Powerpoints Flashcards
4 Types of resources
Natural, Human, Financial, and Intangible
2 types of Capitalism
Pure capitalism (A free-market system) and modified
Countries that are free-enterprise
US, Canda, Japan
Rights that must exist for free enterprise systems to work
Right to earn property, earn profits and use them as one wishes, determine business operations, choose a caree, where to live or locate a business, what goods/ervices to purchase, and more
Economic Expansion
Inflation ensues
Economic contraction
Recession, unemployment, and depression ensue
Trade balance
The difference between our exports and our imports. If the balance is negative, as it has been since the mid-1980s, it is called a trade deficit and is generally viewed as unhealthy for our economy
Consumer price index
Measures changes in prices of goods and services purchased for consumption by typical urban housefolds
Per capita income
Indicates the income level of “average” Americans. Useful in determining how much “average” consumers spend and how much money Americans are earning
Unemployment Rate
Indicates how many working-age Americans are not working who otherwise want to work
Inflation
Monitors price increases in consumer goods and services over specified periods of time. Used to determine if costs of goods and services are exceeding worker compensation over time
Worker productivity
The amount of goods and services produced for each hour worked
How the US assesses their economy
Growth in GDP and jobs, Government public policy, tax revenue from individuals and businesses
2 ways the economy allows entrepreneurs to succeed
Free-enterprise system and new technology and innovative management techniques
US government involvement in the economy
Intervenes occasionally to regulate economy and spur growth
Roles of ethics and responsibility in Business
Promote public confidence in corporate America, Foster business ethics, encourage socially responsible behavior, push for diversity in the workforce, enhance reputation and drive profits
What portion of businesses are sole proprietorships?
Nearly 3/4 of all US businesses
Advantages of sole proprietorship
-Ease and cost of formation
-Secrecy
-Distribution and use of profits
-Flexibility and control of the business
-Government regulation
-Taxation
-Closing the business
Disadvantages of sole proprietorship
-Unlimited liability
-Limited sources of funds
-Limited skills
-Lack of continuity
-Lack of qualified employees
-Taxation
What is the least used form of business in the US?
Partnerships
2 types of partnerships
General and Limited
Advantages of Partnerships
-Ease of organization
-Availability of capital and credit
-Combined knowledge and skills
-Decision making
-Regulatory controls
Disadvantages of partnerships
-Unlimited liability
-Responsibilities and conflicts
-Life of the partnership
-Distribution of profits
-Limited sources of funds
Rights of a corporation
Similar to people
-Can own and transfer property
-Can enter into contracts
-Can sue and be sued in court
Who creates corporations?
Incorporators
5 types of corporations
-Domestic
-Foreign
-Alien
-Private
-Public
2 Characteristics of Private corporations
-No stock is sold to the public
-Not required to disclose financial information to the public
2 types of public corporations
-Quasi-public
-Nonprofit
Advantages of corporations
-Limited liabilities
-Ease of transfers of ownership
-Perpetual life
-External sources of funds
-Expansion potential
Disadvantages of corporations
-Double taxation
-Forming a corporation
-Disclosure of information
-Employee-owner separation
3 types of mergers
-Horizontal mergers
-Vertical mergers
-Conglomerate mergers
2 impacts of small businesses in the American economy
-Job creation
-Innovation
5 Industries that attract small businesses
-Retailing
-Wholesaling (Can assist customers with almost every business function)
-Services
-Manufacturing
-Technology
Advantages of a small business
-Independence
-Costs
-Flexibility
-Focus
-Reputation
Disadvantages of small businesses
-High stress level
-High failure rate
-Undercapitalization
-Managerial inexperience or incompetence
-Inability to cope with growth
Challenges with starting a small business
-Underfunded
-Not understanding your competitive niche
-Lack of effective utilization of social media
-Lack of marketing or business plan
-Poor site selection
-Pricing mistakes
-Underestimating time commitment
-Not finding complementary partners to bring in experience
-Not hiring the right employees
-Not understanding legal and ethical responsibilities
Ways to finance a small business
-Owner puts up significant percentage of capital needed
-Equity finances from venture capitalists or personal assets
Ways to debt finance a business
-Loans obtained from banks or the SBA
-Collateral
-Mortgage
-Line of Credit
-Trade credit
-Bartering
Approaches to starting a small business
-Franchising
-Starting from scratch instead of buying an existing business
Advantages of franchises
-Management training and support
-Brand-name appeal
-Standardized quality of goods and services
-National and local advertising programs
-Financial assistance
-Proven products/business formats
-Centralized buying power
-Site selection and territorial power
-Greater chance for success
Disadvantages for franchises
-Franchise fees and profit sharing with franchiser
-Strictadherence to standardized operations
-Restrictions on purchasing
-Limited product line
-Possible market saturation
-Less freedom in business decisions
2 things that help the future of small businesses
-Demographic trends
-Tech and economic trends
How big businesses act small
-Emulating smaller firms to improve their bottom line
-Downsizing
-Intrapreneurs
