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BUS2000 Exam 1
covers chapters 1-4
| Term | Definition |
|---|---|
| 3 benefits of entrepreneurship | freedom, autonomy, wealth potential |
| 3 drawbacks of entrepreneurship | income instability, no guaranteed benefits, risk of failure |
| 5 ways governments support entrepreneurship | private ownership, free trade, enforce contracts, stable currency, reduce corruption |
| according to Pete Drucker, what is the most important factor of production to create wealth | knowledge |
| compare insourcing vs. outsourcing risks and rewards | outsourcing: lower costs, risk of quality/job backlash, unsafe work conditions --- insourcing: boosts domestic jobs, higher labor costs |
| compare working for others vs. entrepreneurship | working for others= stability and benefits --- entrepreneurship= freedom and risk, no benefits |
| define B2B | e-commerce acronym standing for "business to business" |
| define B2C | e-commerce acronym standing for "business to consumer" |
| define C2C | e-commerce acronym standing for "consumer to consumer" |
| define goods | tangible products (computers, clothes) |
| define services | intangible products (tax, preparation, insurance) |
| what is the distinction between standard of living vs. quality of life | standard of living is people's buying power --- quality of life considers well-being factors of a demographic |
| how do differences in standard of living affect location decisions in business | lower standards of living= lower wages, cheaper production --- higher standards of living= higher consumer purchasing power; companies balance cost savings vs. market affects |
| how does demography influence business strategy | demography includes age affecting product design, income affects pricing, cultural background affects marketing, and location affects distribution |
| what are the most critical "factors of production" for a business startup | knowledge and entrepreneurship |
| name the five "factors of production" | land. labor. capital. knowledge. entrepreneurship. |
| revenue increases but profit stays flat- what does this mean is happening | expenses are also increasing, costs may be rising too quickly, and poor costs control or inefficiency exists in the business |
| what is the role of knowledge in competitive markets | drives innovation, creates differentiation, improves efficiency, builds long-term competitive advantage |
| what is the role of robotics/AI in business | used to increase efficiency, productivity, and reduce costs |
| what factors are considered when measuring the quality of life in a demographic | level of political freedom, environmental priorities, education, healthcare, safety, amount of leisure time |
| what is "risk" in business | the chance of losing time/money |
| what is a "database" | an electronic storage of information |
| what is a loss | when expenses are greater than profits (expenses > revenue) |
| what is a nonprofit organization? give an example | an organization whose goals aren't making profit, but instead are social/educational goals (e.g. American Red Cross, Salvation Army, etc.) |
| what is a cloud storage | data stored on multiple servers managed by a host |
| what is "insourcing" | foreign companies opening U.S. offices/factories |
| what is "outsourcing" | hiring external firms (usually abroad) to do tasks |
| what is profit | when revenue is greater than expenses (money earned above the amount of money owed to expenses) |
| what is revenue | the total amount of money from sales generated before considering expenses reductions |
| what is standard of living | the quantity and quality of goods and services available to a population people can buy |
| what is the competitive environment in business | market competition and competitors |
| what is the global business environment | worldwide economic factors |
| what is the social environment in business | people and demographics |
| what is the technological environment in business | technology and its impact on a business |
| what should a B2C e-commerce business always consider | competition (global market), demography, technology, and infrastructure |
| what individuals are considered "stakeholders" | anyone affected by a business's actions |
| who is an entrepreneur | someone who risks money and time to start and manage a business |
| what does CPI stand for? what is it | consumer price index; measures the pace of inflation or deflation month by month |
| what is a recession | two or more consecutive quarters of decline in a GDP |
| what does PPI stand for? what is it | producer price index; measures overall changes in pricing at a wholesale level |
| what is "fiscal policy" | the federal gov't efforts to keep the economy stable by either decreasing or increasing government spending |
| what does the Keynesian economic theory state | states that in the event of a recession, cutting taxes and increasing spending could stimulate an economy |
| what is the "national debt" | the sum of government deficits in a given period of time |
| what is resource development | the study of how to increase resources (e.g. oil and gas from shale and tar sand) and create conditions that will make better use of them (recycling, conservation) |
| what is "inflation" | a general rise in the prices of goods and services over a period of time (2.7% currently) |
| market price (equilibrium point) can be defined graphically as | the intersection of the supply and demand curve on a graphy |
| ADAM SMITH on freedom and creation of wealth believed that | 1. freedom is vital to economic survival, 2. freedom of property and landownership is essential, 3. people will work hard if they believe they will be rewarded |
| according to ADAM SMITH, the term "invisible hand" says | self-directed gain turns into social and economic benefits for all |
| what is "capitalism" | when all or most factors of production and distribution are owned by the individual |
| what is "state capitalism" | a combination of freer markets and some gov't control |
| what is a "free market" | when decisions on what and how much to produce are made by the market through negotiation amongst buyers and sellers |
| what are the 4 basic rights in "free market capitalism" | 1. right to private ownership, 2. right to own a business and keep its profits, 3. right to freedom of competition, 4. right to freedom of choice (work and careers) |
| what is "supply" | the quantity of product manufacturers or owners are willing to SELL at a given time |
| what is "demand" | the quantity of product people are willing to BUY at a given time |
| what is a "national deficit" | the amount of money the federal gov't spends BEYOND what it collects in taxes in a fiscal year |
| what is a "national surplus" | when the gov't takes in more money in revenue than money it spends |
| what is a "national debt" | the sum of gov't deficits over time |
| what is "monetary policy" | the management of the money supply and interest rates by the Federal Reserve Bank |
| what is the Federal Reserve (fed)'s role | to raise and lower interest rates |
| when the economy is booming, the Fed will ____ interest rates | RAISE interest rates |
| when the economy is in recession, the Fed will ____ interest rates | CUT/LOWER interest rates |
| what are the 4 types of competition in business | (1) perfect competition (2) monopolistic competition (3) oligopoly (4) monopoly |
| what is "perfect competition" | many sellers in a specific market, not one individual seller will dominate and dictate price of product in the market |
| what is "monopolistic competition" | product differentiation; a large number of sellers selling similar product buyers would not perceive as different |
| what is an "oligopoly" | when only a few firms dominate a specific market (e.g. BOEING in the airplane industry) |
| what is a "monopoly" | when one seller controls the total supply of a product or service and dominates the market by setting its price |
| what is "socialism" | the economic system based on the premise that most basic businesses should be owned by the government so profits are equally distributed |
| what are some characteristics of socialism | smaller entrepreneurial businesses, steeper taxes on individuals |
| upsides vs. downsides of socialism examples | upsides: social equity, free education, free healthcare --- downsides: BRAIN DRAIN, less innovation |
| what is "communism" | when the government makes all economic decisions and owns all factors of production and distribution |
| what type of economy is the United States | a mixed economy |
| what is a "mixed economy" | an economy where some allocation of resources are made by the market and some made by the government |
| what is a command economy | when the government decides what goods and services get produced and who gets them; associated with communism |
| what is comparative advantage | the theory that a country should sell to other countries products it produces efficiently and buy products from other countries it cannot produce efficiently |
| what is absolute advantage | when a nation/group has a monopoly on producing a specific product or is able to produce it more efficiently than anyone else |
| what is unitarianism | doing the greatest good for the most amount of people |
| what is utilitarianism | the philosophy that decisions are deemed righteous if they benefit the greatest majority of stakeholders |
| what is the USMCA | a trade agreement between the U.S., Mexico, and Canada which created a free-trade region |
| what is GATT | a general agreement on tariffs and trade made in 1948; established negotiations reducing trade restrictions |
| what is an "embargo" | a complete ban on the import or export of a certain product / a complete ban on all trade with another country |
| what does FDI stand for and what is it | stands for Foreign Direct Investment and is the buying of permanent property and businesses in foreign nations |
| what is "trade protectionism"? what type of group typically advocates for it | the use of government regulations to govern/limit the import of goods and services; unions typically advocate for trade protectionism |
| what does the term "dumping" mean | selling your products in a foreign country at lower prices than those charge in your own producing country |
| what is a "common market" | a regional group of countries which have a common external tariff and don't have internal tariffs, a coordination of laws to facilitating exchange |
| what is a "common market" also referred to as | a trade block |
| what is "outsourcing" | the process whereby one firm contracts with other companies to do some or all of its functions |
| what is "contract manufacturing" | a business partnership where a firm outsources production to a specialized third-party manufacturer usually to cut costs or increase efficiency |
| what is an example of a common market | (EU) European Union, Mercosur, ASEAN |
| what is a trade surplus | when the value of a country's exports exceeds that of its imports |
| what is "balance of payment" | the flow of money coming in-and-out of a country via imports and exports |
| what is a "favorable balance of payment | more money is flowing into the country than out of it |
| what is an unfavorable balance of payment | more money is flowing out of a country than into it |
| what is franchising | a contractual agreement whereby someone with a good idea for a business sells others the rights to use the name and sell a product |
| what were the objectives of the USMCA | -eliminate trade barriers -promote fair competition -increase investment opportunity -establish framework for regional trade cooperation -improve work conditions |
| what is macroeconomics | the area of economics which studies how a nation's economy operates as a whole (e.g. inflation, interest rates) |
| what is microeconomics | the area of economics which studies the behavior of people and organizations in particular markets |
| what is Brain Drain in socialism | the loss of the best and brightest people to other countries |
| what is stagflation | when the economy is slowing but prices are going up anyhow |
| what is disinflation | when price increases are slowing |
| what are business cycles | the periodic rises and falls that occur in economies over time |
| what is a recession | a phase of two or more consecutive quarters of decline in a nation's GDP |
| what is a depression | a sever recession; usually accompanied by deflation |
| what is the SEC | the U.S. Securities and Exchange Commisssion |
| what does the SEC do | protects investors, maintains fair, orderly, efficient markets |
| what are sociocultural forces | cultural differences amongst nations and includes: social structures, religion, manners, customers, and values |
| what is an import quota | a limit on the number of products a nation can import |
| what is the World Trade Organization (WTO) | an independent entity of 164 member nations whose purpose are to oversee cross-border trade issues, global business practices |
| what is CAFTA | 'Central American Free Trade Agreement"; an agreement which created a free-trade zone with Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua |
| what is a mixed economy | an economy where some allocation of resources are made by the market and some made by the government |
| in business/economics, what is empowerment | when frontline workers are given responsibility, authority, training, freedom, and equipment needed to respond quickly to customer requests |
| what is greening in business | the trend toward saving energy and producing products that cause less harm to the environment |
| what is economics | the study of how society chooses to employ resources to produce goods and services, distribution, and consumption among competing groups and individuals |
| what is GO | the measure of total sales volume at all stages of production |
| what is joint venture | a business partnership where two more more companies undertake a major project together |
| what is a strategic alliance | long-term partnership between two or more companies to build competitive market advantage and to help each other's businesses |
| how do you restore trust in a free market system | severely punish those who break the law |
| what is a whistleblower | an insider at a firm who reports illegal or unethical behavior in business |
| what is a Ponzi scheme | a form of business fraud which aims to lure investors and pays fake "profits" to earlier investors with funds given by newer investors |
| with respect to the power hierarchy in business, where do ethics begin | at the top of the power hierarchy (corporate) |
| what is insider trading | an unethical business practice where insiders working in companies trade stocks per direction of advantageous knowledge gained from their workplace |
| what is social auditing | a systematic evaluation of an organization's progress toward socially responsive programs |
| what is a trade deficit | when a country's imports exceeds that of its exports (a country is buying more than it is selling) |
| T or F: the unemployment rate is a key economic indicator | true |
| rank the strategies for reaching global markets from least amount of commitment, control, risk, and profit potential to the highest | licensing> exporting,> franchising > contract manufacturing > strategic alliances/joint ventures > foreign direct investment |
| what is a foreign subsidiary | a firm/company in a foreign country owned by another company (mother company) |
| when facing ethical dilemmas in the business environment, what questions should one ask themselves | is this legal? is this balanced? how will this make me feel about myself? |
| what is a compliance-based ethics code | an ethics code mean't to protect businesses and people form legal repercussions (stay within compliance solely) |
| what is an integrity-based ethics code | an ethics code which establishes business values and mora principles |
| what is CSR | corporate social responsibility ; a business's concern for the welfare of society |
| what is licensing | a global strategy in which a firm (the licensor) allows a foreign company (licensee) to produce its product in exchange for a fee (known as a royalty) |
| what is balance of trade | the total value of a nation's exports compared to its imports over a particular period |
| what is a tariff | a tax imposed on imports coming into a country |
Created by:
dallin.james