Intro to Business 101 Vocab – Flashcards
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Value
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Relationship between the price of a good or service and the benefits that it offers its customers
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Business
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Any activity that provides goods and services in an effort to earn a profit
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Profit
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The money that a business earns in sales for revenue minus expenses such as the cost of goods and the cost of salaries.
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Loss
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When a business incurs expenses that are greater than its revenue
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Entrepreneurs
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People who risk their time, money and other resources to start and manage a business
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Standard of living
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The quality and quantity of goods and services available to a population.
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quality of life
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The overall sense of well-being experienced by either an individual or a group.
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nonprofits
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Business like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain.
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factors of production
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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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business environment
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The setting in which business operates. The five key components are: economic environment, competitive environment, technological environment, social environment, and global environment.
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speed-to-market
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The rate at which a new product moves from conception to commercialization.
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business technology
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Any tools-especially computers, telecommunications, and other digital products-that businesses can use to become more efficient and effective.
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World Wide Web
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The service that allows computers users to easily access and share information on the Internet in the form of text, graphics, video, and animation.
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e-commerce
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Business transactions conducted online, typically via Internet
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demographics
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The measurable characteristics of a population. Demographic factors include: population size and density and specific traits such as age, gender and race.
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free trade
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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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General Agreement on Tariffs and Trade (GATT)
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An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide.
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economy
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A financial and social system of how resources flow through society from production, to distribution, to consumption.
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economics
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The study of the choices that people, companies, and government make in allocating society's resources.
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macroeconomics
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The study of a country's overall economic issues, such as the employment rate, the gross domestic product, and taxation policies.
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microeconomics
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The study of smaller economic units such as individual consumers, families, and individual businesses.
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fiscal policy
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Government efforts to influence the economy, through taxation and spending
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budget surplus
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Overage that occurs when revenue is higher than expenses over a given period of time
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budget deficit
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Shortfall that occurs when expenses are higher than revenue over a give period of time.
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federal debt
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The sum of all the money that the Federal Government has borrowed over the years and not yet repaid.
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monetary policy
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Federal Reserves decisions that shape the economy by influencing interest rates and the supply of money.
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money supply
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The total amount of money within the overall economy
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M1 money supply
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Includes all currency plus checking accounts and traveler's checks.
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M2 money supply
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Includes all of M1 money supply plus most savings accounts, money market accounts and certificates of deposit.
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open market operations
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The Federal Reserve function of buying and selling government securities, which include treasury bonds, notes and bills
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discount rate
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The rate of interest that the Federal Reserve charges when it loans funds to banks.
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Federal Deposit Insurance Corporation (FDIC)
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A federal agency that insures deposits in banks and thrift institutions for up to $100,000 per customer, per bank.
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reserve requirement
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A rule set by the Fed, which specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the bank's deposits.
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economic system
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A structure for allocating limited resources.
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capitalism
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An economic system-also known as the private enterprise or free market system-based on private ownership, economic freedom, and fair competition.
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pure competition
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A market structure with many competitors selling virtually identical products. Barriers to entry are quite low.
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monopolistic competition
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A market structure with many competitors selling differentiated products. Barriers to entry are low. (Like T-shirt companies)
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oligopoly
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A market structure with only a handful of competitors selling products that are either similar or different. Barriers to entry are typically high. (like car manufacturing)
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monopoly
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A market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable .
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natural monopoly
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A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are government sanctioned and regulated (like cable)
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supply
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The quantity of products that products are willing to offer for sale at different market prices.
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supply curve
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The graphed relationship between price and quantity from a supplier standpoint.
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demand
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The quantity of products that consumers are willing to buy at different market prices.
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demand curve
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The graphed relationship between price and quantity from a customer demand standpoint.
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equilibrium price
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The price associated with the point at which the quantity demanded of a product equals the quantity supplied.
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socialism
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An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare.
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communism
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An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government.
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mixed economies
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Economies that embody elements of both planned and market-based economic systems.
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privatization
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The process of converting government owned businesses to private ownership.
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gross domestic product (GDP)
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The total value of all final goods and services produced within a nation's physical boundaries over a given period of time.
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unemployment rates
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The percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment.
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business cycle
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The periodic contraction and expansion that occur over time in virtually every economy.
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contraction
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A period of economic downturn, marked by rising unemployment and failing business production.
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recession
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An economic downturn marked by a decrease in the GDP for two consecutive quarters.
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depression
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An especially deep and long lasting recession.
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recovery
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A period of rising economic growth and high employment
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inflation
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A period of rising average prices across the country
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hyperinflation
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An average monthly inflation rate of more than 50%
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disinflation
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A period of slowing average price increases across the economy.
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deflation
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A period of failing average prices across the economy
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consumer price index (CPI)
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A measure of inflation that evaluates the change in the weighted-average price of goods and services that the average consumer buys each month.
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producer price index (PPI)
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A measure of inflation that evaluates the change over time in the weighted-average wholesale prices.
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productivity
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The basic relationship between the production of goods and services (output) and the resources needed to produce them (input) calculated via the following equation: output/input=productivity
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opportunity cost
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The opportunity of giving up the second best choice when making a decision
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absolute advantage
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The benefit a country has in a given industry when it can produce more of a product than other nations using the same amount of resources.
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comparative advantage
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The benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries.
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balance of trade
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A basic measure of the difference in value between a nation's exports and imports, including both goods and services.
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trade surplus
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Overage that occurs when the total value of a nation's exports is higher than the total value of its imports.
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trade deficit
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Shortfall that occurs when the total value of a nation's imports is higher than the total value of its exports
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balance of payments
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A measure of the total flow of money into or out of a country
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balance of payment surplus
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Overage that occurs when more money flows into a nation than out of that nation
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balance of payment deficit
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Shortfall that occurs when more money flows out of a nation than into that nation.
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exchange rate
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a measurement of the value of one nation's currency relative to the currency of other nations
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countertrade
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International trade that involves the barter of products for products rather than for currency
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foreign outsourcing
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(also contract manufacturing) Contracting with foreign suppliers to produce products, usually at a fraction of the cost of domestic production.
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importing
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Buying products domestically that have been produced or grown in foreign nations.
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exporting
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Selling products in foreign nations that have been produced or grown domestically.
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foreign licensing
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Authority granted by a domestic firm to a foreign firm for the rights to produce or to use its trademark/patent rights in a defined geographical areas.
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foreign franchising
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A specialized type of foreign licensing in which a firm expands by offering businesses in other countries the right to produce and market its products according to specific operation requirements.
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direct investment
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(or foreign direct investment) When firms either acquire foreign firms or develop new facilities from the ground up in foreign countries.
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joint ventures
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When two or more companies join forces- sharing resources, risks and profits, but not actually merging companies- to pursue specific opportunities.
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partnership
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A voluntary agreement under which two or more people act as co-owners of a business for profits
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strategic alliance
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An agreement between two or more firms to jointly pursue a specific opportunity without merging their businesses. Strategic alliances typically involve less formal, less encompassing agreements than partnership.
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sociocultural differences
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Differences among cultures in language, attitudes and values.
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infrastructure
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A country's physical facilities that support economic activity.
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protectionism
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National policies designed to restrict international trade, usually with the goal of protecting domestic businesses
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tariffs
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Taxes levied against imports
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quotas
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Limitations on the amount of specific products that may be imported from certain countries during a given time period
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voluntary export restraints (VERs)
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Limitations on the amount of specific products that one nation will export to another nation.
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embargo
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A complete ban on international trade of a certain item, or a total halt in trade with a particular nation
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free trade
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The unrestricted movement of goods and services across international borders
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General Agreement on Tariffs and Trade (GATT)
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An international trade treaty designed to encourage worldwide trade among its members
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World Trade Organizations (WTO)
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A permanent global institution to promote international trade and to settle international trade disputes
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World Bank
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An international cooperative of 186 member countries, working together to reduce poverty in the developing world
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International Monetary Fund (IMF)
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An international organization of 186 member nations that promotes international economic cooperation and stable growth
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trading bloc
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A group of countries that have eliminated tariffs and harmonized trading rules to facilitate the free flow of goods among the member nations.
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North American Free Trade Agreement (NAFTA)
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The treaty among the United States, Mexico and Canada that eliminated trade barriers and investment restrictions over a 15 year period starting in 1994.
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European Union (EU)
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The world's largest common market, composed of 27 European nations
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ethics
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A set of beliefs about right and wrong, good and bad
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universal ethical standards
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Ethical norms that apply to all people across a broad spectrum of situations
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business ethics
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The application of right and wrong, good or bad in a business setting.
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ethical dilemma
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A decision that involves a conflict of values; every potential course of action has some significant negative consequences.
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code of ethics
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A formal, written document that defines the ethical standards of an organization and gives employees the information they need to make ethical decisions across a range of situations.
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whistle-blowers
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Employees who report their employer's illegal or unethical behavior to either the authorities or the media.
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social responsibility
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The obligation of a business to contribute to society.
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stakeholders
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Any groups that have a stake-or a personal interest-in the performance and actions of an organization.
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consumerism
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A social movement that focuses on four key consumer rights (1) The right to be safe (2) the right to be informed (3) the right to choose and (4) the right to be heard.
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planned obsolescence
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The strategy of deliberately designing products to fail in order to shorten the time between purchases
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Sarbanes-Oxley Act
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Federal legislation passed in 2002 that sets higher ethical standards for public corporations and accounting firms. Key provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the validity of their financial statements.
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corporate philanthropy
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All business donations to nonprofit groups, including money, products, and employee time.
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caused-related marketing
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Marketing partnerships between businesses and nonprofit organizations, designed to spike sales for the company and raise money for the nonprofit.
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corporate responsibility
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Business contributions to the community through the actions of the business itself rather than donations for money and time
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sustainable development
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Doing business to meet the needs of the current generation, without harming the ability of future generations to meet their needs
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carbon footprint
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Refers to the amount of harmful green-house gases that a firm emits throughout its operations, both directly and indirectly.
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green marketing
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Developing and promoting environmentally sound products and practices to gain a competitive edge.
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social audit
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A systematic evaluation of how well a firm is meeting its ethics and social responsibility goals.
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expansion
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A period of robust economic growth and high employment
