What do the terms “picketing”, “boycott” and “work slowdown” mean when thinking about union tactics?
Picketing = workers march at entrance of organization with signs explaining their reason for striking
Boycott = when union members agree to not buy products of a targeted employer
Work slowdown = instead of striking, workers perform their job in a much slower pace
What do the terms “Lockout” and “Strikebreaker” mean when thinking about union tactics?
Lockout = management tactic whereby workers are denied access to their workplace (only legal if management has a legitimate business need)
Strikebreaker = temporary/permanent replacements for striking employees made by management
What are the 4 stages of the Product Life Cycle and what do they imply?
- Introduction (product reaches marketplace; about making potential customers aware of product; usually making losses through R&D investments)
- Growth (sales start to climb; product starts to earn profits; competitors might already start introducing their version of this new product)
- Maturity (longest stage, product reaches its peak in sales and stagnates; increased competition that lower profits through higher marketing costs)
- Decline (profits and sales continue to fall as new product in introduction stage takes away sales; firms usually reduce promotional support)
What are 3 ways to extend the product life cycle?
- Product Extension = existing product marketed in new markets (internationally) instead of just domestically
- Product Adaption = modifying product for greater appeal in different countries
- Reintroduction = reviving old products for new markets
What is the difference between price skimming and penetration pricing?
price skimming = setting an initial higher price to cover development costs and generate a larger profit on each item sold –> works only if customers are convinced that its truly different/better from existing products and no major competitors on the monitor
penetration pricing = setting an initial lower price to create customer interest and stimulate trial purchases –> best when introducing a product that expects to have competitors quickly
What does price lining refer to?
setting a limited number of prices for certain categories of products (e.g. suits for 150€, 300€, 700€) –> allows store to have a product for different customer segments
What is the difference between a pull strategy and a push strategy when it comes to promotions?
pull = creates consumer demand, appeals directly to consumers who will demand the product from retailers
push = pushes wholesalers & retailers to stock & display more; firm markets products to wholesalers & retailers who then persuade customers to buy
What are the different aims of financial and managerial accounting?
financial –> prepared for external users of information (e.g. income statement, balance sheet)
managerial –> prepared for internal users of information (e.g. certain costs that are relevant for managers)
What are the “Big 4” public accounting firms?
Deloitte
EY
PwC
KPMG
Name some relevant facts about the Balance Sheet!
- shows firm’s financial position at one point in time
- gives detailed information about assets, liabilities & equity
Name some relevant facts about the Income Statement!
- aka profit & loss statement
- its outline of revenues & expenses result in a figure showing the firm’s annual profit or loss
- shows financial results that occurred during a period of time
Name some relevant facts about the Cashflow Statement!
- summarizes yearly cash receipts and cash payments
- shows a firm’s operating, financing and investing activities
What is the difference between bull markets and bear markets?
Bull markets –> rising stock prices, generally lasting 12 months or longer
Bear markets –> falling stock prices, usually 20 percent off peak prices
What are “Angel Investors” and what does “Venture Capital” mean?
Angel Investors –> outside investors who provide capital for firms in return of shares of ownership
Venture Capital –> private funds from wealthy individuals seeking investment opportunities in new growth companies
What are the 2 most popular risk rating agencies?
Moody’s & Standard & Poor’s
