Business Test - Flashcards

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Industry

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Segment of economy. Provides service to customes. Economic activity

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Business

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Individuals or organizations trying to earn profit that satisfy peoples needs.

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Entreprenuer

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Risk wealth, time, and effort to develop an innovative product or service with the hope of great profit

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Product

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Good or service with tangible and intangible characteristics that provides satisfaction and benefits

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Profit

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Difference between what it costs to make and the sell the product and what a customer pays for it

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Stakeholders

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Stake in the success and outcomes of a business

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Activities of business

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Management, Marketing, Finance

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Management

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Focus on employees. Production and Manufacturing

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Marketing

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Focus on satisfying peoples needs

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Finance

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Primary responsibility of owners for using money more efficiently

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Economics

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Distribution of resources for the production of goods and services within a social system

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Macroeconomics

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Concentrates on the operation of a nations economy as a whole

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Microeconomics

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Behaviors within organizations

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Resources

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Natural Resources (land, forests, minerals) Human Resources (labor) Financial resources (capital)

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Factors of Production

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Natural, human, and financial resources used to produce goods and services

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Economic Systems

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How a society distributes its resources to produce goods and services

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Communism

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An economic and political system in which the government makes almost all economic decisions and owns all the major factors of production. Consumers choice of goods and services is narrow. Government determines the supply and what is produced

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Socialism

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Government owns and operates basic industries but individuals own must business.

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Modified Capitalism

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Government intervenes with industries when needed

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Capitalism

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Individuals own and operate majority of businesses providing goods and services

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Pure Capitalism

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Less government regulations that modified capitalism. Free Market

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Mixed Economies

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No country practices pure capitalism or pure socialism/communism. Most economic systems exists in mixed forms

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Demand

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Number of goods and services consumers buy at a given price or time

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Supply

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Number of products business will sell

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Economic Cycles

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Inflation Recession Depression Unemployment

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Consumer Price Index (CPI)

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Monthly statistics that measures inflation or deflation

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Gross Domestic Product (GDP)

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Total value of final goods and services produced in a country in a given year

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Business Ethics

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Principles and standards that determine acceptable conduct in business

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Code of Ethics

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Formalized rules and standards that describe what a company expects of its employees

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Sarbanes Oxley Act (SOX)

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Stiffened penalties for corporate fraud and securities fraud

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Social Responsibility

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Business obligation to maximize its positive impact and minimize its negative impact of society

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Corporate Social Responsibility

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The extent to which businesses meet the legal, ethical, economic and voluntary responsibilities placed on them by their stakeholders

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International Business

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Buying, selling, and trading across national boundaries

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Global Marketing

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Requires balancing global brands with the needs of local consumers

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Why Nations Trade

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Acquisitions of raw materials and goods at favorable prices

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Absolute Advantage

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A monopoly that exists when a country is the only source of an item, the only producer of an item, or a natural resource so it can be sustained

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Comparative Advantage

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Basis of the most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items

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Outsourcing

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Transferring

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Exports

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Sale to foreign markets

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Importing

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Foreign sources

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Balance of Trade

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Difference in the value between what a nation exports and imports

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Infrastructure

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Physical facilities support economic activities with include railroads, highways, ports

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Import Tariff

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Tax levied by a nation on goods imported into the country

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Quota

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A restriction on the number of units of a particular product that can be imported into a country

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Embargo

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A prohibition on trade for a product

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Dumping

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Act as a country/business selling products at less than what it costs to produce

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World Trade Organization

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International organization dealing with the rules of trade between nations

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General Agreement on Tariff (GATT)

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Replaced by the World Trade Organization

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World Bank

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Nations to loan money to underdeveloped and developing countries

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International Monetary Funds

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Eliminating trade barriers Fostering financial cooperation Producing short loans to member countries Functioning as a world central bank

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Multinational Strategy

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Customizing products, promotion, and distribution according to cultural technological, regional, and national differences

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Global Strategy

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Standardizing products

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Sole Proprietorship

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Business owned and operated by 1 individual most common form of business in the US

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Advantages of Sole Proprietorship

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Ease cost of formation Little government regulation Taxation Secrecy Distribution/Use of products

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Disadvantages of Sole Proprietorship

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Unlimited liability Limited skills Lack of qualified employees Taxation

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Partnership

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2 or more persons who carry on as co-owners

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General Partnerships

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Management & Liability

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Limited Partnership

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1 general partnership, who assumes unlimited liability, and at least 1 limited partner whose liability is limited to his/her investment in the business

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Limited Liability

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means the liability for the debts of the business is limited to the amount the limited partner puts into the company. personal assets are not at risk

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Articles of Partnership

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legal documents that set fourth the basic agreement between partners

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Disadvantages of Partnerships

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Unlimited liability Taxation of partnerships

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Corporations

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legal entities created by the state whose assets & liabilities are separate from its owners. typically owned by stockholders/shareholders

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Articles of Incorporation

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legal documents fixed with basic information about the business with the appropriate state of office (often secretary of state)

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S Corporations

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Unique government creation that looks like a corporation but it is taxed like sole partnerships

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The Business Plan objectives

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Explanations of the business Analysis of competition Income/Expense estimates Secure a loan

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Venture Capitalists

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Provide funding for a new business exchange ownership interest or stock

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The Business PLan

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Step-by-step explanation of how it will achieve its goals. a must for a financial institution to loan you money

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Management

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Achieve an organizations objectives, using resources effectively and efficiently

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What managers do

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Utilizations of resources- achieve objectives Planning Organizing Staffing Directing Controlling

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The Importance of Management

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Resource acquisition and coordination Resources: People Raw Materials Equipment Money Information

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Mission

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Organizations purpose and philosophy

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Organizational Structure

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The arrangement or relationships of positions within an organization

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Organizational Culture

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Firms shared values, beliefs, and traditions, philosophies, rules, role models, for behavior developed over time

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Operations Management

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Transforming resources into goods and services

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Inputs

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Labor, materials, energy converted to outputs

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Outputs

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Goal of output to be worth more than the cost of inputs

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The debt ceiling is the maximum amount Congress lets the government borrow.

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True

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The sum of all the money borrowed over the years and not yet repaid is the total fiscal debt.

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False; Federal debt

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The debt ceiling is the maximum amount Congress lets the government lend to the public.

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False; the maximum amount Congress lets the government borrow.

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The 12 Federal Reserve Banks are regional banks, privately owned by the member commercial banks in their individual districts.

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True

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The federal government does not own the Federal Reserve Bank.

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True; the locals own the Federal Reserve Banks

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The Federal Reserve does not regulate banks; only state regulatory agencies perform this function.

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False; The federal Reserve does regulate banks

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State governments are actually the owners of the Federal Reserve Banks.

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False; Federal Reserve Banks are owned by the member commercial banks in their individual districts.

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The Federal Reserve provides banking services to member banks and is the central bank of the U.S.

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True

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The Fed is headed by a 50-member Board of Governors

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False; Headed by a 12-member Board of Governors.

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The Federal Reserve Bank is in charge of both fiscal and monetary policy.

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False; Just monetary

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The economy, as a system, represents the:

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Flow of resources from production through consumption.

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In the broadest sense, economics studies the choices that:

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People, governments, and companies make in allocating resources.

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From the business perspective, a key reason to study economics is to:

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Gain a better understanding of past business choices in order to make better future decisions.

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A ________ is targeted to borrowers with low credit scores, high debt-to-income ratios, or signs of a reduced ability to repay the money they borrow.

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Subprime mortgage loan

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Economics is divided into two core areas of study known as:

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Macroeconomics and microeconomics

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A core goal for successful businesses to deliver value to customers while generating long-term profits.

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True

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Value is the relationship between the price of carpet cleaning, for example, and the benefit that the service offers to the customer.

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True

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Business drives up the standard of living for people worldwide, contributing to a higher quality of life.

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True

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During the Industrial Revolution, the production process shifted from skilled artisans working in small workshops to semiskilled workers employed in huge factories.

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True

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Henry Ford's focus on producing a consistent and quality product represented a shift from the production era to the relationship era.

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False; Marketing era to the relationship era

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When providing products and services, the primary goal of nonprofit organizations is to ensure community interests are addressed.

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True

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Factors of production are the resources a business needs to achieve its objectives.

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True

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Human resources is a factor that includes the physical, intellectual, and creative contributions of everyone who works within an economy.

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True

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Speedtomarket is the rate at which a company's competitors copy its new product innovations.

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False; Introducing a product in the market as soon as possible.

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Its more important for a firm to launch a new product before its competitors do, than for the products to meet the needs of customers.

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False; Meet the needs of customers so that you don't make a product and have it not sell, therefore, spending money instead of profiting.

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