intro to bus. ch 1 – Flashcards
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they seek opportunities, avoid the pitfalls, carefully evaluate risks, and completely understand their market. they adhere to ethical practices.
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what do successful firms try to do?
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to generate long-term profits by delivering unsurpassed value to their customers.
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the core goal of firms is
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any activity that provides goods and services in an effort to earn a profit.
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what is a business
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the financial reward that comes from starting and running a business. a profit is the money that a business earns in sales or revenue minus expenses such as the cost of goods and the cost of salaries.
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profit is?
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when a business brings in less money than it needs to cover expenses.
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loss
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the relationship between the price of a good or a service and the benefits that it offers its customers.
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value
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people who risk their time,money, and other resources to start and manage a business.
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entrepreneurs
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they produce a ripple effect that enriches everyone around them.
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what happens when entrepreneurs create wealth for themselves?
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the standard of living for people worldwide, contributing to a higher quality of life.
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what does business drive up?
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the quality and quantity of goods and services available to a population
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standard of living
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the overall sense of well being experienced by either an individual or a group.
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quality of life
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innovation. business also help raise the standard of living through taxes, which the gov. spends on projects that range from streetlights to environmental cleanup.
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business contributes to society through?
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they actively advocate for the wellbeing of the society that feeds their success.
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what do socially responsible firms contribute?
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five distinct one and they overlap during the periods of transition.
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how many business eras do we have
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technological advances fueled a period of rapid industrialization in america from the mid 1700s - mid 1800s. as a mass production took hold, huge factories replaced skilled artisan workshops. the factories hired large number of semiskilled workers who specialized in a limited number of tasks .the result was unprecedented production efficiency but also a loss of individual ownership and personal pride in the production process.
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the industrial revolution
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larges-scaled entrepreneurs emerged in the second half of the 1800s, building business empires. these industrial titans created enormous wealth, raising the overall standard of living across the country. many also dominated the markets, forcing out competitors, manipulating prices, exploiting workers, and decimating the environment. towards the end of the 1800s, the gov. stepped into the business realm, passing laws to regulate business and protect consumers and workers, creating a more balance in the economy.
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the entrepreneurship era
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the early part of 1900s, major business focused on further refining the production process and creating greater efficiencies. jobs became even more specialized, increasing productivity and lowering costs and prices (in 1913 when henry ford introduced the assembly line - which quickly became standard across industries). managers focused on efficiency and customers became and afterthought but that changed in the great depression and WWII, they started to design things to separate consumers from their cash.
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the production era.
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after WWII, the balance of power shifted away from producers towards consumers, flooding the market with enticing choices. to differentiate themselves from competitors, business began to develop brands or distinctive identities to help consumers understand the differences among various products. the marketing concept emerged: a consumer focus that permeates successful companies in every department, at every level. this approach continues to influence business decisions today as global competition heats up to unprecedented levels.
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the marketing era.
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building on the marketing concept, today, leading edge firms look beyond each immediate transaction with a customer and aim to build long term relationships. satisfied costumers can become advocates for a business, spreading the word with more speed and credibility than even the best promotional campaign. and cultivating current customers is more profitable than constantly seeking new ones. a key tool is technology. using the web and other digital resources, businesses gather detailed information about their customers and use this date to serve them better.
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the relationship era
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they work hand in hand with businesses to improve the quality of life in our society.
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non profit organizations
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business like establishments that employ people to produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain.
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nonprofits
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not in the business of financial gain. we're in the business of doing good. nonprofits are still businesses in every other sense- they employ people, take in revenue, produce goods and services and contribute in significant ways to our region's economic stability and growth.
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non profits are?
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about one in 10 workers. accounting for more paid workers than the entire construction industry and more than the finance, insurance and real estate sectors combined. ( nonprofit museums, schools, theaters, and orchestras have become economic magnets for many communities, drawing additional investment.
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how much do nonprofits employ?
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four fundamental elements- natural resources, capital, human resources and entrepreneurship - that businesses need to achieve their objectives.
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businesses and nonprofits rely on factors of production
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all inputs that offer value in their natural state, such as land, fresh water, wind and mineral deposits. most must be extracted, purified, or harnesses. people cant create them. agricultural products are not natural resources. the value of these tend to rise with high demand, low supply, or both.
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natural resources
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includes machines, tools, building, info, and technology- the synthetic resources that a business needs to produce goods or services. computers and telecommunications capability have become pivotal elements of capital across a surprising range of industries. capital does not include money but businesses use money to acquire, maintain and upgrade their capital.
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capital
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encompasses the physical, intellectual, and creative contributions of everyone who works within an economy. as technology replaces a growing # of manual labor jobs, education and motivation have been increasingly important to human resource development. given the importance of knowledge to workforce effectiveness, some business experts break out knowledge as its own category-separating it from human resources.
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human resources
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they tend to see opportunities where others dont and use their own resources to capitalize on that potential. entrepreneurial enterprises can kick start an economy creating waves of opportunity by harnessing the other factors of productions. they dont thrive in an environment that doesnt support them. they key ingredient is economic freedom, the freedom of choice, from excess regulation, from too much taxation. protection from corruptions and unfair competitions is another entrepreneurial "must"
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entrepreneurship
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entrepreneurship.
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which factor of production is more important?
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the setting in which businesses operates. the five key components are: economic environment, competitive environment, technological environment, social environment, and global environment.
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business environment
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the critical difference in whether an overall economy thrives or disintergrates.
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the broader business environment can make?
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reduce the risks of starting and running a business. the result is free enterprise and fair competition flourish.
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the gov takes active steps on an ongoing basis to ?
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is one of the gov. policies that support business.
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relatively low federal tax rates, both for individuals and businesses is?
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entire agencies.
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the federal government runs what to support businesses such as the small business admin?
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legislation that supports enforceable contracts.
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another key element of us economic environment is?
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to develop long-term, mutually beneficial relationships with customers
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what is the current goal for companies that are focusing on customer satisfaction?
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the size of the gap between product benefits and price.
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what is the best measure of value?
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its benefits to the customer are equal to or greater than the price that the customer pays.
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a product has value when?
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quality and virtually all successful firms offer top quality products relative to their direct competitors.
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what is the key to value?
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1. avoid your competitors' strength and exploit their weaknesses. start a new game instead of beating them at their own. 2. always be a little bit paranoid about competition. never underestimate your competitors. 3. remember that competitors wil usually get better if pushed. don't assume that they won't fix their problems. 4. don't forget that competitors are sometimes irrational when threatened. they may sacrifice own profits to drive you out of business.
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companies follow 4 basic principles
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the rate at which a new product moves from conception to commercialization. ( can be a key source of competitive advantage)
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speed-to-market
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bleeding-edge firms launch products that fail because they're too far ahead of the market. leading edge firms offer products just as the market becomes ready to embrace them. ( ex of leading edge - apple )
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leading edge and bleeding edge
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worker satisfaction yield tangible bottom line results. those with high employee satisfaction gain an average return on investment of 14% per year.
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employee contributions
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sense of fairness, a chance for achievement, and a team-oriented atmosphere. / superb top management.
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3 crucial sources of employee satisfaction
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any tools - especially computers, telecommunications and other digital product- that businesses can use to become more efficient and effective.
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business technology
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the service that allows computer users to easily access and share information on the internet in the form of text, graphics, video, and animation.
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world wide web
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business transactions conducted online, typically via the internet.
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e-commerce
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businesses- to businesses selling
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what comprises the vast majority of total e-commerce sales( & larger shares of the profits)?
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allows leading-edge firms to offer customized products at prices that are comparable to standardized products. companies can also have effective selling strategies which also gives consumers a more individualized buying experience by looking at reviews and recommendations.
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online technology ?
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the values, attitudes, customs, and beliefs shared by groups of people. also covers demographics.
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the social environment embodies?
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the measurable characteristics of a populations. demographic factors include population size and density and specific traits such as age, gender, and race.
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demographics
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b/c successful businesses must offer goods and services that respond to it.
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why is understanding the various dimensions of the social environment crucial
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profits, workforce.
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growing diversity affects?
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can yield a powerful competitive advantage in innovations and ability to reach a broad customer base.
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advantage of diverse staff- one that reflects an increasingly diverse marketplace?
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free trade
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the migration of jobs relates closely to the global movement toward
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an international economic and political movement designed to help goods and services flow more freely across international boundaries.
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definition : free trade
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GATT. an international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide.
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general agreement on tariffs and trade
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it was signed by 125 countries to lower trade restrictions worldwide. the result of it were that goods were able to move more freely than ever across international boundaries.
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what about GATT?
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lowered prices and increased quality across virtually every product category, as competition becomes truly global.
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what does free trade movement do?
