Business in Action – Chapter 1 – Developing a Business Mindset

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any profit-seeking organization that provides goods and services designed to satisfy customers’ needs
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business
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money a company brings in through the sale of goods and services
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revenue
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a concise description of how a business intends to generate revenue
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business model
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money left over after all the costs involved in doing business have been deducted from revenue
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profits
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all the costs involved in doing business
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expenses
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Why is competition good?
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* gives customers a wider range of options * tends to increase quality, improve customer service, and lower prices * competition is so vital to the health of the economy that the US government goes to great lengths to preserve competition in virtually all industries (monopolies).
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companies generally have considerable freedom in deciding which customers they want to focus on and how they want to compete
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free-market economy
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some aspect of a product or company that makes it more appealing to target customers
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competitive advantage
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What is the driving force of a business?
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The driving forces behind most businesses are the prospects of earning profits and building assets.
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anything of meaningful, from patents and brand names to real estate and company stock
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assets
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Organizations that provide goods and services without having a profit motive. However, they must operate efficiently and effectively to achieve their goals, and successful nonprofits apply many of the business-management principles you’ll learn in this course.
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non-profit organizations
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Companies that create value by making “things,” most of which are tangible (digital products such as software and music downloads are a notable exception)
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goods-producing businesses
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Companies that create value by performing activities that deliver some benefit to the customer. These businesses tend to be labor-intensive businesses, in that they rely more on human resources than buildings, machinery, and equipment to prosper.
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service businesses
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Over the past few decades, the US economy has undergone a profound transformation from being dominated by manufacturing to being dominated by services. True or False
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True
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What percentage does the service sector now accounts for of nation’s economic output?
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3/4
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What type of businesses account for more than half of the 100 largest US companies?
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service providers EXAMPLE: IBM is well known as a manufacturer of computers and other technological goods, but 60% of the company’s sales revenue now comes from services such as systems design, consulting, product support, and financing.
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These require large amounts of money, equipment, land, and other resources to get started and to operate. The capital needed to compete in these industries is the barrier to entry, a resource or capability a company must have before it can start competing in a given market.
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capital-intensive business
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List some examples of barriers of entry
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* capital needed for startup * government testing and approval * tightly controlled markets * strict licensing procedures * limited supplies of raw materials * need for highly skilled employees
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A view of business that considers the myriad decisions that must be made and the many problems that must be overcome before companies can deliver the products that satisfy customer needs.
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business mindset
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List some examples of how businesses have the potential to contribute to society.
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* Offering valuable goods and services. * Providing employment (US businesses pay out more than $2 trillion in salaries and wages every year) * Paying taxes (US businesses pay roughly a half trillion dollars in taxes every year, money that helps build highways, fund education, further scientific research, enhance public safety and national defense, and support other vital functions of government.) * Contributing to national growth, stability, and security. Beyond the mere dollar of taxes paid, a strong economy helps ensure a strong country.
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List some negative affects businesses can have on society.
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Generating pollution and creating waste Creating health and safety risks Disrupting communities Causing financial instability (The recent credit market collapse demonstrates how a single industry can throw the entire global economy into chaos. In addition, poorly managed companies in any industry can become a liability to society if they are unable to meet their financial obligations and need assistance from the government.)
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Directly or indirectly, virtually every decision a company makes is influence by the economic environment. True or False
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True
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The conditions and forces that (a) affect the cost and availability of goods, services, and labor and (b) thereby shape the behavior of buyers and sellers.
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economic environment
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Within the overall economic environment, every company operates within a market environment composed of which three important groups?
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1. target customers 2. buying influences (that shape the behavior of those customers) — fades in fashion change 3. competitors (other companies that market similar products to those customers)
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laws and regulations at the local, state, national, and even international level
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legal and regulatory environment
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Trends and forces in society at large.
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social environment
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Give an example of social environment.
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One great example of social environmental trends is the so-called Baby Boom generation, a generational ” bulge” in the population made up of people born between 1946 and 1964. This generation has affected business in numerous ways as it has moved through childhood, then into adulthood as consumers and workers, and finally back out of the workforce as the first wave of boomers reach retirement age.
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Technological changes have the potential to change every facet of business, from altering internal processes to creating — or destroying— market opportunities. With recorded music, for instance, digital file technology has adversely affected every aspect of CD album sales, from the chemicals used in the manufacture of blank CDs to retail stores that sell CDs to all the products associated with CDs ( such as CD players and storage cases).
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technological environment
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FUNCTIONAL AREAS IN A BUSINESS ENTERPRISE Functional area responsible for conceiving and designing new products.
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Research and Development
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FUNCTIONAL AREAS IN A BUSINESS ENTERPRISE This area is where the company makes whatever it makes or does whatever it does (for service companies).
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Manufacturing, Production and Operations
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FUNCTIONAL AREAS IN A BUSINESS ENTERPRISE Charged with identifying opportunities in the marketplace, working with R&D to develop the products to address those opportunities, creating branding and advertising strategies to communicate with potential customers, and setting prices; develops relationships with potential customers and persuades customers, transaction by transaction, to buy the company’s goods and services.
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Marketing, Sales, Distribution and Customer Support
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Which aspect of business has been changed most dramatically by recent technological advances?
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Marketing, Sales, Distribution and Customer Support
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List some examples of recent technological advances in marketing, sales, distribution and customer support.
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social media = blogs and user-generated-content sites websites = allows customers to compare prices and read product reviews The result is a profound power shift that puts buyers on much more equal footing with sellers
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FUNCTIONAL AREAS IN A BUSINESS ENTERPRISE Responsible for virtually every aspect of the firm’s finances, including ensuring that the company has the funds it needs to operate, monitoring and controlling how those funds are spent, and drafting reports for company management and outside audiences such as investors and government regulators.
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Finance and Accounting
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FUNCTIONAL AREAS IN A BUSINESS ENTERPRISE Responsible for recruiting, hiring, developing, and supporting employees; usually oversees these processes and supports the other departments as needed; charged with making sure the company is in compliance with laws concerning employee rights and workplace safety.
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Human Resources
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FUNCTIONAL AREAS IN A BUSINESS ENTERPRISE Helps companies with specific needs in accounting, law, banking, real estate, and other areas; these services can be performed by in-house staff, external firms, or a combination of the two.
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Business Services
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CAREERS IN BUSINESS Encompasses all the people and processes used to create the goods and services that a company sells. (May include production engineering, assembly, testing, scheduling, quality assurance, information technology, forecasting, finance, logistics, and customer support.)
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Operations Manager
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CAREERS IN BUSINESS Plan and direct human resource activities that include recruiting, training and development, compensation and benefits, employee and labor relations, and health and safety.
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Human Resource Specialist
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CAREERS IN BUSINESS This role is evolving from a tactical support function to a critical strategic component; design, implement, and maintain systems that help deliver the right information at the right time to the right people in the organization. Jobs in this role typically require a degree in a technical field, but an understanding of business processes, finance, and management is also important — particularly as you progress up through the ranks of IT management. Many managers and executives in this field also have a business degree, although not all companies require one.
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Information Technology Manager
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CAREERS IN BUSINESS Identifying and understanding market opportunities and shaping the product, pricing, and promotional strategies needed to pursue those opportunities.
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Marketing Specialist
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CAREERS IN BUSINESS Responsible for building relationships with customers and helping them make purchase decisions.
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Sales Professional
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CAREERS IN BUSINESS Tasks vary by job and industry, but in general, professionals in this role are responsible for collecting, analyzing, and reporting on financial matters— such as analyzing budgets, assessing the manufacturing costs of new products, and preparing state and federal tax returns.
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Accountant
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CAREERS IN BUSINESS Develops and implements the firm’s financial plan and determines the most appropriate sources and uses of funds
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Financial Manager
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the quality of performing at a high level and conducting oneself with purpose and pride; True professionals who have this exhibit seven distinct traits: striving to excel, being dependable and accountable, being a team player, communicating effectively, demonstrating a sense of etiquette, making ethical decisions, and maintaining a positive outlook.
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professionalism
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One of the tenets of doing business in a competitive business is, “Without ________, there is no reward.” A) risk B) competitive advantage C) profit D) entrepreneurship E) service
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E) service
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All of the following would be potentially negative effects that a business can have on society EXCEPT ________. A) an inability to meet its financial obligations B) laying off workers in an economic downturn C) creating health and safety risks to employees D) generating pollution and causing waste E) paying state and federal taxes
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B) laying off workers in an economic downturn
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________ is the study of how a society uses its scarce resources to produce and distribute goods and services to its citizens. A) Trade-offs B) Economics C) Entrepreneurship D) Allocation E) Productivity
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D) Allocation
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The means by which a society distributes its resources in order to satisfy the needs of its citizens is a(n) ________. A) distribution system. B) supply system. C) opportunistic system. D) economic system. E) sociopolitical system.
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B) supply system
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An economic system where individuals own and operate the majority of businesses with limited economic intervention by the government is characteristic of a ________ economy. A) socialist B) mixed-market C) communist D) planned E) free-market
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A) socialist
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All of the following are disadvantages of sole proprietorships EXCEPT ________. A) single layer of taxation B) unlimited liability C) finite life span D) limited managerial perspective E) resource limitations
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B) unlimited liability
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Roger helps his brother’s small business by contributing money, but he lets his brother take care of the daily operations of the business. and is protected from unlimited liability. Roger is likely a ________. A) general partner B) limited partner C) employee D) sole proprietor E) stockholder
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D) sole proprietor
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Many law firms are established as ________, in which the partners have unlimited liability for their own actions but only limited liability for the partnership as a whole. A) master limited partnerships B) general partnerships C) limited partnerships D) limited liability partnerships E) sole proprietorships
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E) sole proprietorships
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A small business is all but which of the following? A) operated for profit B) demanding of its owner’s time and attention C) often a lifestyle businesses D) independently owned E) dominant in its field of operation
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A) operated for profit
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Three factors contributing to the increased number of small businesses are downsizing/outsourcing, growing diversity in entrepreneurship, and ________. A) technologies such as e-commerce B) lifestyle enterprises C) increased ease in taking a company public D) tax advantages E) new business failure rates
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C) increased ease in taking a company public
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All of the following would be qualities of successful entrepreneurs EXCEPT ________. A) They are highly adaptable in terms of pursuing new opportunities B) They are driven by a passion to succeed C) They thrive in high-risk situations D) They learn from their mistakes and view their failures as opportunities to improve E) They are highly disciplined and willing to make sacrifices to succeed
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D) They learn from their mistakes and view their failures as opportunities to improve
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Managerial roles fall into one of three categories: interpersonal, informational, and ________. A) instructional B) directional C) conceptual D) decisional E) influential
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[answer unknown]
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Establishing organizational goals and determining the best methods for accomplishing those goals would be part of the ________ function of management. A) organizing B) leading C) planning D) analytical E) planning
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C) planning
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A ________ is an outline of the fundamental purposes of the organization – in other words, why the company exists. A) strategic plan B) vision statement C) mission statement D) competitive strategy E) tactical plan
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C) mission statement
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An individual who became a Microsoft Certified Software Engineer has a ________ in certain Microsoft networks and systems. A) absolute advantage B) core competency C) span of management D) comparative advantage E) work specialization
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B) core competency
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A manager in an organization who provides support, advice and specialized services to line managers would likely have a(n) ________ position. A) bureaucratic B) authoritative C) staff D) hierarchical E) directive
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C) staff

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