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Intro to business > Test 1 > Flashcards

Test 1 Flashcards

1
Q

What is revenue?

A

the total amount of money a business takes in during a given period by selling goods and services

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2
Q

What is standard of living?

A

The amount of goods and services people can buy with the money they have

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3
Q

What is profit?

A

Amount of money a business earns above and beyond what it spends for salaries and other expenses

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4
Q

What is quality of life?

A

The general well-being of a society in terms of its political freedom, natural environment, education, health care, etc. that add to the satisfaction and joy that other goods and services provide

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5
Q

What is risk?

A

The chance an entrepreneur takes of losing time and money on a business that may not prove profitable

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6
Q

How is risk related to profit?

A

With big risks can come big profits, but also major loss

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7
Q

What is a stakeholder?

A

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

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8
Q

What is outsourcing?

A

Contracting with other companies (often in other countries) to do some functions of a firm, like production or accounting

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9
Q

What is insourcing?

A

the assignment of a project to a person or department within a company

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10
Q

What are some advantages of working for other people?

A

Job security, access to resources and benefits, collaboration and networking opportunities, structured environment and guidance

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11
Q

What benefits do you lose by being an entrepreneur?

A

Freedom to fail, no paid vacations, and no health insurance

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12
Q

What benefits do you gain by being an entrepreneur?

A

Freedom to succeed, make own decisions, and possible wealth

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13
Q

What are the five factors of production?

A

Land, Labor, capital, entrepreneurship, and knowledge

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14
Q

Which factors of production seem to be the most important for creating wealth?

A

Entrepreneurship and knowledge

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15
Q

What are four ways the government can foster entrepreneurship?

A

allowing private ownership of businesses, minimizing interference with the free exchange of goods and services, passing laws that enable business people to write enforceable contracts, and establishing a currency that’s tradeable in world markets

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16
Q

What is Effectiveness?

A

The degree to which something is successful in producing a desired result

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17
Q

What is efficiency?

A

The ability to achieve maximum productivity with minimum wasted effort or expense

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18
Q

What is productivity?

A

The amount of output you generate given the amount of input (for example, hours worked)

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19
Q

What is empowerment?

A

Giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests

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20
Q

What are some of the major issues affecting the economy today?

A

War and terrorism

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21
Q

What major factor caused people to move from farming to manufacturing and from manufacturing to the service sector?

A

Technology and industrialization

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22
Q

What does the future look like for tomorrow’s college graduates?

A

Information and technology based global economy

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23
Q

What is macroeconomics?

A

The part of economics study that looks at the operation of a nation’s economy as a whole

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24
Q

What is microeconomics?

A

The part of economics study that looks at the behavior of people and organizations in particular markets

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25
Q

What does Adam Smith’s term “invisible Hand” mean?

A

The process that turns self-directed gain into social and economic benefits for all

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26
Q

What is better for an economy than teaching a man to fish?

A

Teach a man to start a business

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27
Q

How does the “invisible hand” create wealth for a country?

A

As people improve their own situation in life, they help the economy prosper through the production of goods, services, ideas, and charitable donations

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28
Q

What are four basic rights that people have under free-market capitalism?

A

The right to own private property, the right to own a business and keep all that business’s profit, the right to freedom of competition, the right to freedom of choice

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29
Q

How do business people know what to produce and in what quantity?

A

Consumers send signals about what they like and how they like it, and price tells companies how much of a product they should produce

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30
Q

How are prices determined?

A

By buyers and sellers negotiating in the marketplace, if the seller lowers the price, quantity demanded likely to increase

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31
Q

What are four degrees of competition, and what are some examples of each?

A

Perfect Competition ex. farmers market, Monopolistic competition ex. fast food restaurant, Oligopoly ex. Airline industry, and Monopoly ex. local utility provider

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32
Q

What led to the emergence of socialism?

A

the social and economic upheavals of the Industrial Revolution, critique of capitalist exploitation, and the rise of political movements advocating for workers’ rights

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33
Q

What are benefits of socialism?

A

Free education, health care, child care, and generous sick leave as well as shorter work weeks

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34
Q

What are drawbacks of socialism?

A

Few incentives for businesspeople to take risks, brain drain, and fewer inventions and less innovation

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35
Q

What countries still practice communism?

A

China, Cuba, Vietnam, and North Korea

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36
Q

What are the characteristics of a mixed economy?

A

Coexistence of private and public sectors, as well as government enacting laws and regulations to protect consumers, workers, and the environment

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37
Q

Name the three economic indicators and describe how well the US is doing based on each indicator

A

GDP, Gross Output, and Unemployment Rate.

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38
Q

What is a recession?

A

Two or more consecutive quarters of decline in the GDP

39
Q

What is a depression?

A

A severe recession, usually accompanied by deflation

40
Q

How does the government manage the economy using fiscal policy?

A

by increasing or decreasing taxes or government spending

41
Q

What does monetary policy mean?

A

The management of the money supply and interest rates by the Federal Reserve Bank

42
Q

What organization is responsible for monetary policy?

A

Federal Reserve

43
Q

What are two of the main arguments favoring the
expansion of U.S. businesses into global markets?

A

Importing and exporting

44
Q

What is comparative advantage, and what are some
examples of this concept at work in the United States?

A

A country should sell to other countries those products that it produces most efficiently and buy from other countries those products that it cannot produce as effectively or efficiently

45
Q

What is balance of trade and how is it determined?

A

Total value of a nation’s exports compared to its imports over a particular period

46
Q

What is balance of payments and how is it determined?

A

The difference between money coming into a country (exports) and money leaving the country (imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment

47
Q

What is meant by the term dumping in global trade?

A

Selling products in a foreign country at lower prices than those charged in the producing country

48
Q

What are the advantages to a firm of using
licensing as a method of entry in global markets?

A

Gaining revenues it wouldn’t have otherwise generated, and spending little or no money to produce or market their products

49
Q

What are the disadvantages to a firm of using licensing as a method of entry in global markets?

A

Potential loss of control over the brand and product quality and the risk of creating competitors

50
Q

What services are usually provided by an export-
trading company?

A

Help companies with indirect exporting by negotiating and establishing trading relationships

51
Q

What is a joint venture

A

A partnership in which two or more companies join to undertake a major project

52
Q

What is a strategic alliance?

A

A long-term partnership between two or more companies established to help each company build competitive market advantages

53
Q

What makes a company a multinational corporation?

A

An organization that manufactures and markets products in many different countries and has multinational stock ownership and management

54
Q

What are four major hurdles to successful global
trade?

A

Social structures, religion, manners and customs, and language

55
Q

What does ethnocentricity mean, and how can it
affect global success?

A

An attitude that your own culture is superior to other cultures

56
Q

How would a low value of the dollar affect U.S.
exports?

A

foreign goods become more expensive

57
Q

What does the Foreign Corrupt Practices Act
prohibit?

A

Bribing foreign officials

58
Q

What are the advantages of
trade protectionism and of tariffs?

A

Trade protectionism- Allows domestic producers to survive, grow, and produce Tariffs- raise money for government

59
Q

What are the disadvantages of
trade protectionism and of tariffs?

A

Trade protectionism- A limit on the number of products in certain categories that a nation can import, tariffs- import taxes

60
Q

What is the primary purpose of the WTO?

A

Oversee cross-border trade issues and global business practices

61
Q

What is the key objective of a common market like
the European Union?

A

to have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange

62
Q

What are the major threats to doing business in
global markets?

A

cultural differences, political risks, and economic challenges

63
Q

What are the two primary concerns associated
with offshore outsourcing?

A

Quality issues and job losses

64
Q

What is ethics?

A

Standards of moral behavior; behavior accepted by society as right versus wrong

65
Q

What is legality?

A

quality of being in accordance with the law

66
Q

When faced with ethical dilemmas, what questions can you ask yourself that might help you make ethical decisions?

A
  1. Is my proposed action legal?
  2. Is it balanced?
  3. How will it make me feel about myself?
67
Q

What are compliance-based ethics codes?

A

Emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers

68
Q

What are integrity-based ethics codes?

A

Define the organization’s guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees

69
Q

What are the six steps to follow in establishing an effective ethics program in a business?

A
  1. Top management must adopt and unconditionally support an explicit corporate code of conduct.
  2. Employees must understand that senior management expects all employees to act ethically.
  3. Managers and others must be trained to consider the ethical implications of all business decisions.
  4. An ethics office must be set up with which employees can communicate anonymously.
  5. Involve outsiders such as suppliers, subcontractors, distributors, and customers.
  6. The ethics code must be enforced with timely action if any rules are broken.
70
Q

What is corporate social responsibility, and how does it
relate to each of a business’s major stakeholders?

A

A business’s concern for the welfare of society, companies with good ethical reputations attract and retain better employees, draw more customers, and enjoy greater employee loyalty

71
Q

What is a social audit, and what kinds of activities does it
monitor?

A

A systematic evaluation of an organization’s progress toward implementing socially responsible and responsive programs. social, economic, and environmental practices

72
Q

How are U.S. businesses demanding socially responsible behavior from their international suppliers?

A

By implementing regulations like the Foreign Corrupt Practices Act, the inter-american Convention against Corruption, and the UN condemnation of corporate bribery

73
Q

Why is it unlikely that there will be a single set of international rules governing multinational companies
soon?

A

The complexity of international law, diverse economic interests, Political will and cooperation

74
Q

Advantages of Sole Proprietorship

A

Easy to start, complete control over the business, tax advantages

75
Q

Disadvantages of sole proprietorship

A

Unlimited liability, limited lifespan, lack of expertise, and limited capital

76
Q

What are general partners?

A

individuals who manage a partnership and have unlimited liability for the debts and obligations of the business and share equal responsibility

77
Q

What are limited Partners?

A

individuals who invest capital into a partnership but have limited liability, they typically do not participate in the day-to-day operations of the business

78
Q

Advantages of partnerships

A

pooling of resources and shared responsibility

79
Q

Disadvantages of partnerships

A

disagreements between partners and shared liability, which makes each partner responsible for the actions of the others

80
Q

What is a C corporation?

A

a legal structure for a corporation in which the owners or shareholders are taxed separately from the entity

81
Q

What is a S corporation?

A

a special type of corporation that meets specific internal revenue code requirements, allowing it to pass income directly to shareholders and avoid double taxation

82
Q

What are limited liability companies (LLC)?

A

a specific type of business structure that provides its owners with protection from debts and liabilities of the business, protecting their personal assets

83
Q

Advantages of corporations

A

Economic growth, limited liability, access to capital, and perpetual life

84
Q

disadvantages of corporations

A

The complexity of the structure, the potential of double taxation, and accountability and transparency challenges

85
Q

What are three types of corporate mergers?

A

Horizontal, vertical, and conglomerate.

86
Q

What is a horizontal merger?

A

when two companies in the same industry and are at the same stage of production combine. Ex. T-mobile and sprint

87
Q

What is a vertical merger?

A

between companies at different stages of the production process within the same industry. Ex. eBay and PayPal

88
Q

What is a conglomerate merger?

A

involve companies that operate in completely different industries. Ex. Amazon and Whole Foods

89
Q

What is the role of leveraged buyouts and taking a firm private?

A

enable the acquiring firm to gain control over the target company while minimizing the initial capital outlay, and taking a firm private can allow greater operational flexibility and improve the efficiency and profitability of the acquired company

90
Q

Advantages of franchises

A

brand recognition, support and training, and economies of scale

91
Q

Disadvantages of franchises

A

Initial costs, ongoing fees, limited control, and brand reputation risks

92
Q

What are the opportunities for diversity in franchising?

A

Increased innovation, improved market reach, and enhanced bran reputation

93
Q

What are the challenges of global franchising?

A

maintaining consistent quality and service across different locations and building strong relationships

94
Q

What is the role of cooperatives?

A

they promote economic efficiency, enhancing social connections, and supporting ethical practices

Intro to business (1 decks)

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