Term
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| Individuals or organizations who try to earn a profit by providing products that satisfy people's needs. |
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| A good or service with tangible and intangible characteristics that provide satisfaction and benefits. |
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| The difference between what it costs to make and sell a product and what a customer pays for it. |
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| Organizations that may provide goods or services but do not have the fundamental purpose of earning profits. |
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| Groups that have a stake in the success and outcomes of a business. |
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| The study of how resources are distributed for the production of goods and services within a social system. |
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| land, forests, minerals, water, and other things that are not made by people. |
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| The physical and mental abilities that people use to produce goods and services; also called labor. |
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| The funds used to acquire the natural and human resources needed to provide products; also called capital. |
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Definition
A description of how a particular society distributes its resources to produce goods and services.
-central issue of economics is how to fulfill an unlimited demand for goods and services in a world with a limited supply of resources.
-Unlimited demands
-Finite resources |
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Term
| Communism (command economy) |
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Definition
First described by Karl Marx as a society in which the people, without regard to class, own all the nation's resources.
-Government/ central planning
-No competition
-Cuba, North Korea
-Equality
-Marx- everyone contributes according to ability and receives benefits according to need--> equality, fairness.
-the people (through the government) own and operate all businesses and factors of production
-central government planning determines what goods and services satisfy citizens' needs, how the goods and services are produced, and how they are distributed.
-Communist economies have been marked by low standards of living, critical shortages of consumer goods, high prices, and little freedom.
-Business ownership-most businesses are owned and operated by gov.
-competition- none, government owns and operates everything.
-profits- excess income goes to the government.
-product availability and price- consumers have a limited choice of goods and services; prices are usually high.
-employment options-little choice in choosing a career; most people work for government- owned industries or farms. |
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Definition
An economic system in which the government owns and operates basic industries(postal service, telephone, utilities, transportation, healthcare, banking, and some manufacturing- but individuals own most businesses.
-citizens are dependent on the government for many goods and services.
-socialist economies profess egalitarianism- equal distribution of income and social services.
-taxes and unemployment are generally higher in socialist countries.
-More equal allocation of resources
-Government/ central planning for basic goods/ services
-Most basic industries owned by the government
-Sweden, India, Israel
-business ownership- the government owns and operates major industries; individuals own small businesses.
-competition- restricted in major industries; encouraged in small businesses.
-profits- profits earned by small businesses may be reinvested in the business; profits from government-owned industries go to the government.
-product availability and price-consumers have some choice of goods and services; prices are determined by supply and demand.
-employment options-some choice of careers; many people work in government jobs. |
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| Capitalism (free enterprise) |
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Definition
An economic system in which individuals own and operate the majority of businesses that provide goods and services.
-Factors of production are privately held and used to make profit.
-competition, supply, and demand determine which goods and services are produced, how they are produced, and how they are distributed.
-Competition and freedom
-EFFICIENCY
-Free to succeed or fail
-Free to make choices- all economic decisions made without government intervention
-Product mix
-Price
-Hire/ fire
-business ownership-individuals own and operate all businesses.
-competition-encouraged by market forces and government regulations.
-profits-individuals are free to keep profits and use them as they wish.
-product availability and price- consumers have a wide choice of goods and services; prices are determined by supply and demand.
-employment options- unlimited choice of careers
-modified capitalism different because government intervenes and regualtes business to some extent. |
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Definition
| Pure capitalism, in which all economic decisions are made without government intervention. |
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| Economies made up of elements from more than one economic system. |
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Definition
| The number of goods and services that consumers are willing to buy at different prices at a specific time. |
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Definition
The number of products- goods and services- that businesses are willing to sell at different prices at a specific time.
-in general, because the potential for profits is higher, businesses are willing to supply more of a god or service at higher prices. |
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Term
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Definition
The price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time.
-changing price alters supply curve, and a new equilibrium price results. this is an ongoing process, with supply & demand constantly changing in response to changes in economic conditions, availability of resources, and degree of competition. |
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Definition
The rivalry among businesses for consumer's dollars.
-competition fosters efficiency and low prices by forcing producers to offer the best products at the most reasonable price; those who fail to do so are not able to stay in business. therefore, competition should improve the quality of the goods and services available or reduce prices. |
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Definition
The market structure that exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell are small.
-ex:aspirin, soft drinks, and vacuum cleaners.
-these products differ slightly in packaging, warranty, name, and other characteristics, but all satisfy the same consumer need. |
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| 'Pure' or perfect competition |
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Definition
| The market structure that exists when there are many small businesses selling one standardized product, such as agricultural commodities like wheat, corn and cotton.. |
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Term
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Definition
The market structure that exists when there are very few businesses selling a product.
-in an oligopoly, individual businesses have control over their products' price because each business supplies a large portion of the products sold in the market place. |
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Term
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Definition
The market structure that exists when there is only one business providing a product in a given market.
-utility companies that supply electricity, natural gas, and water are monopolies. the government permits such monopolies because the cost of creating the good or supplying the service is so great that new producers cannot compete for sales. |
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Definition
| The situation that occurs when an economy is growing and people are spending more money; their purchases simulate the production of good and services, which in turn stimulates employment. |
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| Basic difference of efficiency vs equality |
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Definition
| The extent to which the factors of production are owned and/ or directed by private interests or publicly by the government. |
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Definition
Resources used to produce goods and services:
1. Capital (buildings, equipment)
2. Enrepreneurship
3. Land (natural resources)
4. Labor (workers)
5. Knowledge/ information |
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Definition
-Father of free trade and capitalism
-The drive of individual self-interest in an environment of similarly motivated individuals will result in competition and the competition will result in providing goods that society wants in the quantities and at the prices that society wants |
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Definition
-ed: virgin records, google, nike, home depot, bolder boulder, verizon...
-Self-interested behavior:
-Producers
-Consumers
-Labor force
-Investors
-Competition= self interest
-Why don't producers charge high prices and pay employees low wages?
*prices constrained by self competition
-greed is good- drives people and makes things work.
-"Free market" capitalism- "The invisible hand"
-Self-intertest and competition will produce the optimal quantity and variety of goods.
-Limited government- "Laissez Faire" |
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Term
| Levels of competitiveness of markets |
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Definition
-"Pure" or perfect competition
-Monopolistic competition
-Oligopoly
-Monopoly |
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Definition
-Indistinguishable products
-"Infinite" sellers
-Ex: commodities, retail gasoline |
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Definition
-One dominant producers
-Similar products
-Minor differences(real or perceived)
-Many sellers
-Ex: athletic shoes, handbags, apparel, candy |
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Definition
-Dominant producers
-ex: -coke and pepsi
-airplanes
-intel and AMD
-GPS data
-Supermarket chains
-Cigarettes
-Over $100B Bottled/Canned Soft Drink Market
3 Firms control 88%
Sodas, Waters, Energy Drinks, Sports Drinks, Fruit Juices, Teas, etc.
-High entry barriers (distribution) |
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Definition
-MP3 players
-1 firm controls 73%
-electricity
-gas
-water |
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Term
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Definition
-Indicate the health and trend of an economy
-Gross Domestic Product (GDP)
-Unemployment rate
- Productivity
-Inflation rate |
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Term
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Definition
-Measures the sum of all goods and services produced in a country in a year.
-Includes production of Honda cars in Tennessee
-Does not include production of Ford cars in China
-Major producers in U.S. |
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Term
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Definition
-Measures the percentage of the population 16 and over that is actively looking for work but cannot find it.
-Frictional- entering work force for first time/ re-entering. Temporary. Fixes itself. Transfer to another place. Natural
-Cyclical- Follows business cycles (seasons-skiing)
-Structural- most problematic. Skills do not match the needs of employers. Have to re-train workforce. |
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Definition
-Measures output per person per hour
-computers/ information systems
-fertilizers
-machinery/ automation
-education
-competition |
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Definition
-Widespread increase in prices
-inflation can be harmful if individuals' incomes do not increase at the same pace as rising prices, reducing their buying power.
-Measured by the consumer price index (CPI)
-Tracked monthly
-Deflation- problematic- prices go down |
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Definition
-Efficient
-Rewards innovation
-Freedom of choice
-Fair |
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Term
| Keeping markets competitive |
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Definition
-Anti-trust regulations
-collusion-an agreement between two or more persons, sometimes illegal and therefore secretive, to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage.[citation needed] It is an agreement among firms to divide the market, set prices, or limit production.
-Monopoly- exists when a specific person or enterprise is the only supplier of a particular commodity.prevent companies from merging- to protect consumers. Monopolies are thus characterised by a lack of economic competition to produce the good or service and a lack of viable substitute goods.
-Regulation of Natural monopolies- when a single firm can best serve society. ex: subway transportation, water, telephone service, electricity. |
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Definition
-Situations when the market may fail to allocate the real costs and benefits of a product.
-Externalities are over-produced
-Public goods are under- produced- government steps in to provide them |
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Term
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Definition
a cost or benefit, not transmitted through prices,[1] incurred by a party who did not agree to the action causing the cost or benefit.
-Costs borne by unrelated third parties
-pollution
-traffic congestion
resource depletion
-overproduced in free market |
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Definition
| =private costs+ externalities |
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Definition
-Efficiency vs. equality/fairness
-Egalitarian ideals in politics/ society
-inequality in economic system |
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Definition
-The basic "trade-off"
-insulin
What constitutes "fairness"?
-Income distribution-starting point
-income redistribution- taking from people who already have a lot.
-Universal entitlements
-Free
-Universal
-Non-transferable |
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Term
| Corporate Social Responsibility (CSR) |
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Definition
-Taking into account the interests of stakeholders
-corporate citizenship
-who is a stakeholder?
-anyone affected by the company's actions or policies.
-stakeholders=a person, group, organization, or system who affects or can be affected by an organization's actions--> consumers, employees, surrounding communities, stockholders, suppliers |
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Term
| Enlightened self interest |
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Definition
-Taking into account the interests of stakeholders because it benefits the business
-motive is the key difference |
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Definition
-"Beliefs about what is right and wrong or good and bad in actions that affect others"
-individual beliefs about what is right and wrong |
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| Relevance of people who practice bad ethics |
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Definition
-How do they define themselves?
-Cheaters?
-Rationalize it "away"?
-had to do it?
-ends/means
-generous atm
-napster
-be aware of slippery slope |
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Definition
-ethics and the law are not good substitutes
-pharmacists and abortion pill dilemma
-actions define ethical choices |
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Definition
| -Another contextual environment within which business must operate |
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Definition
-To obtain raw materials and goods that are:
-otherwise unavailable
-available elsewhere at a lower price
-to foster relationships |
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Definition
-A rare monopoly that exists when a country is the:
-only source of an item
-only producer of an item
-most efficient producer of an item |
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Term
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Definition
-a country specializes in products that it can supply more efficiently at a lower cost than it can produce other items.
-advantages change as markets/ countries develop |
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Term
| International trade barriers |
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Definition
-economic
-technological
-legal/political
-social/cultural |
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Term
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Definition
-the level of a country's economic development
-infrastructure
-currency exchange rates |
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Definition
-varying levels of technological development and infrastructure .
-ex: phones- communication
-technological advances are creating additional global marketing opportunities, along with opportunities, changing technologies also create new challenges and competition. |
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Term
| Political & legal & ethical barriers |
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Definition
-a company that decides to enter the international marketplace must contend with potentially complex relationships among the different laws of its own nation, international laws, and the laws of the nation with which it will be trading; various trade restrictions imposed on international trade; changing political climates and different ethical values.
-once outside U.S. borders, businesspeople are likely to find that the laws of other nations differ from those of the united states
-Some countries have copyright and patent laws that are less strict than those of the U.S., and some countries fail to honor U.S. laws
-because copying is a tradition in China and Vietnam and laws protecting copyrights and intellectual property are weak and minimally enforced, those countries are flooded with counterfeit videos, movies, CDs, computer software, furniture, and clothing.
-companies are angry because the counterfeits harm not only their sales, but also their reputations if the knockoffs are of poor quality.
-Laws and regulations
-property ownership
-intellectual property
-Political barriers
-businesses engaged in international trade must consider the relative instability of countries such as Iraq, Haiti...etc.
-political unrest in countries such as Pakistan, Somalia, etc may create a hostile or even dangerous environment for foreign business.
-natural disasters, like haitian and chilean earthquakes can cripple a country's government, making the region even more unstable.
-a sudden change in power can result in a regime that is hostile to foreign investment.
-Political instability, sanctions
-Trade restrictions/protectionism |
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Term
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Definition
-trade protection is the use of government regulation to limit the import of goods and services
-tariffs,quotas, embargos, subsidies.
-protectionism protects domestic industries BUT...reduces trade and competition. consumers harmed, hurt political relations with countries- reduces innovation. |
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Term
| Social & cultural barriers |
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Definition
-understanding the differences among the cultures of countries can be important to a firm.
-spoken and written language-->colgate col-ga-te= go kill yourself
-body language and personal space
-family roles
-perception of time
-religious holidays and local customs |
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Term
| Trade agreements, alliances & organizations |
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Definition
-Trade organizations
-WTO
-GATT
-IMF
-World Bank
Trade Blocs-groups of nations enter agreement and limit what protectionism they will use against each other.
-NAFTA
-European union
-APEC |
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Term
| Organizational approaches to global trade |
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Definition
-import/export
-licensing & franchising
-contract manufacturing
-joint ventures & alliances
-foreign direct investment (FDI) |
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Term
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Definition
| minimal amount of investment and risk. Have control |
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Term
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Definition
licensing- trade arrangement in which one company- the licenser- allows another company- the license- to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty. logo adds value to product--> company with logo gets a portion of sales...ex:coca-cola
-licensing is an attractive alternative to direct investment when the political stability of a foreign country is in doubt or when resources are unavailable for direct investment.
-licensing is especially advantageous for small manufacturers wanting to launch a well-known brand internationally. ex: Yoplait-- french yogurt that is licensed for production in the U.S.
-franchising--> A form of licensing in which a company- the franchiser- agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with a franchiser's business, in return for a financial commitment and the agreement to conduct business in accordance wit the franchiser's standard of operations. ex: wendy's, mcdonalds, holiday inns.buy whole business plant. more control than licensing but still not full control
-licensing and franchising enable a company to enter the international marketplace without spending large sums of money abroad of hiring or transferring personnel to handle overseas affairs.
-they also minimize problems associated with shipping costs, tariffs, and trade restrictions.
-HOWEVER, if the license (or franchise) does not maintain high standards of quality, the product's image may be hurt; therefore, it is important for the licensor to monitor its products overseas and to enforce its quality standards. |
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Term
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Definition
-the hiring of a foreign company to produce a specified volume of the initiating company's product to specification; the final product carries the domestic firm's name.
hire a company in another country to manufacture goods for you --> nike |
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Term
| Joint ventures/ strategic alliances |
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Definition
-joint venture- a partnership established for a specific project or for a limited time.
-the sharing of the costs and operation of a business between a foreign company and a local partner.
-Strategic alliance- a partnership formed to create competitive advantage on a worldwide basis.
-ex: New united motor manufacturing inc (NUMMI) formed by toyota and general motors
-getting a partner--> share risk but also share profit.
-join separate company under joint remain separate companies but joint ventures create 3rd one together. |
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Term
| Foreign direct investment (FDI) |
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Definition
-the ownership of overseas facilities
-Highest risk, highest investment, highest profit, and most control.
ex: honda
starbucks in japan |
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Term
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Definition
-control, risk, investment, profit
-imp./exp., licensing, cont. mfr., joint venture, FDI |
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Term
| Primary forms of business organization |
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Definition
-Sole proprietorships
-Partnerships
-'C' Corporations
-Hybrid Forms
-'S' Corp
-Limited Liability Company (LLC) |
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Definition
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Term
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Definition
A business owned and operated by one individual; the most common form of business organization in the U.S.
-ex: restaurants, hair salons, flower shops, dog kennels, and independent grocery stores.
-ownership- 1 owner
-taxation- individual income taxed
-liability- unlimited
-use- owned by a single individual and is the easiest way to conduct business.
-typically small businesses employing fewer than 50 people. |
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Term
| Advantages of sole proprietorships |
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Definition
-taxation (1x)
-flexibility & control of the business-complete control over business, can make decisions on spot without anyone else's approval. this control allows owner to respond quickly to competitive business conditions or to changes in the economy.
-ease and cost of formation-relatively easy &inexpensive
-secrecy- does not have to discuss publicly his or her operating plans, minimizing the possibility that competitors can obtain trade secrets. financial reports need not be disclosed.
-distribution and use of profits-all profits belong exclusively to owner, he or she does not have to share them with any partners or stockholders, the owner decides hows to use funds
-government regulation- SP most freedom from government regulation
-easy to close the business- no approval of co-owners or partners is necessary.
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Term
| Disadvantages of sole proprietorships |
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Definition
-unlimited liability- if the business cannot pay its creditors, the owner may be forced to use personal, nonbusiness holdings such as a car or a home to pay off debts.
--the more wealth an individual has, the greater is the disadvantage of unlimited liability.
-limited sources of funds- owners personal financial condition determines his or her credit standing. sole proprietorships may have to pay higher interest rates on funds borrowed from banks than do large corporations because they are considered greater risks.--often only way SP can borrow for business purposes is to pledge a car, house, other real estate or personal assets as well as the business.
-limited skills- must be able to perform many functions and possess skills in diverse fields such as management, marketing, accounting, bookkeeping, and personnel management.
-lack of continuity-life expectancy of SP is directly linked to that of the owner and his or her ability to work. the serious illness of the owner could result in failure of the business if competent help cannot be found.
-Lack of qualified employees |
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Term
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Definition
-an association of two or more persons who carry on as co-owners of a business for profit.
-typically larger than sole proprietorships but smaller than corporations.
-least used form of business
-general partnership
-limited partnership |
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Term
| Advantages of general partnerships |
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Definition
-taxation (1x)
-ease of organization- no legal charters have to be granted.
-availability of capital and credit-when a business has several partners, it has the benefit of combination of talents and skills and pooled financial resources. partnerships tend to be larger than SP's and therefore have greater earning power and better credit ratings.
-combined knowledge and skills-partners in the most successful partnerships acknowledge each other's talents and avoid confusion and conflict by specializing in a particular area of expertise such as marketing, production, accounting, or service. the diversity of skills in a partnership makes it possible for the business to be run by a management team of specialists instead of by a generalist SP. additionally, by splitting up work, partners can often tackle projects that would have been much more difficult for a SP.
-decision making-small partnerships can react more quickly to changes in the business environment than can large partnerships and corporations. such fast reactions are possible because the partners are involved in day-to-day operations and can make decisions quickly after consultation.
-regulatory controls-partnership has fewer regulatory controls affecting its activities than does a corporation. a partnership does not have to file public financial statements with government agencies or send out quarterly financial statements to several thousand owners as do corporations such as apple and ford. |
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Term
| Disadvantages of general partnerships |
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Definition
-unlimited liability- general partners have unlimited liability for the debts incurred by the business.
-distributions of profits- profits earned by the partnership are distributed to the partners in the proportions specified in the articles of partnership-this may be a disadvantage if the division of the profits does not reflect the work each partner puts into the business.
-limited sources of funds-because partnership shares cannot be bought and sold easily in public markets, potential owners may not want to tie up their money in assets that cannot be readily sold on short notice.
-decision making-all partners responsible for business actions of all others. Partners may have the ability to commit the partnership to a contract without approval of other partners. A bad decision by one partner may put the other partners' personal resources in jeopardy.
-life of the partnership-a partnership is terminated when a partner dies or withdraws. In a two-person partnership, if one partner withdraws, the firm's liabilities would be paid off and the assets divided between partners. Obviously, the partner who wishes to continue in the business would be at a serious disadvantage. Business could be disrupted, financing would be reduced, and the management skills of the departing partner would be lost.The remaining partner would have to find another or reorganize the business as a sole proprietorship.
-personal challenges- personal problems such as divorce can eliminate a significant portion one one partner's financial resources and weaken the financial structure of the whole partnership. |
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Term
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Definition
-Legal entity whose assets and liabilities are separate from its owners.
-as a legal entity, a corp has many of the rights, duties, and powers of a person, such as the right to receive, own, and transfer property.
-corporations can enter into contracts with individuals or with other legal entities and they can sue and be sued in court.
-Corporations are treated as individuals
-Can be public or private |
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Term
| Advantages of 'C' corporations |
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Definition
-limited liability- because the corp's assets (money and resources) and liabilities (debts and other obligations) are separate from its owners', in most cases the stockholders are not held responsible for the firm's debts if it fails. Their liability or potential loss is limited to the amount of their original investment.
-ease of transfer of ownership- stockholders can sell or trade shares of stock to other people without causing the termination of the corp, and they can do this without the prior approval of other shareholders. The transfer of ownership does not affect the daily or long term operations of the corp.
-perpetual life-the existence of the corp is unaffected by the death or withdrawal of any of its stockholders. It survives until the owners sell it or liquidate its assets. however, in some cases, bankruptcy ends a corps life.
-external sources of fund- of all forms of business organizations, public corp finds it easiest to raise money. When a corp needs to raise more money, it can sell more stock shares or issue bonds attracting funds from anywhere in the U.S. and even overseas. the larger a corp becomes, the more sources of financing are available to it.
-expansion potential- because large public corps can find long-term financing readily, they can easily expand into national and international markets. |
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Term
| Disadvantages of 'C' corporations |
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Definition
-double taxation- when after- tax corporate profits are paid out as dividends to the stockholders, the dividends are taxed a second time as part of the individual owner's income. this process creates double taxation for the stockholders of dividend paying corporations.
-forming a corporation-formation of a corp can be costly.
-disclosure of information-corps must make information available to their owners, usually through an annual report to shareholders. the annual report contains financial information about the firm's profits, sales, facilities and equipment, and debts, as well as descriptions of the company's operations, products, and plans for the future.
-employee-owner separation-many employees are not stockholders of the company for which they work. this separation of owners and employees may cause employees to feel that their work benefits only the owners.
-government regulation- public corps must file reports with the securities and exchange commission (SEC) , the government regulatory agency that regulates securities such as stocks and bonds. because all reports filed with the SEC are available to the public, competitors can access them. |
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Term
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Definition
-corporation taxed as though it were a partnership with restrictions on shareholders.
-A subchapter S corporation combines the limited liability of a 'C' corporation and has tax treatment similar to a partnership or sole proprietorship.
-Limitations that restrict growth |
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Term
| Limited liability company (LLC) |
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Definition
-form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members.
-not a corporation
-limited liability and single taxation
-limitations that restrict growth
-most bars/ restaurants are LLCs |
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Term
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Definition
-form of business and personal circumstances influence appropriate business form
-lemonade
-electric bath soap
-advertising agency |
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Term
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Definition
-The capacity and willingness to undertake conception, organization and management of a business with all its associated risks
-entrepreneurs constantly changing American business practices with new technology and innovative management techniques.
-ex: Bill Gates & Microsoft |
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Term
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Definition
-to earn profit, person or organization needs management skills to plan, organize, and control the activities of the business and to find and develop employees so that it can make products that consumers will buy.
-needs marketing expertise to learn what products consumers need and want and to develop, manufacture, price, promote, and distribute those products.
-needs financial resources and skills to fund, maintain, and expand its operations |
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Term
| Challenges for businesses |
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Definition
-abiding by laws and government regulations
-acting in an ethical and socially responsible manner
-adapting to economic, technological, and social changes |
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Term
| How do businesses achieve and maintain profitability? |
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Definition
-must produce quality products
-operate efficiently
-be socially responsible and ethical in dealing with customers, employees, investors, government regulators, the community, and society |
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Term
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Definition
-management and employees are in same segment- because management involves coordinating employees' actions to achieve the firm's goals, organizing people to work efficiently, and motivating them to achieve the business's goals.
-management is also concerned with acquiring, developing, and using resources (including people) effectively and efficiently.
-production and manufacturing is another element of management- managers plan, organize, staff, and control tasks required to carry out the work of the company or NPO.
-making decisions to ensure the business achieves its short- and long-term goals is a vital part of management. |
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Term
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Definition
-marketing and consumers are in same segment- because the focus of all marketing activities is satisfying customers.
-marketing includes all the activities designed to provide goods and services that satisfy consumers' needs and wants.
-marketers use promotion- advertising, personal selling, sales promotion(coupons, games, sweepstakes) and publicity- to communicate the benefits and advantages of their products to consumers and increase sales. |
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Term
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Definition
-owners and finance are in same segment- because it is the primary responsibility of the owners to provide financial resources for the operation of businesses.
-owners have the most to lose if the business fails to make a profit
-finance refers to all activities concerned with obtaining money and using it effectively. |
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Term
| 3 issues economic systems must address |
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Definition
1. what goods and services, and how much of each, will satisfy consumers' needs?
2. How will goods and services be produced, who will produce them, and with what resources will they be produced?
3. How are the goods and services to be distributed to consumers? |
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Term
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Definition
1. individuals must have the right to own property and to pass this property on to their heirs. This right motivates people to work hard and save to buy property.
2. individuals and businesses must have the right to earn profits and to use the profits as they wish, within the constraints of their society's laws and values.
3. individuals and businesses must have the right to make decisions that determine the way business operates. althoug there is gov regulation, the philosophy in counties like U.S. and australia is to permit maximum freedom within a set of rules of fairness.
4. individuals must have the right to choose what career to pursue, where to live, what goods and services to purchase, and more. businesses must have the right to choose where to locate, what goods and services to produce, what resources to use in the production process, and so on.
----without these rights, businesses cannot function effectively because they are not motivated to succeed |
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Term
| 4 types of competitive environments |
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Definition
1. pure competition
2. monopolistic competition
3. oligopoly
4. monopoly |
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Term
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Definition
| grant the developer of new technology a period of time (usually 17 years) during which no other producer can use the same technology without the agreement of the original developer. |
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Term
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Definition
-occurs when spending declines.
-a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers. |
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Term
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Definition
-a decline in production, employment, and income.
-characterized by levels of unemployment |
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Term
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Definition
| rising unemployment levels tend to stifle demand for goods and services, which can have the effect of forcing prices downward-deflation. |
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Term
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Definition
-best described as modified capitalism because the government regulates business to preserve competition and protect consumers and employees.
-federal, state, and local governments intervene in the economy with laws and regulations designed to promote competition and to protect consumers, employees, and the environment. |
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Term
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Definition
-business ethics generally refers to the standards and principles used by society to define appropriate and inappropriate conduct in the workplace- in many cases these standards have been codified as laws prohibiting actions deemed unacceptable.
-acceptability of behavior in business is determined by not only the organization but also stakeholders such as customers, competitors, government regulators, interest groups, and the public, as well as each individual's personal moral principles and values. |
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Term
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Definition
| -a businesses obligation to maximize its positive impact and minimize its negative impact on society. |
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Term
| What does ethical conduct do? |
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Definition
| -builds trust among individuals and in business relationships, which validates and promotes confidence in business relationships. |
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Term
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Definition
an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as wrong, ethical or unethical.
-many ethical issues in business can be categorized in the context of their relation with abusive and intimidating behavior, conflicts of interest, fairness and honesty, communications, misuse of company resources, and business associations. |
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Term
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Definition
-experience with the culture in which a business operates is critical to understanding what is ethical or unethical.
-one of the principal causes of unethical behavior in organizations is overly aggressive financial or business objectives |
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Term
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Definition
1. misuse of company resources
2. abusive or intimidating behavior- physical threats, false accusations, profanity, insults, yelling, harshness, and unreasonableness to ignoring someone or simply being annoying.
-abusive behavior is difficult to assess and manage because of diversity in culture and lifestyle. |
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Term
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Definition
-most common ethical issue identified by employees, exists when a person must choose whether to advance his or her own personal interests or those of others.
-to avoid conflicts of interest, employees must be able to separate their personal financial interests from their business dealings.
-conflict of interest has long been a serious problem in the financial industry because the financial companies pay the credit raters money in order to be rated. |
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Term
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Definition
-most common ethical issue identified by employees, exists when a person must choose whether to advance his or her own personal interests or those of others.
-to avoid conflicts of interest, employees must be able to separate their personal financial interests from their business dealings.
-conflict of interest has long been a serious problem in the financial industry because the financial companies pay the credit raters money in order to be rated. |
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Term
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Definition
-False and misleading advertising, as well as deceptive personal-selling tactics, anger consumers and can lead to the failure of a business.
-truthfulness about product safety and quality are also important to consumers |
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Term
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Definition
-the behavior of businesspersons toward customers, suppliers, and others in their workplace may also generate ethical concerns.
-ethical behavior within a business involves keeping company secrets, meeting obligations and responsibilities, and avoiding undue pressure that may force others to act unethically. |
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Term
| 3 key factors that influence ethical decisions in an organization |
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Definition
1. individual moral standards
2. the influence of managers and co-workers
3. the opportunity to engage in misconduct. |
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Term
| 4 dimensions of social responsibility |
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Definition
1. economic responsibilities- being profitable
2. legal responsibilities- obeying the law (society's codification of right and wrong); playing by the rules of the game
3. ethical responsibilities- being ethical; doing what is right, jus, and fair; avoiding harm
4. voluntary responsibilities- being a "good corporate citizen" contributing to the community and quality of life. |
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Term
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Definition
-the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their various stakeholders.
-it involves the activities and organizational processes adopted by businesses to meet their social responsibilities. |
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Term
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Definition
-issue of importance to a business is its responsibilities to employees
-employees expect businesses to provide a safe workplace, pay them adequately for their work, and keep them informed of what is happening in their company.
-a major social responsibility for business is providing equal opportunities for al employees regardless of their sex, age, race, religion, or nationality. |
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Term
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Definition
-the activities that independent individuals, groups, and organizations undertake to protect their right as consumers.
-to achieve their objectives, consumers and their advocates write letters to companies, lobby government agencies, make public service announcements, and boycott companies whose activities they deem irresponsible
CONSUMER RIGHTS
-the right to be informed- gives consumers the freedom to review complete information about a product before they buy it.
-right to choose- ensures that consumers have access to a variety of products and services at competitive prices. The assurance of both satisfactory quality and service at a fair price is also a part of the consumer's right to choose.
-right to be heard- assures consumers that their interests will receive full and sympathetic consideration when the government formulates policy. it also assures the fair treatment of consumers who voice complaints about a purchased product. |
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Term
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Definition
-refers to the buying, selling, and trading of goods and services across national boundaries.
-falling political barriers and new technology are making it possible for more and more companies to sell their products overseas as well as at home.
-As differences among nations continue to narrow, the trend toward globalization of business is becoming increasingly important |
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Term
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Definition
-transferring manufacturing and other tasks to countries where labor and supplies are less expensive.
-outsourcing has become a controversial practice in the U.S. because many jobs have moved overseas where those tasks can be accomplished for lower costs.
- difficult to train indians to speak the kind of colloquial english, french, spanish, german, or dutch that customers want.
-this can be frustrating for customers when they have trouble understanding the customer service representative, resulting in increased customer dissatisfaction with the service. |
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Term
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Definition
| -The sale of goods and services to foreign markets. |
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Term
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Definition
| -The purchase of goods and services from foreign sources. |
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Term
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Definition
| The difference in value between a nation's exports and its imports. |
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Term
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Definition
| A nations negative balance of trade, which exists when that country imports more products than it exports. |
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Term
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Definition
- the difference between the flow of money into and out of a country.
-a country's balance of trade, foreign investments, foreign aid, loans, military expenditures, and money spent by tourists comprise its balance of payments |
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Term
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Definition
| -the physical facilities that support a country's economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distributed systems |
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Term
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Definition
-the ratio at which one nation's currency can be exchanged for another nation's currency.
-familiarity with exchange rates is important because they affect the cost of imports and exports |
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Term
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Definition
-a tax levied by a nation on goods imported into the country
-fixed tariff-a specific amount of money levied on each unit of a product brought into the country
-ad valorem tariff-based on the value of the item
-countries sometimes levy tariffs for political reasons, as when they impose sanctions against other countries to protest their actions.
-however, import tariffs are more commonly imposed to protect domestic products by raising the price of imported ones.
-such protective tariffs have become controversial, as americans become increasingly concerned over the U.S. trade deficit.
-Tariffs also help when, because of low labor costs and other advantages, foreign competitors can afford to sell their products at prices lower than those charged by domestic companies. |
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Term
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Definition
| restrict the amount of currency that can be bought or sold. |
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Term
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Definition
-limits the number of units of a particular product that can be imported into a country.
-a quota may be established by voluntary agreement or by government decree. |
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Term
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Definition
-prohibits trade in a particular product.
-embargoes are generally directed at specific goods or countries and may be established for political, economic, health, or religious reasons. |
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Term
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Definition
-one common reason for setting quotas or tariffs is to prohibit dumping
-the act of a country or business selling products at less than what it costs to produce them.
-dumping permits quick entry into a market.
-sometimes dumping occurs when the domestic market for a firm's product is too small to support an efficient level of production.
-dumping is relatively difficult to prove, but even the suspicion of dumping can lead to the imposition of quotas or tariffs. |
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Term
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Definition
| -A group of firms or nations that agrees to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets. |
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Term
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Definition
-a firm that buys goods in one country and sells them to buyers in another country.
-by linking sellers and buyers of goods in different countries, trading companies promote international trade. |
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Term
| Multinational corporation |
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Definition
-a corporation that operates on a worldwide scale, without significant ties to any one nation or region.
-Nestle- with headquarters in switzerland operates more than 300 plants around the world. |
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Term
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Definition
-a plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences.
-many soap and detergent manufacturers adapted their products to local water conditions, washing equipment, and washing habits. |
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Term
| Global strategy (globalization) |
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Definition
- a strategy that involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity.
-examples of globalized products--american clothing, movies, music, and cosmetics. |
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Term
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Definition
| - a partnership that involves a complete sharing in both the management and the liability of the business |
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Term
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Definition
-a business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment in the business
-limited partnerships exist for risky investment projects where the chance of loss is great
-limited partners do not participate in the management of the business but share in the profits in accordance with terms of a partnership agreement
-usually the general partner receives a larger share of the profits after the limited partners have received their initial investment back.
-ex: oil-drilling partnerships & real-estate partnerships. |
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Term
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Definition
-shares of a corporation that may be bought or sold.
-thus corporate owners are often called shareholders or stockholders-- can buy, sell, give or receive as gifts, or inherit their shares of stock. |
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