unit 2 Flashcards
What is a business?
Business is the satisfaction of consumers’ needs and wants through the production of goods and the providing of goods and/or services in the marketplace.
What is an expense?
Costs involved in running a business
What is revenue?
The money a business receives from the goods/services it sells
What is profit?
Income that is left over after all expenses are paid. Revenue - Expenses = Profit or loss
What is a non-profit organization?
-Don’t seek to make money from operations of the business and raises money for a goal (ex. cancer research)
-Examples are charities and charitable organizations
What is a not for profit organization?
-Don’t seek to make money from operations of the business
-Examples are Hospitals, universities, and school boards
What is an SMB?
An SMB is a small or medium business. They employ less then 500 people
How do consumers influence demand?
Consumers determine what products will be successful, and also determine which ones will fail. Over time, goods can become obsolete (ex. Typewriter) and people will no longer want them.
How do consumers influence price?
People want cheap items. They will buy from the cheapest seller. Consumers will go to the cheapest seller, so businesses compete for the lowest price. This creates competition.
What is competition?
Where two or more businesses sell the same type of product/service
What is a marketplace?
Where businesses and consumers come together to engage in the buying and selling of goods and services
-Ex. Amazon, mall, farmer’s market
What are wants and needs?
-Needs are things that are basic for human survival (food, basic clothes, shelter)
-Wants are things that are not necessary for human survival (ex. designer clothes, gourmet food, mansions)
What are economic resources and the 3 types?
- The means through which goods & services are made available to consumers (aka Factors of Production
The three types are:
-Natural Resources: things that come from the earth, water and air (ex. crops, fish, animals),
-Human Resources: the people who work to create the goods and services.
-Capital Resources: things like buildings, equipment, tools, trucks and factories. Require a substantial investment and
What is Elastic demand?
Elastic demand means that when the price changes, so will the quantity demanded (ex. if a slice of pizza became more expensive, people will buy less, and the opposite is true as well)
What is inelastic demand?
Inelastic demand is when price change has no effect on the quantity demanded. (ex. when gas prices went up, people still bought the same amount of gas)
What is the Law of Demand?
Consumers will buy more as price decreases
Consumers will buy less as the price increases
What are the 4 conditions that create demand?
- Consumers being aware of the good/service (can be achieved with advertising)
- Ample Supply of the good/service
- Good prices
- Good location
What are the 4 factors that can increase or decrease demand?
- Changing consumer income
- Changing consumer tastes
- Changing expectations for the future:
- Changes in population.
What is the Law of Supply?
The amount of goods/services that businesses can provide within a price range that consumers would be willing to pay.
What are the 3 conditions that affect supply?
1.The cost of producing the good/service.
2.The price consumers are willing to pay.
3.Supplying the good/service – THEN market it. (Can be risky.)
What are the 4 factors that can increase or decrease supply?
1. Changes in the number of producers:
2. Changes in price:
3. Changes in technology:
4. Changing expectation for the future:
What are the 4 types of Business Ownership?
- Sole proprietorship
- Partnership
- Corporation (private and public)
- Franchises
What is a sole proprietorship?
A business owned by one person.
Advantages: you get all profits, get to be your own boss and easy to start up.
Disadvantages: Owner may not be familiar with all aspects of the business, to get
financing is difficult, unlimited liability (you’re responsible for all losses and can possibly loose your home and other assets.
What is a partnership?
A business operated by 2+ individuals
Advantages: more financing available, shared responsibilities among owners
Disadvantages: Unlimited liability, partner disagreements
What is a corporation?
A business owned by shareholders. They get 1 vote per share.
Advantages: Limited liability (Shareholders cannot be held legally responsible for the debts of the corporation), transfer of ownership is simple
Disadvantages: Timely & costly setup, people who only have a few shares don’t have a lot of influence on how the company is run
What are the two types of corporations?
Private:
-Only a few people control the shares
-Shares are not listed for sale on the stock exchange
Public:
-Raises money by making shares available to thousands of people through selling them on the stock market
What is a franchise?
A very popular hybrid type of ownership.
Advantages:
-Brand recognition
-Shared marketing
-Corporate training and support
Disadvantages:
-Must pay a hefty franchise fee, which can be from thousands - millions
-Have to pay a monthly fee to franchisor
-You have to buy supplies only from franchisor.
What are the 5 P’s of International Business?
Product: ex. Canada wheat, Morocco dates, USA oranges
Price: The cost of producing a particular good/service varies from one country to another.
Proximity/Place: A business should be close to it’s market.
Preference: Many consumers prefer to buy foreign specialties.
Example: Belgian Chocolates, Swiss watches, Australian wines
Promotion: Letting the market know about your product/service.
Example: Billboards, Radio & TV commercials
What are the 4 costs of international trade?
- Offshore outsourcing
- Human rights issues and labor abuses
- Child labor
- Environmental degradation
What is offshore outsourcing?
Hiring service providers from countries where labor costs are lower to complete some or all of the steps in the production process.
What are human right issues and labor abuses?
Workers in poor countries may face:
*Labour Exploitation
*Forced Confinement
*Non-payment of Wages
*Denial of Food, Health Care
*Excessive Working Hours
What is child labor?
Regular employment for boys and girls under the age of 16. (Indonesia)
What is environmental degradation?
This occurs when nature’s resources such as trees, habitat, earth, water and air are being consumed faster that nature can replenish them.
What are the 5 barriers to International Trade?
- Tariff Barrier (Custom Duties): An effort by a country to protect it’s domestic industry by increasing the cost of imported goods.
- Non- Tariffs barrier: Standards for the quality of imported goods that are set so high, foreign competitors can not enter the market.
- Costs of Importing & Exporting: Ex. shipping costs
- Excise tax: a tax on the manufacture, sale, or consumption of a particular product. Example: Gas
- Currency Fluctuations: The strength of two countries currencies based on the economic strength in relation to each other.
What is Global dependency?
This exists when customers in one country begin to demand items that are created in another country.
What is an import?
goods and services that flow into a country
What is a export?
goods and services that flow out of a country
Examples of imported and exported goods?
These include: raw materials, processed materials, semi-finished goods, manufactured products (that can be put for sale)
What is Balance of Trade?
The relationship between a country’s total imports and exports
What is a trade deficit?
a country pays more for imports than it earns from exports
What is a trade surplus?
a country earns more from exports than it pays for imports
How do you offset risks?
- Do your research – make sure there is a market for your good or service.
- Choose foreign suppliers with care.
- Learn about the culture your are dealing with.
- International Contracts – make sure you know what you are signing.
- When the goods arrive, make sure everything you ordered is there.
What is culture?
the sum of a country`s way of life, beliefs, and customs. It influences how things are bought and sold.
What is fraud?
deceiving someone for personal gain
What is embezzlement?
employee steals money from the company
What is discrimination?
not hiring a person for reason’s such as-race, religion, disability
What are environmental violations?
ignoring laws and regulations related to the environment
What is an accounting scandal?
those in the business who alter the financial records of that business
*Often to make it look more profitable than it really is
What is insider trading?
Illegal buying or selling of shares of a company based on confidential information that isn’t available to the public
*Not easy to detect
*Regulators use sophisticated computer programs to search for abnormal patterns of sale of stocks
*Monitored by Provincial Securities Commissions
What is whistle blowing?
The decision of an employee to inform officials or the public about a legal or ethical violation of the business
What are CSR principles?
Companies believe: Important for businesses to be socially responsible to their employees, customers & communities
What are the the 5 CSR principles?
- Providing a safe and healthy work environment:
-Ontario, the Occupational Health and Safety Act (OHSA) is set up to ensure workplace safety and health
-Defines the rights and responsibilities of workers
-Business could invest in employee wellness by offering on-site daycare or fitness facilities - Adopting fair labor policies:
-Employees are not singled out or treated differently because of race, religion, gender or sexual orientation
-Protect employees from harassment
-Could pay more than minimum wage and offer flexible hours
Fair trade:
-The practice of helping producers in developing countries bypass expensive middlemen so they can sell their goods in countries for a fair profit
-Fair trade goods tend to cost a little more
-Consumers know that they are not exploiting poor farmers in distant countries
-Products such as coffee, tea, rice, bananas, cocoa, sugar, honey and fruit juices
- Protecting the environment
-Help fund environmental programs in their community
-Become more environmentally responsible themselves - Being truthful in advertising
-Ensure that their advertising does not contain inaccurate or deceptive claims, statements or illustrations - Donating to charity:
Host an event and donate proceeds to charitable causes in the community (Scotiabank Toronto Waterfront Marathon)
-Make it easy for employees to contribute to charities through their payroll plan (United Way)
