Midterm Flashcards
Business
any activity that seeks to provide goods and services to others while operating at a profit
Goods
tangible products such as computers, food, clothing, cars, and appliances
Services
intangible products that can’t be held in your hand, such as education, health care, insurance, recreation, and travel and tourism.
Entrepreneur
person who risks time and money to start and manage a business.
Revenue
total amount of money a business takes in during a given period by selling goods and services.
Profit
amount a business earns above and beyond what it spends for salaries and other expenses.
Loss
when a business’s expenses are more than its revenues.
Risk
the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.
Standard of living
the amount of goods and services people can buy with the money they have.
Quality of life
general well-being of a society in terms of political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide.
Stakeholders
all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address.
Outsourcing
contracting with other companies (often in other countries) to do some or all of the functions of the firm, like its production or accounting tasks.
Non profit org.
organization whose goals do not include making a personal profit for its owners or organizers.
Factors of production
are the resources used to create wealth: land, labor, and capital
Business environment
consists of the surrounding factors that either help or hinder the development of business.
Technology
everything from phones to computers, mobile devices, medical imaging machines, robots, the Internet, social media, and various software programs and apps that make business processes more efficient and productive.
Productivity
amount of output you generate given the amount of input (such as hours worked).
E-commerce
is buying and selling of goods online.
Database
electronic storage file for information; one use of databases is to store vast amounts of information about consumers.
Identity theft
obtaining individuals’ personal information
Empowerment
giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests.
Demography
statistical study of the human population in regard to its size, density, and other characteristics, such as age, race, gender, and income.
Climate change
movement of the temperature of the planet up or down over time.
Greening
saving energy and producing products that cause less harm to the environment.
Econ
study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals.
Micro
part of economic study that looks at the behavior of people and organizations in particular markets.
Macro
part of economic study that looks at the operation of a nation’s economy as a whole.
Resource development
study of how to increase resources and to create the conditions that will make better use of those resources.
Invisible hand
phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all.
Capitalism
economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.
Supply
refers to the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.
Demand
refers to the quantity of products that people are willing to buy at different prices at a specific time.
Market price
the price determined by supply and demand.
Perfect competition
degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product.
Monopolistic competition
is the degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different.
Oligopoly
a degree of competition in which just a few sellers dominate a market.
Monopoly
degree of competition in which only one seller controls the total supply of a product or service, and sets the price.
Gross domestic product
total value of final goods and services produced in a country in a given year.
Gross output
measure of total sales volume at all stages of production.
Unemployment rate
number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks.
Inflation
general rise in the prices of goods and services over time.
Disinflation
a situation in which price increases are slowing (the inflation rate is declining).
Deflation
is a situation in which prices are declining, occurring when countries produce so many goods that people cannot afford to buy them all.
Stagflation
situation when the economy is slowing, but prices keep going up anyhow.
Consumer price index
consists of monthly statistics that measure the pace of inflation or deflation.
Producer price index
index that measures prices at the wholesale level.
Business cycle
periodic rises and falls that occur in economies over time.
Recession
two or more consecutive quarters of decline in the GDP
Depression
severe recession, usually accompanied by deflation.
Fiscal policy
federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending.
Keynesian economic theory
theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.
National debt
sum of government deficits over time.
Monetary policy
management of the monetary supply and interest rates; it is controlled by the Fed.
Management
process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources.
Planning
management function that includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives.
Organizing
management function that includes designing the structure of the organization and creating conditions and systems in which every¬one and everything work together to achieve the organization’s goals and objectives.
Leading
means creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization’s goals and objectives in a timely manner.
Controlling
management function that involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not.
Vision
encompassing explanation of why the organization exists and where it is headed; it is more than a goal.
Mission statement
outline of the fundamental purposes of the organization.
Goals
broad, long-term accomplishments an organization wishes to attain.
Objectives
specific, short-term statements detailing how to achieve the organizational goals.
Swot analysis
planning tool used to analyze an organization’s Strengths, Weaknesses, Opportunities, and Threats.
Strategic planning
process of deter¬mining the major goals of the organization and the policies and strategies needed for obtaining and using resources to achieve those goals.
Tactical planning
process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done.
Operational planning
process of setting of work standards and schedules necessary to implement the company’s tactical objectives.
Contingency planning
process of preparing alternative courses of action that may be used if the primary plans don’t achieve the organization’s objectives.
Decision making
choosing among two or more alternatives.
Problem solving
process of solving the everyday problems that occur; it is less formal than the decision-making process and calls for quicker action.
Brainstorming
coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas.
PMI
all the Pluses for a solution in one column, all the Minuses in another, and the Implications in a third column.
Top management
highest level of management, consisting of the president and other key company executives who develop strategic plans.
CEO
responsible for all top-level decisions in the firm.
COO
responsible for putting those changes into effect.
CFO
responsible for obtaining funds, planning budgets, collecting funds, and so on.
CIO or CKO
responsible for getting the right information to managers so they can make good decisions. CIOs are more important than ever.
Middle management
level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling.
Supervisory management
managers who are directly responsible for supervising workers and evaluating their daily performance; they are also known as first-line managers.
Technical skills
involve the ability to perform tasks in a specific discipline (such as selling a product) or department (such as marketing).
Human relations skills
involve communication and motivation; they enable managers to work through and with people.
Conceptual skills
involve the ability to picture the organization as a whole and the relationships among its various parts.
Staffing
management function that includes hiring, motivating, and retaining the best people available to accomplish the company’s objectives.
Transparency
the presentation of the company’s facts and figures in a way that is clear and apparent to all stakeholders.
Autocratic leadership
leadership style that involves making managerial decisions without consulting others; it is effective in emergencies and when dealing with unskilled workers.
Participative leadership
leadership style that consists of managers and employees working together to make decisions.
Free rein leadership
leadership style that involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives.
Enabling
giving workers the education and tools they need to make decisions.
Knowledge management
finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm.
External customers
dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use.
Internal customers
individuals and units within the firm that receive services from other individuals and units.
Marketing
activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
Marketing concept
three-part business philosophy: customer orientation, service orientation and profit orientation
Customer relationship management
process of learning as much as possible about customers and doing everything you can to satisfy them—or even exceed their expectations—with goods and services over time.
Marketing mix
ingredients that go into a marketing program: product, price, place, and promotion.
Product
physical good, service, or idea that satisfies a want or need plus anything that would enhance the product in the eye of consumers, such as the brand.
Test marketing
process of testing products among potential users.
Brand name
word, letter, or group of words or letters that differentiates one seller’s goods and services from those of competitors.
Promotion
all the techniques sellers use to inform people and motivate them to buy products or services.
Marketing research
analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions.
Secondary data
information that has already been compiled by others and published in journals and books or made available online.
Primary data
data that you gather yourself (not from secondary sources such as books and magazines).
Focus group
small group of people who meet under the direction of a discussion leader to communicate their opinions about an organization, its product, or other given issues.
Environmental scanning
process of identifying the factors that can affect marketing success.
Consumer market
made up of all the individuals or households that want goods and services for personal consumption or use.
Business to business market
consists of all the individuals and organizations that want goods and services to use in producing other goods and services or to sell, rent, or supply goods to others
Market segmentation
process of dividing the total market into groups whose members have similar characteristics.
Target marketing
marketing directly toward those groups (market segments) an organization decides it can serve profitably.
Geographic seg.
dividing a market by cities, counties, states, or regions.
Demographic seg.
dividing the market by age, income, and education level.
Psychographic seg.
dividing the market using the group’s values, attitudes, and interests.
Benefit seg.
dividing the market by determining which benefits of the product to talk about.
Volume seg.
dividing the market by usage (volume of use).
Niche marketing
the process of finding small but profitable market segments and designing custom-made products for them.
one to one marketing
developing a unique mix of goods and services for each individual customer.
mass marketing
means developing products and promotions to please large groups of people.
relationship marketing
marketing strategy with the goal of keeping individual customers over time by offering them products that exactly meet their requirements.
Total product offer
consists of everything that consumers evaluate when deciding whether or not to buy something (also called the value package).
Product line
group of products that are physically similar or are intended for a similar market
Product mix
combination of product lines offered by a manufacturer
Product differentiation
creation of real or perceived product differences
Convenience goods and services
products that the consumer wants to purchase frequently and with a minimum of effort.
Shopping goods and services
those products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers.
Speciality goods and services
consumer products with unique characteristics and brand identity.
Unsought goods and services
are products that consumers are unaware of, haven’t necessarily thought of buying, or find that they need to solve an unexpected problem.
Industrial goods
are products used in the production of other products: sometimes called business goods or B2B goods.
Bundling
grouping two or more products together and pricing them as a unit.
Brand
name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.
Trademark
brand that has been given exclusive legal protection for both the brand name and its design
Manufactures brands
brand names of manufacturers that distribute products nationally.
Dealer brands
products that do not carry the manufacturer’s name, but carry a distributor or retailer’s name instead
Generic goods
non-branded products that usually sell at a sizable discount compared to national or private-label brands.
Knockoff brands
illegal copies of national brand-name goods.
Brand equity
value of the brand name and associated symbols
Brand loyalty
degree to which customers are satisfied, like the brand, and are committed to further purchases.
Brand awarness
refers to how quickly or easily a given brand name comes to mind when a product category is mentioned.
Brand association
linking of a brand to other favorable images
Brand manager
manager who has direct responsibility for one brand or one product line
Product analysis
making cost estimates and sales forecasts to get a feeling for profitability of new-product ideas.
Concept testing
involves taking a product idea to consumers to test their reactions.
Commercialization
promoting the product to distributors and retailers to get wide distribution and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers.
Product life cycle
theoretical model of what happens to sales and profits for a product class over time; the four stages are introduction, growth, maturity, and decline.
Target costing
designing a product so that it satisfies customers and meets the profit margins desired by the firm.
Competition-based pricing
is a pricing strategy based on what all the other competitors are doing; the price can be set at, above, or below competitors’ prices.
Price leadership
is the procedure by which one or more dominant firms set the pricing practices that all competitors in an industry follow.
Break even analysis
is the process used to determine profitability at various levels of sales.
Total fixed costs
are all the expenses that remain the same no matter how many products are made or sold.
Variable costs
re costs that change according to the level of production.
Skimming price strategy
is a strategy in which a new product is priced high to make optimum profit while there is little competition; however, it invites competitors.
Penetration strategy
is one in which a product is priced low to attract more customers and discourage competitors; it allows a company to capture market share quickly.
Everyday low pricing
is setting prices lower than competitors and then not having any special sales (example: Home Depot and Walmart).
High low pricing strategy
is setting prices that are higher than EDLP stores, but have many special sales where the prices are lower than competitors.
Psychological pricing
is pricing goods and services at price points that make the product appear less expensive than it is (example: gasoline priced at $2.99 instead of $3.00).
Accounting
is the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties with the information they need to make good decisions.
Accounting cycle
is a six-step procedure that results in the preparation and analysis of the major financial statements.
Bookkeeping
is the recording of business transactions.
Journal
is the record book or computer program where accounting data are first entered.
Double entry bookkeeping
is the concept of writing every business transaction in two places.
Ledger
is a specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place.
Trial balance
a summary of all the data in the account ledgers to show whether the figures are correct and balanced.
Financial statement
is the summary of all transactions that have occurred over a particular period.
Fundamental accounting equation
is Assets = Liabilities + Owners’ equity; this is the basis for the balance sheet.
Balance sheet
is the financial statement that reports a firm’s financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners’ equity.
Assets
are economic resources (things of value) owned by the company.
Liquidity
refers to how fast an asset can be converted into cash.
Current assets
are items that can or will be converted to cash within one year (examples: cash, accounts receivable, and inventory).
Fixed assets
are assets that are relatively permanent, such as land, buildings, and equipment.
Intangible assets
are long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value.
Liabilities
are what the business owes to others (DEBTS).
Accounts payable
are current liabilities or bills the company owes to others for merchandise or services purchased on credit but not yet paid for.
Notes payable
are short-term or long-term liabilities that a business promises to repay by a certain date.
Bonds payable
are long-term liabilities that represent money lent to the firm by bondholders that must be paid back.
Owners equity
is the amount of the business that belongs to the owners minus any liabilities owned by the business.
Retained earnings
are the accumulated earnings from a firm’s profitable operations that were reinvested in the business and not paid out to stockholders in dividends.
Income statement
is the financial statement that shows a firm’s profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm, and the resulting net income.
Net income
is revenue left over after all costs and expenses, including taxes, are paid.
Cost of goods sold
is a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale.
Gross profit
s how much a firm earned by buying (or making) and selling merchandise.
Operating expenses
are costs involved in operating a business, such as rent, utilities, and salaries.
Depreciation
is the systemic write-off of the cost of a tangible asset over its estimated useful life.
Statement of cash flows
is the financial statement that reports cash receipts and disbursement related to the firm’s three major activities: operations, investment, and financing.
Cash flow
is the difference between cash coming in and cash going out of a business.
Ratio analysis
is the assessment of a firm’s financial condition using calculations and interpretations of financial ratios developed from the firm’s financial statements.
Financial accounting
is accounting information and analyses prepared for people outside the organization (owners and prospective owners, creditors and lenders, employee unions, customers, suppliers, governmental units, and the general public).
Private accountant
is an accountant who works for a single firm, government agency, or nonprofit organization.
Public accountant
is an accountant who provides his or her accounting services to individuals or businesses on a fee basis.
Certified public accountant
is an accountant who has passed a series of examinations established by the American Institute of Certified Public Accountants (AICPA).
Managerial accounting
is accounting used to provide information and analyses to managers within the organization to assist them in decision making.
Auditing
is the job of reviewing and evaluating the records used to prepare the company’s financial statements.
Independent audit
is an evaluation and unbiased opinion about the accuracy of company’s financial statements.
Tax accountant
is an accountant trained in tax law and responsible for preparing tax returns and developing tax strategies.
Government and not for profit accounting
is the accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget.
