Business Test

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Industry
Segment of economy. Provides service to customes. Economic activity
Business
Individuals or organizations trying to earn profit that satisfy peoples needs.
Entreprenuer
Risk wealth, time, and effort to develop an innovative product or service with the hope of great profit
Product
Good or service with tangible and intangible characteristics that provides satisfaction and benefits
Profit
Difference between what it costs to make and the sell the product and what a customer pays for it
Stakeholders
Stake in the success and outcomes of a business
Activities of business
Management, Marketing, Finance
Management
Focus on employees. Production and Manufacturing
Marketing
Focus on satisfying peoples needs
Finance
Primary responsibility of owners for using money more efficiently
Economics
Distribution of resources for the production of goods and services within a social system
Macroeconomics
Concentrates on the operation of a nations economy as a whole
Microeconomics
Behaviors within organizations
Resources
Natural Resources (land, forests, minerals)
Human Resources (labor)
Financial resources (capital)
Factors of Production
Natural, human, and financial resources used to produce goods and services
Economic Systems
How a society distributes its resources to produce goods and services
Communism
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
Socialism
Government owns and operates basic industries but individuals own must business.
Modified Capitalism
Government intervenes with industries when needed
Capitalism
Individuals own and operate majority of businesses providing goods and services
Pure Capitalism
Less government regulations that modified capitalism. Free Market
Mixed Economies
No country practices pure capitalism or pure socialism/communism. Most economic systems exists in mixed forms
Demand
Number of goods and services consumers buy at a given price or time
Supply
Number of products business will sell
Economic Cycles
Inflation Recession Depression Unemployment
Consumer Price Index (CPI)
Monthly statistics that measures inflation or deflation
Gross Domestic Product (GDP)
Total value of final goods and services produced in a country in a given year
Business Ethics
Principles and standards that determine acceptable conduct in business
Code of Ethics
Formalized rules and standards that describe what a company expects of its employees
Sarbanes Oxley Act (SOX)
Stiffened penalties for corporate fraud and securities fraud
Social Responsibility
Business obligation to maximize its positive impact and minimize its negative impact of society
Corporate Social Responsibility
The extent to which businesses meet the legal, ethical, economic and voluntary responsibilities placed on them by their stakeholders
International Business
Buying, selling, and trading across national boundaries
Global Marketing
Requires balancing global brands with the needs of local consumers
Why Nations Trade
Acquisitions of raw materials and goods at favorable prices
Absolute Advantage
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
Comparative Advantage
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
Outsourcing
Transferring
Exports
Sale to foreign markets
Importing
Foreign sources
Balance of Trade
Difference in the value between what a nation exports and imports
Infrastructure
Physical facilities support economic activities with include railroads, highways, ports
Import Tariff
Tax levied by a nation on goods imported into the country
Quota
A restriction on the number of units of a particular product that can be imported into a country
Embargo
A prohibition on trade for a product
Dumping
Act as a country/business selling products at less than what it costs to produce
World Trade Organization
International organization dealing with the rules of trade between nations
General Agreement on Tariff (GATT)
Replaced by the World Trade Organization
World Bank
Nations to loan money to underdeveloped and developing countries
International Monetary Funds
Eliminating trade barriers
Fostering financial cooperation
Producing short loans to member countries
Functioning as a world central bank
Multinational Strategy
Customizing products, promotion, and distribution according to cultural technological, regional, and national differences
Global Strategy
Standardizing products
Sole Proprietorship
Business owned and operated by 1 individual most common form of business in the US
Advantages of Sole Proprietorship
Ease cost of formation
Little government regulation
Taxation
Secrecy
Distribution/Use of products
Disadvantages of Sole Proprietorship
Unlimited liability
Limited skills
Lack of qualified employees
Taxation
Partnership
2 or more persons who carry on as co-owners
General Partnerships
Management & Liability
Limited Partnership
1 general partnership, who assumes unlimited liability, and at least 1 limited partner whose liability is limited to his/her investment in the business
Limited Liability
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
Articles of Partnership
legal documents that set fourth the basic agreement between partners
Disadvantages of Partnerships
Unlimited liability
Taxation of partnerships
Corporations
legal entities created by the state whose assets & liabilities are separate from its owners. typically owned by stockholders/shareholders
Articles of Incorporation
legal documents fixed with basic information about the business with the appropriate state of office (often secretary of state)
S Corporations
Unique government creation that looks like a corporation but it is taxed like sole partnerships
The Business Plan objectives
Explanations of the business
Analysis of competition
Income/Expense estimates
Secure a loan
Venture Capitalists
Provide funding for a new business exchange ownership interest or stock
The Business PLan
Step-by-step explanation of how it will achieve its goals. a must for a financial institution to loan you money
Management
Achieve an organizations objectives, using resources effectively and efficiently
What managers do
Utilizations of resources- achieve objectives
Planning
Organizing
Staffing
Directing
Controlling
The Importance of Management
Resource acquisition and coordination
Resources:
People
Raw Materials
Equipment
Money
Information
Mission
Organizations purpose and philosophy
Organizational Structure
The arrangement or relationships of positions within an organization
Organizational Culture
Firms shared values, beliefs, and traditions, philosophies, rules, role models, for behavior developed over time
Operations Management
Transforming resources into goods and services
Inputs
Labor, materials, energy converted to outputs
Outputs
Goal of output to be worth more than the cost of inputs
The debt ceiling is the maximum amount Congress lets the government borrow.
True
The sum of all the money borrowed over the years and not yet repaid is the total fiscal debt.
False; Federal debt
The debt ceiling is the maximum amount Congress lets the government lend to the public.
False; the maximum amount Congress lets the government borrow.
The 12 Federal Reserve Banks are regional banks, privately owned by the member commercial banks in their individual districts.
True
The federal government does not own the Federal Reserve Bank.
True; the locals own the Federal Reserve Banks
The Federal Reserve does not regulate banks; only state regulatory agencies perform this function.
False; The federal Reserve does regulate banks
State governments are actually the owners of the Federal Reserve Banks.
False; Federal Reserve Banks are owned by the member commercial banks in their individual districts.
The Federal Reserve provides banking services to member banks and is the central bank of the U.S.
True
The Fed is headed by a 50-member Board of Governors
False; Headed by a 12-member Board of Governors.
The Federal Reserve Bank is in charge of both fiscal and monetary policy.
False; Just monetary
The economy, as a system, represents the:
Flow of resources from production through consumption.
In the broadest sense, economics studies the choices that:
People, governments, and companies make in allocating resources.
From the business perspective, a key reason to study economics is to:
Gain a better understanding of past business choices in order to make better future decisions.
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.
Subprime mortgage loan
Economics is divided into two core areas of study known as:
Macroeconomics and microeconomics
A core goal for successful businesses to deliver value to customers while generating long-term profits.
True
Value is the relationship between the price of carpet cleaning, for example, and the benefit that the service offers to the customer.
True
Business drives up the standard of living for people worldwide, contributing to a higher quality of life.
True
During the Industrial Revolution, the production process shifted from skilled artisans working in small workshops to semiskilled workers employed in huge factories.
True
Henry Ford’s focus on producing a consistent and quality product represented a shift from the production era to the relationship era.
False; Marketing era to the relationship era
When providing products and services, the primary goal of nonprofit organizations is to ensure community interests are addressed.
True
Factors of production are the resources a business needs to achieve its objectives.
True
Human resources is a factor that includes the physical, intellectual, and creative contributions of everyone who works within an economy.
True
Speedtomarket is the rate at which a company’s competitors copy its new product innovations.
False; Introducing a product in the market as soon as possible.
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.
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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