PART 5: The environement Flashcards
OPEX CAPEX
Operational expenses and Capital expenses
microeconomic factors
- competitors
- demand
- market size
- supply
- suppliers
- distribution chain
macroeconomic factors
- unemployment
- inflation
- interest rates
- GDP
- exchange rates
- consumer
- confidence
the economic environment in which a business is conducted
- economic systems
- free enterprise system
- concept of supply and demand
- role of competition
- global changes
economic systems
an economic system describes how a particular society distributes its resources to produce goods and services
three issues that all economic systems must adress
- what good and services, and how much of each, will satisfy consumer’s needs?
- how will goods and services be produced, who will produce them and with what resources will they be produced?
- how are the goods and services be distributed to consumers?
three economic systems
Communism
Karl Marx
central government planning determines what goods and services satisfy citizen’s needs, how the goods and services are produced and how are distributed
Socialism
economic system in which the government owns and operate basic industries, but individuals owns most of the businesses
basic industries like postal services, telephone, utilities (electricity, gas, water, etc), transportation
what is egalitarianism
equal distribution of income and social service
Capitalism or free enterprise
economic system in which individuals own and operate the majority of businesses that provide goods. Competition, supply and demands determine which goods and services are produced, how they are produced and how they are distributed
Adam Smith
free capitalism
all decisions are made without government intervention
what were Smith main ideas
- the philosophy of free markets (invisible hands)
- Gross Domestic Product (GDP) –> maximize exports and minimize imports
- Assembly line production method –> division of labor and the specialization of tasks
2 types of capitalism
modified capitalism
government regulates business in some extent
differs from pure capitalism
pure capitalism
individuals owns and operate all businesses
mixed economy
organized with some free market elements and some socialistic elements (somewhere between pure socialism and pure capitalism)
free enterprise system (invisible hand)
economy where the market determines prices, products and services rather than the government
capitalism –> method in which scarce resources are produced and distributed
free enterprise –> set of legal rules regarding commercial interaction
competition
monopolist
businesses have some power over the price they charge because they can make consumer aware of product differences through advertising
example: aspirins, vaccum cleaners, soft drinks
Entertainment industry is an example of
monopolistic competition
oligopoly
few businesses selling a product. Individual businesses have control over their product’s price because each business supplies a large portion of the products
examples: cable television services, pharmaceuticals, computer and software industries
monopoly
only one business providing a product in a given market. Has near-total control of a market
Deflation
general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy
economic expansion
occurs when an economy is growing and people are spending more money
from June 2009 to February 2020 the world has lived a(n)…
economic expansion
unemployment rate
indicates how much working-age people are not working who otherwise want to work
measuring the economy
GDP
the sum of all goods and services produced in a country during a year
other measures
Budget deficit
a nation spends more than it takes from taxes
trade balance
the difference between our exports and imports
negative trade balance since the mid-1980 –> trade deficit is viwed as unhealthy for our economy
consumer price index
measures changes in prices of goods and services purchased for consumption by typical urban households
per capita income
indicates the average income level per person
worker productivity
the amount of good and services produced for each hour worked
global changes
What is a megatrend
change on a global scale that is often verified with factual data
what are the 5 trends that can affect business environment
- growing urban population
- global warming
- demographic changes
- emerging markets gain power
- advances in technology. Digital information
