Business Chapters 1-4 Boone Kurtz – Flashcards
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What is Profit? Do you agree with the statement, "The success of a business is measured only by the profit it earns"? Explain your answer.
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Profit is a financial reward for taking risks in blending people, technology, and information to create and market a desired good or service. Profit attracts investors and encourages owners to stay in the business, although profit is important it is not the only factor defining success in a business. Businesses have the responsibility to maintain proper social and ethical environments. Meaning to be courteous with employees, consumers, and suppliers.
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Describe technology as a capital source.
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Technology can refer to many things for example, machinery and equipment, computers and software, telecommunication, and inventions designed to improve production. An increase in proper communication of information by technology is extremely important in a business, because information needs to be detailed and gets its point across.
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Explain how consumers benefit from business competition.
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Competition forces businesses to create a product that is of higher quality and place an affordable price tag on it. They want to pull in customers from looking at other brand so they are willing to market high quality products at lower prices. This lower price for quality products raises the standard of living, increases demand for product, and creates more jobs for consumers.
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List and describe the four basic rights in the private enterprise system.
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The right to own, sell, rent, and buy private property. The right to fair competition: Allows the public to set rules for competitive activity including law that prohibit cutthroat competition. The right to profit after taxes: After taxes on revenue there will always be profit left for the owner Freedom of choice meaning citizens can choose their own employment, purchases, and investments.
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List the seven eras of business history. Name and Describe each era used by business today.
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Colonial Industrial revolution Age of industrial entrepreneurs the production era the marketing era the relationship era The Social Era is the way businesses interact with individual customers via technology creating communities and sharing information
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Explain the business approach used in the relationship era
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Businesses are using a strategy of making long term relationships with consumers. They seek a way to encourage long term customer loyalty by giving rewards and being personal with the customers. This makes advertising and sales expenses a lot less. Also with these loyal customers we giving feedback on the product which then makes it better and more appealing to the customers
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Explain the difference between transaction management and relationship management.
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Transaction management deals with making a product and hoping that is desirable enough that its sales will cover costs and earn a profit. Relationship management is carefully managing each interaction that the customer has with the business. With good relationship management you can increase revenues and reduce marketing expenses.
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Briefly describe the industrial revolution and its contribution to the evolution of business.
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It shifted from small scale production with individually skilled workers, to large scale production with easy to use machines that made production fast, easy, and uniform.
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Explain how e-business has created a new type of strategic alliance among companies.
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Companies like Amazon.com allows troditional companies to sell and distribute worldwide, which they cannot do on their own
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Describe how the aging population in the United States and abroad directly affect changes in the workforce.
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Employers need to deal with retirement, disability program, retraining, and insurance benefits. Teenagers are also entering the workforce earlier and seniors are staying longer to seek new careers after retiring taking up more non primary careers.
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What are the advantages of a diverse workforce.
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Studies show that a diverse workforce tends to perform tasks more efficiently and develop better solution because of their different ways for problem solving. Also in management they each can understand customer needs differently and create quality relationships.
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Describe offshoring and its related trends.
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Offshoring is the relocation of a business to lower-cost places overseas. For example many companies have offshored production to china and india. Some U.S. businesses even have their whole operation located in China or India providing no jobs in the U.S.
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Explain the new employer-employee relationship in business.
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Good relationships between the employer and employee encourage creative thinking, problem solving, and innovation. Employees through are not expected lifetime loyalty to a single company, they also don't expect the company to be fully loyal to them. Instead they build their own careers however and where ever they can because they have freedom of choice.
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Define the term vision. Why is vision an important skill today?
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Vision is the ability to perceive the marketplace needs and what an organization needs to do to satisfy them. The ability to take a vision and make it reality is extremely important and is a key trait in executives.
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Describe Critical thinking and creativity and explain why they are important qualities for the 21st century manager.
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Critical thinking is the ability to analyze and find problems and opportunities. Critical thinking often analyzes authenticity, accuracy, and worth of information, knowledge, and arguments. It involves looking past the surface for deeper meanings and connections. Creativity is the Capacity to develop proper solutions to organizational problems. In business creativity refers to the ability to see better and different way of doing business that an average thinker could not even imagine. These are important qualities in a 21st century manager because consumers want stuff now and want their stuff to be quality, so when a problem arises that hinders consumers to get their stuff they become frustrated. To have Creativity and Critical thinking equips a manager to take any problem that is slowing his coworkers and solving it, or even creating a solution better than the original procedure.
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What are some examples of external and internal forces that would require a manager to lead organizational change.
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External forces might include feedback from customers, developments in the international marketplace, economic trends, and new technologies. Internal factors might arise from new company goals, emerging employee needs, labor union demands, or production problems.
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Explain how social responsibility differs from business ethics.
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Business ethics refers to the standards of conduct and moral values involving right and wrong decision in a work environment. Social responsibility is the set of actions taken by an organization that leads to social and economic benefits to society as a whole, such as supporting charitable organization and protecting the environment.
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CHAPTER 2
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CHAPTER 2
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What are business ethics and why are they important?
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They are the standard of conduct and moral values that govern actions and decisions in the work environment. They shape the ethical climate of a business, setting the ethical standards for the whole business to follow. The ethics of a business could make or break their profitability and success.
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List and briefly describe the three stages of moral and ethical development.
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The three stages of moral and ethical development are preconventional, conventional, and postconventional. Preconventional: only consider own needs and desires, obey rules because fear the consequences. Conventional: Act in response to their duties to others although self-interest still plays a role Post-Conventional: Moves past individual needs and takes interest in larger needs of society.
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Describe the factors that influence an individual's business ethics.
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Experience, family, education, culture, and religion. As well as the work environment, and the ethical climate of the people at the time.
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Describe examples of honesty and integrity violations in the workforce.
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When applications alter their resumes to seem more appealing to the employer. Stealing supplies from the workplace and using business time for personal activities. (Misuse of the internet) These actions can cost businesses up to $85 billion every year.
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How could loyalty verses truth create an ethical dilemma for a business person
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Employees can be loyal to their business, but if they witness an act of dodging taxes, they are stuck with the decision to be a whistleblower or stay silent for the "benefit" of the firm.
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Explain how state and federal laws protect whistle blowers.
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The Sarbanes Oxley-Act protects whistleblowers from punishment from their employers, as well as threats. Private firms must also provide an anonymous reporting platform. The False Claims Act also allows employees to go to the government and file a lawsuit if they believe their business has defrauded the government.
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What might a company's code of conduct include?
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Code of conduct specifies ground rules for acceptable and unacceptable behaviour in the work force. It can also be used to point our core values that firms what their employees to maintain.
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The development of a corporate culture to support business ethics happens on four levels. Explain each of four levels.
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The four levels are ethical awareness, ethical education, ethical action, and ethical leadership. Ethical awareness is the foundation of ethical climate. Ethical education is where employees are shown common ethical problem and how to cope with them. Ethical action is the procedures that firms establish to help their employees keep ethical behaviour. Ethical leadership the expectation that every employee will lead with ethics in the business environment
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Why is ethical leadership so important?
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With supervisors and managers acting with ethical leadership the employees can look to them and see an example of what is expected of them. Often employees will mimic the behaviour of their leading officers so that is why having ethical leaders is so important.
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Explain social responsibility.
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The responsibility of management to accept and consider profit, consumer satisfaction, and societal well-being of all this is a big factor in evaluating the firm's performance.
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What is a social audit? Who conducts it?
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A procedure that evaluates a company's activities related to social issues such as conversation, employment practices, environmental practices, environment protection, and philanthropy. The audit examines how the company is performing in those social categories.
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What is green marketing?
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A strategy that promotes environmentally friendly products and production. The Federal Trade Commission (FTC) issues guidelines for products and production to be considered green.
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What are the objectives of the consumerism?
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Consumerism refers to public demand that businesses consider when catering to the wants and needs of consumers. It is also the belief that consumers have four basic rights, the right to safety, right to be informed, right to choose, and the right to be heard.
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Explain product liability and briefly describe what this means in terms of social responsibility.
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Product liability refers to the responsibility that manufacturers for injuries and damages caused by their products. Ensuring that their product is safe for the public is the company's social responsibility that they aren't lying or selling an unsafe product.
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Explain how the food and drug administration (FDA) promotes the consumers' right to be informed.
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They issue rules and guidelines that give rules to drug companies like to spell out potential side effects and proper uses. Also when advertising drugs you must provide a free easy way for consumers to learn about the product and its uses.
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Why do investors expect a firm to act ethically can exhibit social responsibility?
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Because investors are giving their money to a company and they not only expect them to turn over profits, but to act ethically and legally so they do not damage their stock prices through social audits, or illegal activities.
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Explain how state and federal agencies carry out their responsibilities of protecting investors from financial misdeeds. Include examples of specific organizations and agencies.
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The Securities and Exchange Commission (SEC) is responsible to investigate suspicions of unethical or illegal behaviour by public firms. They investigate if firms are inaccurately portray their financial resources and profits to investors. Regulation FD (Fair Disclosure) is a SEC rule that requires public companies to accurately and truthfully announce major information and finances.
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CHAPTER 3
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CHAPTER 3
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What are economics? Why is understanding economics important in one's life?
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Economics is a social science that analyzes choices or individuals and organizations in allocating scarce resources. Economics affects everything and everyone, it will affect your everyday life, and understanding it allows you to anticipate changes and cope with them.
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Differentiate between macroeconomics and microeconomics. What types of economic activities might be included in each category?
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Macroeconomics deal with a country's overall economic issues, While microeconomics is concerned with the economic activities of individual consumers, families, and business. Microeconomics might also include economic policies of individual nations and the ways those individuals change the overall economy.
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Describe what drives demand.
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Demand is driven by how people spend their money and what the price of a product is as well as its quality. It can also be driven by consumer preferences or even economic circumstance.
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List the factors that should cause a demand curve to shift to the right.
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An increase in consumer preferences, increase in buyers, increase in buyer income, increase in prices of generic goods, a decrease in complementary goods.
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List the factors that should cause a supply curve to the left.
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increase in cost of inputs an increase in the cost of tech an increase in taxes a decrease in number of suppliers
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Describe how changes in household income affect demand.
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With a higher income consumers are willing to spend more and then demand more. While with a lower income consumers often spent less and demand less Everything basically suffers from a lower household income.
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List the four factors of production and provide example of each factor.
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Natural Resources: Lumber, minerals, water Human Resources: Employees labor and intellectual Capital: Tech. Tools, infomation, buildings Entrepreneurship: The willingness to take risk in business to pursue profits
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Describe how worker incentives vary in each of the four economic systems.
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Capitalist system: to motivate people to perform at their highest levels Communist system: Few incentives but are being introduced Socialist economy: incentives are limited in state enterprises, but are better in private sectors Mixed Economy: incentives operate more in a private sector.
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Define pure competition.
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Pure competition is like in the fishing industry it is one homogenous product where no single participant has an influence on the price. The price varies with the supply and demand. It is easy to enter and leave this market because no one can dominate and choke others out.
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Describe the major differences between socialism and a mixed economic system.
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Socialism the government owns industries considered vital, like energy, transportation, and manufacturing. Allowing limited private businesses which are considered non-essential. In a mixed economy private businesses play a big and main role in the economy. Incentives are larger because with more private businesses more heterogenous products can be sold giving owners control over the pricing.
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List and describe each of the four stages of the business cycle.
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Prosperity: Unemployment is low, consumers are confident making more purchases supporting the economy and employment Recession: A period marked after 6 months when consumers have been prioritizing basic purchases over expensive purchases. Businesses slow production, encounter limited sales, laying off employees Depression: Is when a recession gets worse and just continues Recovery: When consumer spending picks ups reviving the economy out of recession. Unemployment declines as activity increases. Soon the recession and depression mindset leaves and spending increases.
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Distinguish between demand pull inflation and cost push inflation.
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Demand-Pull is caused by an increase in the demand for a good or service. Example higher incomes higher housing costs Cost-Push inflation is cause by the increase in the cost of factors of production. Example more expensive airline tickets because of rising place gas prices
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Describe the relationship between productivity and Gross Domestic Product.
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Productivity has become what measures a nation's economic strength. GDP measure the economic strength measuring goods and services made within a countries boundaries.
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Four categories of unemployment are?
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Frictional unemployment: Temporarily out of work but looking Seasonal Unemployment: Joblessness due to seasonal industries Cyclical unemployment: people out of work due to the cyclical contraction of the economy Structural unemployment: People unemployed for a long time with small chances to find new ones
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What is the monetary policy? What government agency controls monetary policy? Describe actions that are used to influence economic activity.
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Monetary policy is when the government will either increase or decrease money supply to change banking requirement to give out loans, and to change interest rates. A restrictive mp is when money supply is lowered to curb rising prices and slow rapid economic growth While an expansionary mp encourages entrepreneurs to take risks in investments and make profits to increase economic growth. The Federal Reserve controls it
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Briefly describe budget deficit, budget surplus, and balance budget, and how the terms relate to government finances.
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A budget deficit is when the government spends more than they tax so they are in debt A budget surplus is when a government taxes more than they spend creating a surplus of money. A balanced budget is when taxes and spending equal each other for the predicted year.
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List four challenges to maintain global competitiveness.
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Water supply crisis, chronic fiscal imbalances rising greenhouse gases, and mismanagement of population aging.
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CHAPTER 4
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CHAPTER 4
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What have U.S. firms become increasingly focused on international business?
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Our domestic market has been opened up to foreign firms, and Americans really like the imported products. therefore domestic businesses are seeing foreign markets as new opportunities where they are create more revenue. Also internationally some products can be produced cheaper allowing for more profit per product sold.
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Explain how population size or a country's status of developed versus developing do not always indicate economic prosperity.
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Developing countries need products to develop so they are competitively trading and selling, creating a higher GPD. While countries like the U.S. who are developed, may be able to produce a lot, but are not as engaged in trade a developing countries are.
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Distinguish between absolute advantage and comparative advantage. Provide examples.
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Absolute advantage: is when a country can make a product and maintain it at monopoly, or produce the product at a lower cost compared to any competitor. (China and silk) Comparative advantage occurs when a country can supply a product more efficiently and at lower prices than is can supply other goods, compared to the outputs of other countries. All countries have a comparative advantage. (China and textiles)
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Explain the concept of floating exchange rates, Identify factors that influence foreign exchange rates.
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Influenced by domestic economics, and political conditions, central bank intervention, balance of payments position, and speculation over future currency. Supply and demand for currency many factors contribute in to floating exchange rate, that is why they are floating, everything changes their values it can go up and down, but if needed the government can intervene
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Define Balance of trade and its relation to budget deficit and budget surplus.
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balance of trade is the difference between imports and exports. If imports are higher than there is often a budget deficit. If exports are higher there is often a budget surplus.
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Identify and describe the major types of obstacles confronting international trade.
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Cultural barriers, physical barriers, and tariffs. Cultural language, religion, social, and buying habit differences Tariff are taxes on imported goods, meaning your exported goods will have taxes on them making them more expensive in other countries, making it so that foreign companies are at a competitive disadvantage. want you to support your domestic economy. Physical barriers are often terrain, distance, location, and transportation barriers that physically stop products from being exported or imported.
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Explain the advantages and disadvantages of imposing trade restrictions.
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They limit consumers choices, but make foreign good more expensive. They protect your domestic economy from unfair international competition.
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Explain exchange control.
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You must buy the corresponding currency to the product you want to import. Foreign currencies you get from exporting you must then sell back to central banks to get your currency, and they regulate the currencies.
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Discuss why the WTO has been the object of controversy in the recent years. What concerns have been expressed.
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Lowering trade barriers allows foreign businesses cheaper and easier access into international market. This would lower country's powers to be able to put foreign businesses at a competitive disadvantage, and they could overrun smaller domestic businesses. Also developing nations need their low labor cost advantages and the WTO would try and pass stricter labor laws taking their only advantage away.
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Explain the differences between the World Bank and the International monetary fund.
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World bank was formed to lend money to less developed nations. IMF was created to promote trade by eliminating trade barriers and promoting trade. They make short term loan helping troubled nations in the last second.
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Describe the role the the European Union.
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Promote economic and social progress. Create a national european citizenship, in order to create a borderless europe free of trade barrier among members. Involves standardizing business regulations, and requirements, standardizing import duties and taxes, and eliminating custom checks among members.
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Identify three important decisions a business must make before deciding to go global.
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Which foreign markets to enter. Analyzing expenditures required to enter new market Best way to organize an overseas operation.
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Define offset agreement and describe how it might be beneficial to a small firm.
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Offset agreement matches a small business with a major international firm. making the smaller firm a subcontractor of the larger firm. The small firm can benefit from the larger international international presence, and the larger firm can benefit from the small local expertise.
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Define countertrade, and explain why this form of international trade is a viable option for certain nations.
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When a foreign currency may be unobtainable, or yours too little of value to purchase the other currency, you can trade local products for their foreign products.
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Describe three contractual agreements firms can enter into when going global.
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Franchising: can produce and sell a company's products under their brand name. Foreign licensing: A firm allows another firm to sell and produce their product Subcontracting: Hiring local companies to produce, distribute, or sell goods and services in a specific country or region.
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Distinguish between a global strategy and a multidomestic strategy for marketing goods in others nations.
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Global strategy is selling a product the same way you are selling and marketing it in a domestic fashion as you are in international markets. Multidomestic strategy is marketing and selling goods in a way that caters to the culture and people in the international market you are engaged in business with.
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Describe the Chinese term guanxi. What are some advantages and disadvantages of foreign business people to practice guanxi when conducting business in China?
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The word for relationship, making business connections, and creating loyalty with companies and officials. It is partnerships through loyalty, it is sometimes considered similar to bribery.
