What is a business? Flashcards
is a persons regular occupation, profession or trade
What is a business?
A person’s occupation, profession or trade.
For - Profit?
Companies like McDonalds and Wendys who sell products for profit.
Non - For Profit
Charities that fundraise money to benefit towards other organizations or companies
Revenue
The money a company brings from its sales of goods and services
Expenses
The payments involved in running a business and the assets that get “used up” operating it.
Profit
The income left after all costs and expenses are paid. To help better your product or you can use it to reinvest and expand your company, or for your personal use
Solvent
When a company is able to pay all of its debts and financial obligations.
Insolvent
When a company cannot afford to to pay off its debts and finical obligations
Channels of Distribution?
Retail, Online, Telephone
Entreprenuer
individuals who are risk takers and problem solvers, aware of things happening in their surroundings and take advantage of it.
Debt Financing
Capital Resource. Borrowing money to start a business.
Equity Financing
Using your money or investor savings to help save money.
Economic Resources (factors of production)
Natural Resource, Human Resource, Capital Resource (any made products / equipment used in business)
Joint Venture
Match the skills or expertise of individuals or businesses to generate both parties. Still separate but help each other.
Mergers
Businesses or companies join together
International Franchisee
A international franchise is a way to achieve an international presence by buying the rights to a chain operation from the franchiser or selling rights to your franchise in another country.
Strategic Alliances
Strategic Alliances occur when two or more business agree to commit particular resources to achieve a common set of objectives. Alliance partners remain separate and entirely independant of each other.
Multinational Corporation
A business enterprise that conducts business in another country or several different countries is a multinational corporation. A multinational corporations offers different health benefits to the country it invests in. Some positive benefits include new jobs and training for people.
Sole Proprietorship
Sole Owner; have full responsibility of the business
Partnership
When two people are running a business; profit is split
Corporation
Perhaps the most advantageous way to start a business because it exits as a separate entity.
Co-operative
Member-owned business structure with at least five members. All whom have equal voting rights regardless of their level of involvement or investment.
Franchise
Owens or “franchisors” sell the rights to their business logo, name, and model to a third party retail outlets, owned by independant, third party operators called “franchisees”, Franchises is an extremely common way of doing business
Economic Systems
Way of dealing with the selection, productions, distribution and consumption of goods and services. Government and business also work together.
Economics
Social Science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants.
Microeconomics
The study of decisions that people and businesses make regarding the allocations of resources and prices of goods and services.
Macroeconomics
Focuses on supply and demand and other forces that determine the price levels seen in the economy.
Demand: As the price of the product increases…
demand for the product decreases.
Demand: As the price of the product decreases…
demand for the product increases.
Factors that affect demand?
Income, Advertising, Substitutes, Compliments, Expectations
Supply: As the price of the product increases…
the supply of that product increases.
Supply: As the price of the product decreases…
the supply of the product decreases.
Factors that affect supply:
Change in productions costs, Natural Conditions, Expectations
Canadian Currency: Individuals
Have to pay more, could be accused
Canadian Currency: Businesses
Lose money, bankrupt can occur, might not be able to get money back, police need to get involved
Canadian Currency: Economy
Lower amount of cash in economy, lower amount of economy in general
Bank of Canada
loss of money, lawsuits
All Canadians
anyone can receive it, increases prices
How to detect front of Canadian Bill?
- Metallic Portrait
- Large Window
- Transparent Text
- Small Numbers
- Maple Leaf Border
- Metallic Building
- Raised Ink
- Hidden Number
- Frosted maple leaf window
How to detect back of Canadian Bill?
- Metallic Portrait
- Small numbers
- Metallic Building
- Maple leaf border
Factors - D
Deficit: the amount of which something, especially a sum of money, is too small.
Factors - S
Surplus: an amount of something left over when requirements have been met; an excess of production or supply over demand.
Domestic Transaction
Selling a product in the same country that it is produced.
International Transaction
Selling a product that was produced in another country.
Global
A global product is a standardized item that is offered in the same format in all countries.
Cheaper Labour
Lower prices as the result of cheap labour in other countries is the number one reason why consumers buy items made in different parts of the world.
Increased Quality of Goods
International business can help producers improve the quality of the products they sell.
Increased Quantity
As long as a product has international appeal, so does the potential for increased sales.
Access to Resources
Connections to international markets provides businesses with the increased access to the three types of economic resources; natural, human and capital
5 p’s of international business
Product, Price, Proximity, Preferences, Promotion
Product for International Business?
A countries resources determine what goods and services it produces. International trade gives consumers and businesses access to products worldwide.
Price for International Business?
The cost of producing goods and services varies from country to country
Proximity for IB?
It may be more advantageous and profitable for some businesses to sell products and services to consumers near a neighbouring countries border rather than to its domestic customers.
Preference for IB?
Consumers often purchase foreign goods and services based on their reputation and specialization, even though similar products are produced domestically.
Promotion for IB?
Technology, especially the internet and social media, makes it easy for the business to promote their products.
Offshore Outsourcing?
The practise of hiring companies with lower labour costs to complete some or all of the steps in the production process
Human Rights and Labour Abuses
Workers in less developed countries can face a wide range of abuses, including; physical and sexual abuse, non - payment of wages, denial of food and health care, excessive working ours with few breaks or days off.
Child Labour
Regular employment of children under the age of 16
Environmental Degradation
The depletion of the earths resources and environments at a faster rate than it can be restored. International businesses contributed to environmental degradation in many ways.
Sustainable Development
Development that allows those to meet their needs in the present, without jeopardizing future generations from meeting their needs.
Comparative Advantages?
The ability to produce something at a lower opportunity cost than a competitor
Absolute Advantages?
The ability of a country to produce a greater quantity of a good, more efficiently than competitors. (producing more of a good when using the same amount of resources)
What is marketing?
Advertising and Promotion, as well as developing, promoting and distributing products, or goods and services to satisfy the customers needs and wants.
4 P’s?
Product (tangible) / Service (intangible) (humans inventions or innovations. Price $$$, Promotion (how will people find out about your product), Place (where will your product be sold)
2 C’s
Customer (makes the purchase), Competition (who is selling almost the same product)
Consumer Profile : Demographics
Age, Gender, Culture, Income
Consumer Profile: Geographics
Where is consumer from? Urban / Suburban
Consumer Profile: Psychographics
Beliefs, Opinions, Interests
Product Life
Introduction, Growth, Maturity, Decline, Decision Point
Fad
A product, service or idea that is extremely popular for a very brief period of time.
Trend
More lasting effect in market
Niche
small part of market
Seasonal
Christmas Trees
Fixed
Costs that stay the same regardless of the amount produced.
Variable
Costs that are determined by the variable number of items produced
Competition
Companies must react to their competitors products
Company Objectives
What type of company you want to be known as
Target Market
Knowing your target market helps figure out how much they will be willing to pay.
Value Pricing
Pricing based on the customers perceived value of the products, not the costs of production.
E.G Technology, clothing, cosmetics
Penetration Pricings
Company starts with a low price to increase sales and market share, then slowly raises its price. Usually a higher quality product.
E.G A new airline starts with a low price and gradually increases
Skimming Prices
Company initially offers a high price to capture (skim) extra profits, then lowers to reach a wider market.
E.G books are first sold in expensive hardcover then a less expensive softcover. New technology - early adopters.
Competition Pricing
Adjusting your pricing based on the price of your competitors. E.G gas stations
Product Line Pricing
Having a range of similar products at different price points.
E.G Mach 3
Premium Pricing
Setting a high price to keep an image of high quality and exclusiveness
E.G high end clothes
Psychological Pricing
Certain pricing can have psychological impact on consumers
E.G $2.99 . 2 for $3.00
Bundle Pricing
Combining products together at a lower price than separate.
E.G phone/internet
Optional Pricing
Selling a base product with many different options that can be added on.
E.G cars, airlines, hotels
Promotional Pricing
Short term pricing to increase sales
E.G NO TAX 30% off
Captive Product Pricing
Companies will charge low price for the initial place but higher prices for the complementary good to go with the initial product.
E.G printer and ink
Ethos
Using celebrities to catch an appealing eye from others
Pathos
Path to hear (emotional / touching)
Logos
Logical appeal
Income Statement: Profit
the increase in owners equity that results from the operation of a successful business
Income Statement: Revenue
Amounts earned from the sale of goods and services during the operation of a business
Income Statement: Expenses
The costs of items used in the operation of the business
Income Statement: Net Income
The difference between revenue and expenses when revenue is greater than expenses
Income Statement: Net Loss
The difference between revenue and expenses when expenses are greater than revenue
To calculate net income or net loss?
Revenue - Expenses = Net Profit/Loss
When writing revenue it goes from?
Greatest to Least, total in the right hand column
If it is Net Loss you?
Put brackets around the number
Assets
Anything a company owns that has dollar value. Cash, equipment, account receivable.
Assets are shown by
Liquidity. “I can pay my cash before being able to pay off my equipment”
Liabilites
Debts owed by an organizations or a person to another organization or person
Accounts Payable
Anything you have to pay to run your business
Accounts Relievable
Profits you can receivable by doing something beneficial
Liabilities (how you see them)
Usually in the order they are to be paid
E.G accounts payable first, mortgage last.
Simple Interest
PiN
P = Principal (initial investment)
i = growth rate
N= number of periods
Compound Interest
FV = P(1 + i) N FV = future value i = Growth Rate n = Number of Periods
FV on an Annuity of $1
FVOA = P((1 + i)N - 1)/i FVOA = Future Value of an Annuity i = Growth Rate n= Period (years)
RESP?
Registered education savings plan
RRSP
Registered retired savings plan
TFSA
Tax Free Savings Account
Stocks
All shares are divided throughout the corporation
Mutual Funds
Investment vehicle made for a pool full of money
GIC’s
Safe and Secure investment with very little risk
ETFS
Exchange Traded Fund
Entrepreneurship
Someone who identifies needs for products or services
3 types of entrepreneurship #1
Craftspeople
60% of small business owners
Derive their sense of self - worth from their mastery of a craft or trade
Generally work alone
Interested in developing personal skill rather than growing revenue
3 types of entrepreneurship #2
Freedom Fighter
30% of a small business
Prime motivator is being in business for themselves
Typically employ 3 - 50 staff
Over 50% are college educated - 30% are women
3 types of entrepreneurship #3
Mountain Climbers 10% of growth oriented business owners Motivated almost solely by achievement Over 75% have college/university degrees Companies are high profile and achieve 30% annual growth
