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Business > Midterm > Flashcards

Midterm Flashcards

1
Q

What are businesses?

A

Any activity that provides goods and services in an effort to earn a profit

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2
Q

What are not-for-profit organizations?

A

Business-like entities that focus on community causes, not profit

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3
Q

What is profit?

A

The financial reward that comes from starting and running a business
Profit = the money that a business earns in sales (or revenue) minus expenses

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4
Q

Profit equals… ?

A

Shareholder Wealth

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5
Q

What are entrepreneurs?

A

People who risk their time, money, and other resources to start and manage a business

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6
Q

Business drives up the… ?

A

Standard of living (which contributes to the quality of life)

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7
Q

What are the four components of the Industrial Revolution?

A
  1. Mass Production
  2. Factories
  3. Work Specialization
  4. Efficiency
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8
Q

What are the five components of the Entrepreneurship Era?

A
  1. Industrial Titans
  2. Wealth Creation
  3. Increase in Living Standard
  4. Manipulation/Competition
  5. Exploitation
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9
Q

What are the six components of the Production Era?

A
  1. Assembly Line
  2. Refining Production
  3. Productivity Gains
  4. Decrease Costs
  5. Hard Sell
  6. No Customer Focus
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10
Q

What are the four components of the Marketing Era?

A
  1. Consumer Power
  2. Growth in
    Consumerism
  3. Product Differentiation
  4. Customer Focus
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11
Q

What are the three components of the Relationship Era?

A
  1. Long-term
    Relationships
  2. Satisfied Customers
  3. Use of Technology
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12
Q

True or False: Not-for-Profit organizations contribute to the economy

A

True (about 80B$)

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13
Q

What do Not-for-Profit organizations focus on? (6)

A
  • health
  • human services
  • education
  • art
  • religion
  • culture
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14
Q

What are the four factors of production?

A
  1. Natural Resources
  2. Capital
  3. Human Resources
  4. Entrepreneurship
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15
Q

What are the five components of the Business Environment?

A
  1. Economic Environment
  2. Social Environment
  3. Global Environment
  4. Technological Environment
  5. Competitive Environment
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16
Q

What is the economic environment for business? (2)

A
  1. Government promote economic development by providing investment and tax incentives & regulations
  2. State of the economy (recession, peak, etc.)
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17
Q

What is the competitive environment for business? (4)

A

Due to high competition (esp. in tech), companies must provide VALUE
- Value is the size gap between benefit and price
- Cheapest price =(NOT) highest value
- The key to value is quality
- How fast firms get products to market can be a competitive advantage

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18
Q

What are bleeding-edge firms?

A

Bleeding-edge firms launch products that fail because they are ahead of the market.

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19
Q

What are leading-edge firms?

A

Leading-edge firms offer products just as the market is ready

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20
Q

What is the technological environment for business?

A

any tools that businesses can use to become efficient and effective
(ie; computers, social media)

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21
Q

What is the social environment for business? (5)

A
  • Demographics
  • Diversity
  • Aging population
  • Rising worker expectations
  • Ethics and social responsibility
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22
Q

What is the global environment for business? (4)

A
  • Job Migration
  • Terrorism is more
    of a threat today
  • China’s economy
    boomed and deceleration
  • Technology has linked
    customers/suppliers
    worldwide
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23
Q

What is an economy?

A

A financial and social system of how resources flow through society

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24
Q

What are economics?

A

study of the choices that people make in allocating society’s resources

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25
Q

What is macroeconomics?

A

country’s overall economy

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26
Q

What is microeconomics?

A

consumers, families, and businesses

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27
Q

What is GDP?

A

The value of all goods and services produced in the country (size of the economy)

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28
Q

What is fiscal policy? (3)

A

taxation and spending decisions to influence the economy. These decisions encourage
- growth
- boost employment
- curb inflation

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29
Q

What is monetary policy? (2)

A

actions controlled by the Bank of Canada that shape the economy by influencing
- interest rates
- supply of money

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30
Q

What is Federal Debt?

A

Total of all money borrowed by the federal government to finance budget deficits and that has not been repaid

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31
Q

What does the Bank of Canada do? (5)

A
  • Manages Canada’s monetary policy
  • Provides banking services for other banks and the government
  • Coordinates the cheque-clearing process
  • Maintains the federal government’s chequing account
  • Keeps the currency supply in good condition
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32
Q

What is M1 money supply?

A

all currency – paper bills and metal coins – plus chequing accounts and traveller’s cheques

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33
Q

What is M2 money supply?

A

all M1 plus most savings accounts, money market accounts, and certificates of deposit (low-risk savings vehicles with a fixed term)

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34
Q

How does the Bank of Canada manage the money supply (2)?

A

Discount Rate Changes & Open Market Operations

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35
Q

What is a free market?

A

Basis of capitalism.
- private ownership
- economic freedom
- fair competition
- innovation
- hard work

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36
Q

What are the fundamental rights of capitalism? (4)

A
  1. The right to own a business and keep after-tax profits
  2. The right to private property
  3. The right to free choice
  4. The right to fair competition
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37
Q

What are the four degrees of competition?

A
  1. Pure competition (many competitors with identical products, ie; agriculture)
  2. Monopolistic competition (Many competitors with differentiated products, ie; restaurants)
  3. Oligopoly (Handful of competitors with similar or different products, ie; oil companies)
  4. Monopoly (One producer that dominates the market, ie; cable & phone industries)
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38
Q

What is supply?

A

the relationship between the price of a good and the quantity that sellers are willing and able to offer for sale at different prices

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39
Q

What is demand?

A

the relationship between the price of a good and the quantity buyers are willing or able to buy

40
Q

What is socialism? (5)

A
  • government controls key enterprises
  • higher taxes designed to distribute wealth through society
  • inefficient
    -.corruption
  • no profit motive
41
Q

What is communism? (4)

A
  • public ownership of all enterprises
  • strong central government
  • unwanted shortages & surpluses
  • corruption
42
Q

What are the 5 factors of economic performance?

A
  1. GDP
  2. Employment Level
  3. Business Cycle
  4. Price Levels
  5. Productivity
43
Q

What is Disinflation?

A

When price increases slow down

44
Q

What is Deflation?

A

When average prices actually decrease

45
Q

How do we calculate productivity?

A

Output/Input = Productivity

46
Q

What is Hyperinflation?

A

When average prices increase more than 50% per month

47
Q

What is a sole proprietorship?

A

Businesses owned and usually actively managed by a single individual.

48
Q

What is a sole proprietorship from a legal viewpoint?

A

An extension of the owner

49
Q

What are corporations?

A

Legal entities which are separate from theirowners (Legal “persons”)

50
Q

What is the Big Three in business ownership?

A
  1. Sole proprietorship
  2. Partnership
  3. Corporations
51
Q

What are the advantages of a sole proprietorship? (5)

A
  1. Simple and inexpensive to start and operate
  2. Retention of control
  3. Pride of ownership
  4. Retention of profits
  5. Possible tax advantage
52
Q

What’s an example of a sole proprietorship?

A

Baby sitting company, Lemonade stand

53
Q

What are the disadvantages of a sole proprietorship? (5)

A
  1. Limited financial resources
  2. Unlimited liability
  3. Limited ability to attract and retain talented employees
  4. Heavy workload and responsibilities
  5. Lack of permanence
54
Q

What are the three types of partnership?

A

General Partnership, Limited Partnership, Limited Liability Partnership

55
Q

What are the advantages of general partnerships? (4)

A
  1. Pooled financial resources
  2. Shared responsibilities and capitalize on complimentary skills
  3. Ease of formation
  4. Possible tax advantages
56
Q

What is a general partnership? (3)

A

Voluntary partnership agreement which sets out responsibilities, financial contributions, sharing profits & losses

  1. All partners can participate in the management and profits of the firm
  2. All share unlimited liability for its debts
57
Q

What are the disadvantages of general partnerships? (4)

A
  1. Unlimited liability
  2. Disagreements
  3. Difficulty in withdrawing from partnership
  4. Lack of continuity
58
Q

Who owns corporations?

A

Shareholders

59
Q

How does one acquire shares of a corporation?

A

Publicly (on the stock exchange) or privately

60
Q

How are corporations managed?

A
  1. Shareholders elect the Board of Directors
  2. The Board decides on objectives
  3. The Board hires officers (ex: CEO) to manage the business day-to-day
  4. Management reports back to the Board (directly or through committees)
61
Q

What are the advantages of corporations? (5)

A
  1. Limited liability of shareholders
  2. Permanence
  3. Ease of transfer of ownership
  4. Ability to raise financial capital
  5. Specialized management
62
Q

What are the disadvantages of corporations? (5)

A
  1. Expense/complexity of formation and operation
  2. Complications if operating across jurisdictions
  3. Double taxation
  4. Paperwork/regulation
  5. Conflicts of interest
63
Q

Why does corporate restructuring occur?

A

Corporations want to grow, diversify, specialize or become efficient

64
Q

What is a merger?

A

Combination of two companies to form a new entity

65
Q

What are acquisitions?

A

When one firm buys another

66
Q

What is a horizontal merger?

A

The combination of firms within the same industry to increase size, market power, and efficiency

67
Q

Give an example of a horizontal merger.

A

Purchase of Shoppers Drug Mart by Loblaw in 2013

68
Q

What is a vertical merger?

A

Combination of firms at different stages of production which increases control over supply of crucial inputs.

69
Q

Give an example of a vertical merger.

A

Merger of Time Warner (cable tv provider) & Turner Broadcasting (owner of cable networks)

70
Q

What is a conglomerate merger?

A

Combination of firms in unrelated industries to reduce vulnerability to adverse conditions in any single market

71
Q

Give an example of a conglomerate merger

A

Amazon (online retailer) and Whole Foods (supermarket). The merger allowed Amazon to expand its grocery offerings and increased the benefits provided to its Prime members

72
Q

What are divestures?

A

Restructuring by subtraction to allow firms to focus resources

73
Q

What is a spin-off?

A

Setting up part of the business as a separate legal entity and distributing shares to existing shareholders

74
Q

What is a carve-out?

A

Setting up a separate company from an operation and selling shares to outside investors

75
Q

What are cooperatives? (3)

A

Corporation owned by members to meet their common needs in which they all have equal ownership and an equal voice in management

  • May be for-profit or not-for-profit
  • Profits are distributed to members through patronage dividends
76
Q

What are Crown corporations?

A

Corporations that provide services to Canadians where private industry cannot (high barriers to entry)
- Government-owned … but most operate at arm’s length from government
- Exist Federally and Provincially

77
Q

Give an example of a Crown corporation.

A

Air Canada, Canadian National Railway, Canada Post

78
Q

Give an example of a co-op.

A

Home hardware

79
Q

What is franchising?

A

Method of operating a business where franchisee pays to license to use the brand name, trademark, recipes, business methods of the franchisor

80
Q

What are the advantages of franchising? (5)

A
  1. Less risk: Franchisees are buying a proven business system and product with a track record
  2. Training and support provided by franchisors
  3. Brand recognition
  4. Access to funding
  5. Allows franchisors to access foreign markets
81
Q

What are the disadvantages of franchising? (5)

A
  1. Costs (Up-front franchise fees, ongoing royalties, start-up and ongoing operating costs)
  2. Lack of control
  3. Negative halo effect: one a disliked trait or aspect of a person or product to negatively influence globally
  4. Growth challenges
  5. Restriction on sale
  6. Poor execution
82
Q

What are the elements to consider when entering a franchise agreement?

A
  1. Terms and conditions
  2. Fees and other payments
  3. Training and support
  4. Specific operational requirements
  5. Conflict resolution
  6. Assigned territory
83
Q

What are the three interrelated factors of entrepreneurship?

A
  1. Per-capita income
  2. Opportunity costs
  3. Cultural/political environment
84
Q

Do small businesses contribute to the Canadian GDP?

A

Yes, more than 30%

85
Q

In which industry does most small businesses operate?

A

Service (about 78%)

86
Q

What are the advantages of small businesses on the economy? (3)

A
  1. Creating new jobs – nearly half of the private sector labor force is employed by small business
  2. Fuelling innovation – the lifeblood of the entrepreneur. Lower bureaucracy and more agile than big companies
  3. Creating opportunities for women – offers challenge, flexibility
87
Q

Why have small business starts skyrocketed?

A
  1. Economic hard times (“Necessity Entrepreneurs”)
  2. Unemployment
88
Q

What are the personal benefits of starting a new business?

A
  1. Opportunity for greater financial success
  2. Independence
  3. Flexibility
  4. Challenge
  5. Self-sufficiency
89
Q

What are the qualities of a classic entrepreneur? (3)

A
  1. Having transformational ideas that lead to transformational growth
  2. Can change the economic landscape
  3. Attitude
90
Q

What are the qualities of a successful entrepreneur? (6)

A
  1. Vision
  2. Self reliance
  3. Energy
  4. Confidence
  5. Tolerance of uncertainty and failure
  6. Appetite for risk
91
Q

What are the biggest threats to small businesses?

A
  1. High risk of failure
  2. Lack of in-depth knowledge and experience of either the specific business or business in general
  3. Too little money
91
Q

How can small businesses find funding?

A
  1. Personal resources & resources from family & friends (protected through agreements)
  2. Loans
  3. Angel investors (provides money in exchange for partial ownership of the company, less monitoring).
  4. Venture capital firms (for major investments, more monitoring)
92
Q

What causes structural unemployment?

A

Skills that aren’t useful

93
Q

What causes frictional unemployment?

A

Employee’s choice, belief that they can do better

94
Q

What causes cyclical unemployment?

A

Recession

95
Q

What causes seasonal unemployment?

A

people who work in seasonal jobs become unemployed when demand for labor decreases.

Business (4 decks)

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