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Business

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All profit-seeking activities and enterprises that provide goods and services necessary to an economic system.

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Profits

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Rewards for businesspeople who take the risks involved in blending people, technology, and information to create and market want-satisfying goods and services.

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Not-for-profit organizations

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Establishments that have primary objectives other than returning profits to their owners. Included are all government agencies as well as private-sector nonprofits like trade organizations, charitable and religious organizations, and private educational institutions.

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Factors of production

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The basic inputs for a successful operation. The four basic inputs include natural resources, capital, human resources, and entrepreneurship.

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Natural resources

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Inputs that are useful in their natural states, including land, forests, and minerals.

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Capital

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Technology, tools, information, facilities, machines, and equipment.

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Human resources

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Anyone who works, including physical and intellectual labor.

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Entrepreneurship

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The willingness to take risks to create and operate a business.

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Capitalism

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Capitalism is another name for the Private Enterprise System. Capitalism minimizes government interference in economic activity and rewards businesses for their ability to perceive and serve the needs of customers.

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Competitive differentiation

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The unique combination of organizational abilities, products, and approaches that sets a company apart from competitors in the minds of consumers.

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Basic rights in the private enterprise system

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There are four basic rights. The first and most fundamental is the right to private property: the right to own, use, buy, sell, and bequeath most forms of tangible and intangible property. The second is the business owners' right to after-tax profit. The third is the freedom of choice in employment, purchases, and investment. The fourth basic right is the right to fair competition: allowing the public to set rules for competitive activity.

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The entrepreneurship alternative

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Entrepreneurs are risk takers who recognize marketplace opportunities and use their skill and capital to seize and profit from those opportunities. The entrepreneurial spirit fuels growth of the U.S. economy and supports innovation.

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The colonial period

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Prior to 1776, our economy was rural and agricultural, and relied on England for manufactured items and for the financing needed to develop.

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Industrial revolution

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Beginning around 1750, the industrial revolution saw mass production by semiskilled workers, aided by machines.

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The age of the industrial entrepreneur

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The early 1900s was an era of industrial entrepreneurship. Inventors created virtually an endless array of commercially useful products and new production methods that created new demand for manufacturing goods and raised the overall standard of living.

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The production era

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Through the 1920s, focus was on the internal process of producing more goods faster, such as the assembly line. Little attention was paid to consumer wants.

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The marketing era

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Beginning with the Great Depression of the early 1930s, firms could no longer easily sell goods produced. Focus shifted to the wants and needs of the market. After World War II, demand for all kinds of consumer goods exploded, as did competition between firms.

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The relationship era

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Businesses in the 21st century have been using information technology to build long-term relationships with customers and nurture customer loyalty. The results are higher revenues and lower costs.

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Relationship management

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The collection of activities that build and maintain ongoing, mutually beneficial ties with customers and others parties. It involves gathering knowledge of customer needs and preferences, and applying that understanding to get as close to customers as possible.

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Technology

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The activities of relationship management are based on technology: the business application of knowledge based on scientific discoveries, inventions, and innovations, often in the form of communication via Internet.

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Partnership

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An affiliation of two or more companies the help each other achieve common goals.

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Strategic alliances

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A form of partnership between organizations formed to create a competitive advantage for the businesses involved.

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Changes in the workforce

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Companies face several trends that challenge their skills for managing and developing human resources. These challenges include an aging population, a shrinking labor pool, growing diversity of the workforce, changing nature of work, the need for flexibility and mobility, and the use of collaboration to innovate.

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Diversity

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Blending individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities. Diversity can enhance the firm's chances of success. Diverse teams tend to perform tasks more efficiently and develop better solutions to business problems.

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Outsourcing

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Using outside vendors to produce goods or fulfill services and functions that were previously handled in-house

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Offshoring

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The relocation of business to lower-cost locations overseas.

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Vision

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The ability to perceive marketplace needs and what an organization must do to satisfy them.

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Critical thinking

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The ability to analyze and assess information to find problems or opportunities.

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Creativity

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The capacity to develop novel solutions to organizational challenges.

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Ability to steer change

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Technology, marketplace demands, and global competition bring many changes. Managers must be aware of both internal and external causes for change, and they must be good at helping the organization and its people adapt and move towards common goals.

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What makes a company admired?

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Solid profits, stable growth, a safe and challenging work environment, high-quality products, along with business ethics and social responsibility all contribute to a company's reputation and long-term success or failure.

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Business ethics

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The standard of conduct and moral values involved in distinguishing right from wrong actions in the work environment.

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Social responsibility

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Management philosophy that includes contributing resources to the community, preserving the natural environment, and developing or participating in nonprofit programs designed to promote the well-being of the general public

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List the basic rights guaranteed to the public in the private enterprise system

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a. private property b. profit c. freedom of choice d. fair competition

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List the four factors of production in the private enterprise system

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a. natural resources b. human resources c. capital d. entrepreneurship

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The economics system that rewards firms for their ability to perceive and serve the needs and demand of consumers is called the

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capitalism

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_________ is a form of business ownership in which the company is operated by two or more people who are co-owners by voluntary legal agreement.

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partnership

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A name, term, sign, symbol, design, or some combination that identifies the product of one firm and differentiates it from competitors' offerings is known as

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brand

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The battle among businesses vying for consumer acceptance is known as

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competition

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__________________________is the unique combination of organizational abilities and approaches that sets a firm apart from competitors in the minds of consumers.

answer

competitive differentiation

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In the marketing era of business development, firms adopted a ____________, which means they find out what customers want and need and then design products to meet those needs.

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consumer orientation

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In capitalism, also known as the __________________________, success or failure depends on how well firms can perceive and meet customer needs and wants.

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private enterprise system

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__________________________is the process of creating an identity for a good, service, or company that is readily recognized by the firm's intended market.

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branding

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The profit-seeking activities that produce the goods and services needed by society are collectively called__________________________.

answer

business

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Firms engaged in __________________________ hire outside firms who are specialists to perform operations that were formally handled by the company's own employees.

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outsourcing

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__________________________ is the term used to describe the business application of knowledge based on science, inventions, and innovation.

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technology

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The __________________________ is the business era in which firms seek ways to build long-term relationships with customers by managing every interaction.

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relationship era

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__________________________ is the managerial quality of being able to perceive marketplace needs and what an organization must do to satisfy them.

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vision

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Outsourcing production or services to locations near a firm's home base is called __________________________.

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nearshoring

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_________________________ are long-term partnerships of firms designed to improve overall competitiveness.

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strategic alliances

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_________________________ is the relocation of business processes to lower-cost locations overseas.

answer

offshoring

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The four basic inputs for effective operation are collectively known as __________________________, which includes natural resources, capital, human resources, and entrepreneurship

answer

factors of production

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Risk takers who initiate economic activity in the private enterprise system are known as_________________________.

answer

entrepreneurs

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The _________________________ of the U.S. workforce enhances innovation, creativity, and sensitivity to the multicultural marketplace by blending individuals of different genders, ethnic backgrounds, cultures, religions, ages, and physical and mental abilities.

answer

diversity

question

_________________________ include all public sector government agencies as well as many private sector organizations such as labor unions, museums, and religious organizations.

answer

not-for-profit organizations

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_________________________ is the collection of activities that build and maintain ongoing, mutually beneficial ties with customers and other parties.

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relationship management

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Before the 1990s, businesses tended to rely on _________________________. This approach focused on current sales and profits instead of thinking about the future benefits of creating long-term customers.

answer

transaction management

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_________________________ is the capacity to develop novel solutions to perceived organizational problems and to see better and different ways of doing business.

answer

creativity

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_________________________ skills include the ability to analyze information and assess its authenticity, accuracy, and worth; to evaluate arguments; and to identify crucial issues and solutions.

answer

critical thinking

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In the private enterprise system, businesses are the primary providers of the goods and services needed by society.

answer

True

question

Business and not-for-profit organizations both have as their primary objective the return of profits to the owners.

answer

False

question

While religious and charitable organizations are not-for-profits, government agencies are not.

answer

False

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Only profit-seeking organizations face competition.

answer

False

question

These are product inputs that are useful in their natural states:

answer

Natural resources

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Production inputs consisting of technology, tools, information, and physical facilities are called:

answer

capital

question

Production inputs consisting of anyone who works, including both physical and intellectual labor are called:

answer

Human resources

question

The willingness to take risks to create and operate business is known as:

answer

entrepreneurship.

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Over the long run, competition ensures that organizations who provide superior customer satisfaction will be more successful than those who do not.

answer

True

question

People who take the risks of pursuing a business opportunity are called entrepreneurs.

answer

True

question

Profits are both the reward and the incentive for risk taking.

answer

True

question

Entrepreneurship does not require taking risks

answer

False

question

The right to private property is not a requirement of the private enterprise system.

answer

False

question

Freedom of choice means that firms will have the right to compete fairly.

answer

False

question

Fair competition is a basic right required under the private enterprise system.

answer

True

question

The colonial era was characterized by a factory system and the growth of large cities.

answer

False

question

The production era focused on mass production while increasing the productivity of manufacturing processes.

answer

True

question

In the marketing era, firms produced a product, and marketing was simply selling that product.

answer

True

question

The relationship era is driven by information technology that allows firms to form long-term relationships with customers.

answer

True

question

The sales era, which entailed overcoming customer resistance, was a result of the Great Depression.

answer

True

question

Carnegie, Vanderbilt, and McCormick are examples of industrial entrepreneurs.

answer

True

question

A partnership formed to create competitive advantage for the businesses involved is called a:

answer

strategic alliance

question

Managing technology means:

answer

a. using technology to provide new goods and services for customers. b. using technology to improve customer service while lowering prices. c. being aware of new questions about business ethics and social responsibility. d. all of the above.

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Management philosophy that includes preserving the natural environment is known as:

answer

social responsibility.

question

More and more firms are relocating business operations to lower cost locations overseas.

answer

True

question

Outsourcing refers to the increased globalization of business.

answer

True

question

Experts predict a decline in the number of older adult workers in the coming years.

answer

False

question

In the future, businesses will need to focus less on diversity and more on a homogeneous workforce.

answer

False

question

Diverse workteams are more effective and provide more solutions than non-diverse workteams.

answer

True

question

Name and define the four most important qualities that will be required of managers in today's organizations.

answer

1. Vision: Seeing market place needs and methods an organization can use to satisfy them. 2. Critical thinking skills: the ability to analyze and assess information in order to pinpoint problems or opportunities. It involves the ability to look beneath the surface and determine the authenticity, accuracy, and worth of information, knowledge and arguments. 3. Creativity: the capacity to develop novel solutions and to see new and better ways of doing things. 4. Ability to steer change: the skill of recognizing employee strengths and motivating people to adapt to the changes brought about by technology, marketplace demands, and global competitiveness.

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The standards of conduct and moral values that admired companies practice are known as:

answer

business ethics.

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The call for greater social responsibility among admired business means:

answer

management should consider the social and economic effects of management decisions.

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Failure to behave ethically:

answer

a. can be costly in the long-run. b. can spoil a company's image. c. will damage efforts to build long-term customer relationships. d. all of the above.

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Admired companies generate stable profits, which is defined as:

answer

the difference between receipts and expenditures.

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Employees in an admired company work in an environment they find to be

answer

challenging.

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A simplistic definition of business would be: All profit-seeking activities and enterprises that provide products and services needed or desired in an economic system.

answer

True

question

The majority of businesses in the United States are owned by the government.

answer

False

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Each factor of production generates a financial return.

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False

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The factor payment for the use of capital is profit

answer

False

question

The most basic freedom under the free enterprise system is the right to private property.

answer

True

question

The industrial revolution involved mass production, the specialization of labor, and the development of machines and the railroads.

answer

True

question

Even today, marketing is synonymous with selling.

answer

False

question

Studies indicate that diverse employee teams and workforces tend to be less effective and creative than groups made up of people who are all alike.

answer

False

question

In the 21st century, managers will have to find the best way to connect people, technology, and ethics to form strong partnerships with customers, employees, and other organizations.

answer

True

question

Managers can expect the rate of change to slow in the future.

answer

False

question

The marketing era introduced the idea that a firm should identify and satisfy consumer wants and needs.

answer

True

question

Government agencies, public schools, and labor unions are all good examples of organizations in the not-for-profit sector of the U.S. economy.

answer

True

question

The Wealth of Nations was written by:

answer

Adam Smith.

question

A capitalist economic system could also be called:

answer

a private enterprise system.

question

The factor payment that rewards entrepreneurship is:

answer

profit.

question

The U.S. workforce in the 21st century can be expected to:

answer

require greater skill and flexibility.

question

An entrepreneur is defined as a(n):

answer

risk taker.

question

Laws that prohibit price discrimination and deceptive advertising practices are included in the right to:

answer

fair competition.

question

The right of the risk taker to retain his or her after-tax earnings is the right to:

answer

profits.

question

In the free enterprise system, the individual's right to select a career is one example of:

answer

freedom of choice.

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Which of the following is NOT one of the factors of production?

answer

wages

question

The "invisible hand of competition" refers to:

answer

the way competition in a market economy produces high quality and low prices.

question

The history department at your college requires that each student enrolled in History 201 give a five-minute oral presentation. Tamar Seigel decides to give her presentation on the history of business in the United States. To cover the time span from the colonial society to the current business era, she decides to mention two important aspects of each stage of development. Tamar has not had a business course, and she asks you to be her "expert consultant." List two main aspects she should include for each era. The colonial society

answer

The colonial society a. Mainly agricultural. b. The United States was importing manufactured products from England.

question

The Industrial Revolution.

answer

a. Rapid construction and expansion of the railroad system. b. Large scale production with rail transportation as means for wide distribution.

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The age of industrial entrepreneurs.

answer

a. Advances in technology and increased demand for manufactured goods. b. Individuals began to act as risk takers, starting their own businesses.

question

The production era.

answer

a. Emphasis on producing more goods faster. b. Focus on internal processes such as assembly-line production.

question

The marketing era.

answer

a. The competitive business environment brought the need for identifying and satisfying target markets. b. Growth in advertising, market and consumer research.

question

The relationship era.

answer

a. Focus shifts to establishing long term relationships with customers, suppliers, and to building partnerships and strategic alliances to further competitive differentiation. b. Reliance on information technology to develop long-term relationships and sustain customer satisfaction.

question

Define the four basic rights awarded to citizens living in a private enterprise economy. How important are these rights?

answer

The four basic rights awarded to citizens living in a private enterprise system are private property, profit, freedom of choice and fair competition. The right to private property is the right to own and use property, and is a primary motivation for hard work in the private enterprise economics. The right to profit means that an entrepreneur can expect to keep after tax profits earned by taking a business risk. This is both the incentive and reward to taking the risk in the first place. The right to freedom of choice means people in a free enterprise system can select careers, change jobs, and even open their own businesses. It also means that they will generally have a choice between competing producers when they want to make a purchase. Likewise, they will have many choices of investment opportunities, including owning all or part of a business. Finally, people living in a private enterprise system can expect that competition should be fair. The U.S. government, for example, has passed laws that outlaw price discrimination, fraud in financial markets, and deceptive practices in advertising and packaging. The intent of such laws is to eliminate "cutthroat" competition that might harm consumers, the competitive environment, and the natural environment.

question

What is relationship management, and how can it enhance business prospects?

answer

In the 1990s business moved from transaction management to relationship management. Relationship management makes use of information technology, partnerships, and strategic alliances to build and sustain long-term relationships with customers, suppliers, and other outside groups. Relationship management also depends increasingly on a talented, diverse workforce to serve and understand the multicultural global market.Contributions and creativity of workers is crucial, so new employee-employer partnerships have arisen to develop and retain better relationships with customers and other outside groups. Finally, management must engage in ethical business practices and consider social responsibilities to the wider society to assure the firm's long-term success.

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