Business Essentials Chapt. 1 – Flashcards
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Primary Goal of Businesses
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To earn profit or offer service by creating products or services
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Products
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Tangible Goods, Services, and Ideas
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Types of Business
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Commercial Enterprise and Social Enterprise
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Commercial Enterprise
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For-Profit
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Social Enterprise
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Non-Profit
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Interested Parties?
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Stakeholders & Customers
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Stakeholders
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A group that have a stake in the success and outcome 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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Involves coordinating employees actions to achieve the firm's goals, organizing people to work effectively, and motivating them to achieve the company's goals (Employees)(Economy)
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Marketing
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The focus of all marketing activities is satisfying customers. Includes all the activities designed to provide goods and services that satisfy the consumer needs and wants (Consumers)(Information technology & Legal,Political, and regulatory Forces)
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Finance
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Primary responsibility of the owners to provide financial resources for the operation of business (Owners) (Competition & Social Responsibility and Ethics)
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Economy/Economics
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The study of how resources are distributed for the production of goods and services within a social system (Resources, Distributed, Production)
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Types of Resources:
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Natural, Human, and Financial
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Natural Resources
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Land, Forests, Minerals, Water, and Other things NOT MADE BY PEOPLE
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Human Resources
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Physical and Mental abilities that people can use to produce goods and services (LABOR)
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Financial Resources
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Funds used to acquire the natural and human resources needed to provide products (CAPITAL)
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Communism -Business Ownership -Competition -Profits -Product Availability and Price -Employment Options
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People (Govt.) own all. -Majority of Businesses owned by Govt. -No Competition -Profits go to Govt. -Limited choice in product, quantity, and high prices -Limited to no choice
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Socialism -Business Ownership -Competition -Profits -Product Availability and Price -Employment Options
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Govt. owns some businesses but People own Most -Govt. owns major industries and people own small businesses -Restricted to Major industries; Encouraged in People owned businesses -Based on Ownership -Some variation on Choice and Services; Prices determined by supply and demand -Some Career choice; Most work for Govt.
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Capitalism (Free Enterprise System) -Business Ownership -Competition -Profits -Product Availability and Price -Employment Options
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Individuals own and operate all businesses -Individuals own and operate the majority -Encouraged by Market and Govt. regulations -Profits go to business owner -Wide variety; Prices based off Supply and Demand -Unlimited Career Choices
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Free-Market System
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All Economic Decisions are made without Govt.
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Mixed Economy
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An Economic System that pulls from various other systems
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Free Enterprise System requirements
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-Own and Pass Property to Heirs -Earn Profits and Use Them Freely* -Make Decisions on Business Operations* -Choose Career, Places to Live, Purchases, Etc. *With Govt. regulatory and Lawful Boundaries
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Supply
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Number of products that businesses are willing to sell (at different prices at a specific time)
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Demand
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Number of products that consumers are willing to buy (at different prices at different times)
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Equilibrium Price
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Number of products that consumers are willing to buy (at a specific point in time)
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Competition
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The rivalry among businesses for consumers dollars (vital element in free enterprise)
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Pure Competition
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(Best) Many small businesses selling one standardized product
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Monopolistic Competition
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Fewer business competing and products may differ in nature and use
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Oligopoly
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Very few businesses selling all products
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Monopoly
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One business providing a product in a given market
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Economic Expasion
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Economy is growing and people are spending more money
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Economic Contraction
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When spending declines and business cut back product as well as lay off workers
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Inflation
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A continuing rise in prices
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Recession
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A decline in production, employment, and income
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Unemployment
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Percentage of population that want to work but are unable to find jobs
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Depression
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Unemployment is high, consumer spending is low, and business output is sharply reduced
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Gross Domestic Products (GDP)
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The sum of all goods and services produced in a country in a year
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Budget Deficit
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A nation spends more than it takes in from taxes
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Agricultural Economy
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Everything was man-made and self produced
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Manufacturing Economy
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Manufactured goods and provided services
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Marketing Economy
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Consumers determine what goods and services are produced
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Service Economy
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Devoted to buying services that make life easier
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Entrepreneur
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An individual who risks his/her wealth, time, and effort to develop a innovative product or method (for profit)
