Slides 2 (recap) Flashcards
What is a business?
An organization or individual that seeks a profit by providing products that satisfy people’s needs.
Define a product.
A good, service, or idea that has both tangible and intangible characteristics that provide satisfaction and benefits.
What is profit?
The difference between what it costs to make and sell a product and what a customer pays for it.
Define economics.
The study of how resources are distributed for the production of goods and services within a social system.
What are stakeholders?
Groups that have a stake in the success and outcomes of a business, including customers, employees, investors, and government regulators.
Who are the main participants in business?
Owners, employees, and customers.
What activities are involved in management?
Planning, organizing, and controlling the tasks required to carry out the work of the company.
What does marketing refer to?
Activities designed to provide goods and services that satisfy customers, including research, product development, promotion, pricing, and distribution.
What does finance refer to?
Activities concerned with funding a business and using its funds effectively.
What are the four types of economic systems?
- Communism
- Socialism
- Capitalism
- Mixed economies
Describe communism.
A society where the people own all the nation’s resources, aiming for efficiency and equity but often resulting in low living standards and critical shortages.
What characterizes socialism?
The government owns and operates basic industries, while individuals own most businesses, promoting equal distribution of income and social services.
Define capitalism.
An economic system where individuals own and operate the majority of businesses, with competition, supply, and demand determining outcomes.
What is the difference between pure capitalism and modified capitalism?
Pure capitalism has no government intervention, while modified capitalism involves some government regulation.
What is demand?
The number of goods and services that consumers are willing to buy at different prices at a specific time.
What is supply?
The number of goods or services that businesses are willing to sell at different prices at a specific time.
What is the equilibrium price?
The price at which the supply of a product equals demand at a specific point in time.
What is competition in business?
The rivalry among businesses to convince consumers to buy goods or services.
What are the four types of competitive environments in a free-enterprise system?
- Pure competition
- Monopolistic competition
- Oligopoly
- Monopoly
Describe pure competition.
Exists when there are many small businesses selling one standardized product, where no one business can influence the product’s price.
What is monopolistic competition?
Exists when there are fewer businesses than in pure competition, with small differences among the goods sold.
What is an oligopoly?
Exists when there are very few businesses selling a product, allowing each to have control over its price.
Define monopoly.
Exists when there is only one business providing a product in a given market, often regulated by the government.
What is economic expansion?
When an economy is growing and people are spending more money, stimulating production and employment.
What is inflation?
A condition characterized by a continuing rise in prices, which can reduce buying power if incomes do not increase at the same pace.
What is economic contraction?
A slowdown of the economy characterized by a decline in spending, production, and employment.
What is a recession?
A decline in production, employment, and income, often accompanied by rising unemployment.
How is unemployment measured?
As the percentage of the population that wants to work but is unable to find jobs.
What is a recession?
A decline in production, employment, and income.
What condition is characterized by rising unemployment levels?
Recession.
What is deflation?
A condition where prices are forced downward due to stifled demand for goods and services.
What can a severe recession turn into?
Depression.
What are the characteristics of a depression?
Very high unemployment, low consumer spending, and sharply reduced business output.
What is GDP?
Gross Domestic Product, the sum of all goods and services produced in a country during a year.
What is a budget deficit?
When a nation spends more than it takes in from taxes.
What role do entrepreneurs play in the economy?
They risk their time, wealth, and efforts to develop new goods, services, and ideas.
Define business firms.
Organizations engaged in making a product or providing a service for a profit.
What does society refer to in this context?
Human beings and the social structures they collectively create.
What does systems theory help us understand?
How business and society form an interactive social system.
What is the shareholder theory of the firm?
The firm is seen as the property of its owners, aiming to maximize long-term market value.
What is the purpose of the firm according to stakeholder theory?
To create value for all of its stakeholders.
List the three core arguments for stakeholder theory.
- Descriptive argument
- Instrumental argument
- Normative argument
What is a market stakeholder?
Those engaged in economic transactions with the company.
What is a nonmarket stakeholder?
People and groups who are affected by or can affect a firm’s actions without engaging in direct economic exchange.
True or False: Nonmarket stakeholders are less important than market stakeholders.
False.
Who are examples of nonmarket stakeholders?
- The community
- Government
- NGOs
- Business support groups
- Competitors
- The general public
What is the relationship between business and society?
They form an interactive social system influencing each other.
What do managers need to understand to manage interdependencies effectively?
Their company’s key relationships and how the social and economic system affects their decisions.
Fill in the blank: The firm is seen as the property of its owners in the _______ theory.
[shareholder]
Fill in the blank: The sum of all goods and services produced in a country during a year is known as _______.
[GDP]
Fill in the blank: When a nation spends more than it takes in from taxes, it has a _______.
[budget deficit]
What is the role of nonmarket stakeholders in a firm’s success?
Interactions with nonmarket stakeholders can be critical to a firm’s success or failure.
What are internal stakeholders?
Internal stakeholders are those, such as employees and managers, who are employed by the firm.
What distinguishes external stakeholders from internal stakeholders?
External stakeholders are not directly employed by the firm, although they may have important transactions with it.
How is a business firm and its stakeholders best visualized?
As an interconnected network.
What is stakeholder analysis?
The process of identifying relevant stakeholders and understanding their interests and power.
What is the focal organization in stakeholder analysis?
The organization from whose perspective the analysis is conducted.
What is the first step of a stakeholder analysis?
Managers of the focal organization must identify the issue.
What needs to be understood about each stakeholder during stakeholder analysis?
The nature of their interests, power, legitimacy, and links with one another.
What do shareholders expect in exchange for their investment?
Dividends and capital appreciation.
What are customers most interested in when purchasing goods and services?
Gaining fair value and quality.
What do suppliers wish to achieve in their relationships with businesses?
Profitable orders, efficient capacity use, and stable relationships.
What do employees seek in exchange for their time and effort?
Fair compensation and opportunities to develop job skills.
What type of power do stakeholders have when they can cast a vote?
Voting power.
What is economic power in the context of stakeholders?
The ability to withhold supplies or refuse to buy products.
What kind of power do governments exercise through legislation?
Political power.
What is legal power for stakeholders?
The ability to sue a company for damages.
What is informational power?
Access to valuable data and the ability to bring information to the attention of decision-makers.
How can stakeholder coalitions change over time?
They are not static and can become more or less involved based on various issues.
What is a stakeholder map?
A visual representation of the relationships among stakeholder interests, power, and coalitions.
What is the external environment of business described as?
Dynamic and ever-changing.
What are some broad forces that shape the relationship between business and society?
- Changing societal expectations
- Growing emphasis on ethical reasoning
- Globalization
- Evolving government regulations
- Dynamic natural environment
- Explosion of new technology and innovation
What do modern businesses seek to balance in their operations?
Social, legal, and economic obligations.
What challenge do businesses face regarding new public issues?
They require action and must balance the needs of multiple stakeholders.
How does globalization affect businesses today?
It creates an increasingly integrated world economy.
What is a significant challenge posed by rapid technological innovation?
Managing privacy, security, and intellectual property issues.
What is one of the most dramatic and powerful forces affecting business and society?
Technology
Technology influences various aspects of both business operations and societal norms.
What do technological innovations pose for businesses and government?
Massive challenges
These challenges include managing privacy, security, and intellectual property issues.
Corporate strategy must address the expectations of which group?
All the company’s stakeholders
Stakeholders include employees, customers, investors, and the community.
Fill in the blank: The explosion of new technology and innovation has led to _______.
massive challenges
These challenges require careful management and strategic planning.
True or False: Technology has no impact on privacy and security issues.
False
Technology significantly impacts privacy and security, creating new challenges.
What must businesses do to deal effectively with changes in technology?
Address the expectations of stakeholders
This requires adapting corporate strategies to the evolving technological landscape.
