BUSAD101 Test 1
Terms
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- What are the advantages of a sole proprietorship?
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1. Owner retains all profit
2. Easy to form and dissolve
3. Owner has flexability - What are the disadvantages of a sole proprietorship?
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1. Unlimited financial liability
2. Financial limitations
3. Management deficencies
4. Lack of continuity - What are the advantages of a partnership?
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1. Easy to form
2. Can benefit from complementary management skills
3. Extended financial capacity - What are the disadvantages of a partnership?
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1. Unlimited financial liability
2. Interpersonal conflict
3. Lack of continuity
4. Difficult to dissolve - What are the advantages of a coorporation?
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1. Limited financial liability
2. Specialized management skills
3. Expanded financial capacity
4. Economies of scale - what are the disadvantages of a coorporation?
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1. Difficult and costly to form and dissolve
2. Tax dissadvantages
3. Legal Restrictions - What is comparative advantage?
- 1.If you can make for less than you can buy you should make⬦if you can buy for less than you can make⬦you should buy
- not-for-profit organization
- A businesslike establishment that has primary objectives, such as public service, other than returning a profit to its owners.
- Bretton Woods Facts
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1. Small Town in New Hampshire
2. Economic Conference
3. 1944
4. 44 countries attended - Bretton Woods Focus
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1. Financial Issues
2. Stability
3. International Trade
4. Comparative Advantage - Adam Smith
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1. Wrote Wealth of Nations
2. Productivity and the invisible hand - competition
- battle among businesses for consumer acceptance
- advantages of small organizations
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1. innovation
2. superior customer service
3. low costs
4. filling isolated market niches - disadvantages of small organizations
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1. management shortcomings
2. inadequate financing
3. government regulation - productivity
- relationship between the goods and services produced in a nation each year and the inputs needed to produce them.
- business
- all profit-seeking activities and enterprises that provide goods and services necessary to an economic system
- profits
- rewards for businesspeople who take the risks involved to offer goods and servies to customers
- factors of production
- four basic inputs for efective operation: natural resources, captial, human resources, and entrepreneurship
- private enterprise system
- economic system that rewards businesses for their ability to identify and serve the needs and demands of customers
- entrepreneur
- person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business
- brand
- name, term, sign, symbol, design, or some combination that identifies the products of one firm and differentiates them from competitors' offerings
- relationship management
- collection of activities that build and maintain ongoing, mutually beneficial ties between a business and its customers and other parties
- value
- customer's perception of the balance between the positive traits of a good or service and its price
- customer satisfaction
- ability of a good or service to meet or exceed a buyer's needs and expectations
- entrepreneurship
- the willingness to take risks to create and operate a business
- economics
- social science that analyzes the choices made by people and governments in allocating scarce resources
- microeconomics
- study of small economic units, such as individual consumers, families, and businesses
- macroeconomics
- study of a nation's overall economic issues, such as how an economy maintains and allocates resources and how government policies affect the standards of living of its citizens
- supply
- willingness and ability of sellers to provide goods and services
- pure competition
- a market structure in which large numbers of buyers and sellers exchange homogeneous products, so no single participant has a significant influence on price.
- monopolistic competition
- a market structure in which large numbers of buyers and sellers exchange relatively well-differentiated products, so each participant has some control over price.
- oligopoly
- a market situation in which relatively few sellers compete and in which high start-up costs form barriers to keep out new competitors
- monopoly
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1. regulated entities
2. one provider
3. complete control over price - communism
- an economic system in which all property would be shared equally by the people of a community under the diretion of a strong central government
- socialism
- an economic system which is characterized by government ownership and operation of major industries, but allows private ownership in industries considered less crucial to social welfare.
- recession
- cyclical economic contraction that lasts for six months or longer
- planned economy
- government controls determine business ownership, profits and resource allocation to accomplish government goals rather than those set by individual businesses.
- inflation
- rising prices caused by a combination of excess consumer demand and increases in the costs of raw materials, human resources, and other factors of production
- monetary policy
- government action to increase or decrease the money supply and change banking requirements and interest rates to influence bankers' willingness to make loans
- fiscal policy
- government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.
- budget
- organization's plan for how it will raise and spend money during a given period of time
- exports
- domestically produced goods and services sold in other countries
- imports
- foreign goods and services purchased by domestic customers
- balance of trade
- difference between a nation's exports and imports
- balance of payments
- difference in money flows into or out of a country.
- exchange rate
- value of one nation's currency relative to the currencies of other countries
- tariff
- tax imposed on imported goods
- World Trade Organization (WTO)
- 135-member international institiution that monitors GATT agreements and mediates international trade disputes
- North American Free Trade Agreement (NAFTA)
- 1994 agreement among the U.S., Canada, and Mexico to break down tariffs and trade restricitons.
- European Union (EU)
- 24-nation European economic alliance
- multinational corporation (MNC)
- firm with significant operations and marketing activities outside its home country
- global business strategy
- offering a standardized, worldwide product and selling it in essentially the same manner throughout a firm's domestic and foreign markets.
- multidomestic business strategy
- developing and marketing products to serve different needs and tastes of separate national markets.
- small business
- firm that is independently owned and operated, not dominant in its field, and meets industry-specific size standards for income or number of employees
- business plan
- written document that provides an orderly statement of a company's goals, the methods by which it intends to achieve those goals, and the standards by which it will measure achievements.
- Small Business Administration (SBA)
- federal agency that assists small businesses by providing management training and consulting, financial advice, and support in securing government contracts.
- business incubator
- organization that provides low-cost, shared facilities on a temporary basis to small start-up ventures
- franchising
- contractual agreement that specifies the methods by which a dealer can produce and market a supplier's good or service.
- sole proprietorship
- form of business ownership in which the company is owned and operated by one person
- partnership
- form of business ownership in which the company is operated by two or more people who are co-owners by voluntary legal agreement
- corporation
- business that stands as a legal entity with assets and liabilites separate from those of its owner(s)
- stockholder
- person or organization who owns shares of stock in a corporation
- board of directors
- elected governing body of a corporation
- merger
- combination of two or more firms to form one company
- acquisition
- procedure in which one firm purchases the property and assumes the obligations of another
- classic entrepreneur
- person who identifies a business opportunity and allocates available resources to tap that market
- intrapreneur
- entrepreneurially oriented person who develops innovations within the context of a large organization
- change agent
- manager who tries to revitalize an established firm to keep it competitive
- seed captial
- initial funding needed to launch a new venture
- debt financing
- borrowed funds that entrepreneurs must repay
- equity financing
- funds invested in new ventures in exchange for part ownership
- venture capitalists
- business firm or group of individuals who invest in new and growing firms
- angel investors
- wealthy individuals who investdirectly in a new venture in exchange for an equity stake
- intrapreneurship
- process of promoting innovation within the structure of an existing organization
- 4 Business Environments
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1. Legal and Regulatory
2. Social and Cultural
3. Competitive and Technological
4. Economic and Political - Legal and Regulatory Environment
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1. ensures competition
2. employment practicies
3. environment and product safety - Social and Cultural Environment
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1. demographics
2. lifestyle
3. changing values - competitive and Technological Environment
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1. using technology
2. change and flexibility
3. workforce skill
4. research and development
5. exponential changes over time - Economic and Political Environment
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1. supply-side vs. keynesian economics
2. republicans vs. democrats
3. global economy - Demographics
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1. aging of America
2. increasing minority populations
3. declining birthrate - Lifestyle
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1. time conscious
2. delaying marriage
3. more divorce - Changing Values
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1. no longer homogeneous
2. more diversified
3. huge media role - Stages in Business
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1. production
2. product
3. selling
4. marketing
5. social responsibility - Production Stage
- mass production
- Product Stage
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1. color
2. size
3. improvement - marketing Concept Stage
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1. find out what people want before we make it
2. market research - Social responsibility
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1. Present?
2. legal or illegal
3. responsible or irresponsible - Monopolist Competition
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1. product differentiation
2. some control of price
3. retail items - Serendipity
- something that happens by accident
- Cybernetics
- goal-oriented action
- Accomplishment of Bretton Woods Conference
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1. created world bank
2. created International Monetary Fund
3. fixed the price of gold - Problems with Comparative Advantage
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1. monoplies formed
2. alternative products caused disruptions
3. man-made advantages not counted on
4. goal was a static environment but problems caused dynamicenvironment - older organization
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1. set culutre
2. bureaucracy
3. limited high-impact opportunities - younger organization
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1. constant change
2. more work
3. contribution significance - small organization
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1. growth potential
2. cross-trained
3. relate to finished product
4. limited resources
5. risky (less stable) - large organization
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1. stable
2. more resources
3. pigeon-holed - for profit organization
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1. money is primary score card
2. private risk - not for profit organization
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1. primary mission is betterment of society
2. must operate in the black
3. private business concepts are necessary - manufacturing
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1. convertingraw materials
2. value added
3. high paying
4. technical skills
5. union based
6. heavy cost of entry
7. decline - service
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1. one owner; profits
2. lower wages for many
3. low-to-no value added
4. lower skills needed
5. time conscience
6. reflect higher standards of living
7. dramatic increase