Chapters 1, 4, 5 Flashcards
(44 cards)
Business Goal
Earn a profit
Profit
The difference between what it cost to make and sell a product and what a customer pays for it
Non-profit Organization
-Purpose isn’t to earn profits
-May provide goods or services
-Engage in fund raising
-Engage in management, marketing, and finance to reach goals
Stakeholders
Groups that have a stake in the success and outcomes of a business
People & activities of business
Management (Competition/social responsibility and ethics)- Involves the functions of planning, organizing, leading, and controlling (employees)
Marketing (Legal, political, regulatory forces, and digital tech)- Focus of all marketing activities is satisfying customers (customers)
Finance (Economy)- Refers to all activities concerned with obtaining money and using it effectively (owners)
Economics
The study of how resources are distributed for the production of goods and services within a social system
Factors of Production
Land, labor, capital, and enterprise (Natural, human, and financial resources)
Communism
-Owned/operated by government
-Government controls competition/economy
-Excess income goes to gov. The gov supports social/economic institutions
-Consumers have limited choices of goods/services, prices are higher
-Little choice in career, most work for gov own industries or farms
Socialism
-Gov owns/operates some basic industries, individuals own small businesses
-Comp restricted in basic industries, encouraged in small businesses
-Small business profit may be reinvested into the business, profit in gov owned industries goes to gov
-Consumers have some choice of goods and services, prices determined by supply/demand
-More choice of career, many work gov jobs
Capitalism (Free enterprise)
-Individuals own and operate all businesses
- Comp Encouraged by market forces and gov regulations
-Individuals and businesses are free to keep profits after paying taxes
-Consumers have a wide choice of goods and services, prices determined by supply/demand
-Unlimited choice of careers
Mixed market
-No country has a pure form of communism, socialism, or capitalism
-Most nations operate with elements from more than one system
Supply Vs Demand and price
Supply- The number of products, goods, and services that businesses are willing to sell at different prices at a specific time
Demand- The number of goods and services that consumers are willing to buy at different prices at a specific time
Equilibrium Price
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 time
Pure Competition
The market structure that exists when there are many small businesses selling one standardized product
Monopolistic Competition
The market structure that exists when there are fewer businesses that in a pure competition environment and the differences among the goods they sell are small
Oligopoly
The market structure that exists when there are very few businesses selling a product (Airlines)
Monopoly
The market structure that exists when there is only one business providing a product in a given market (Utilities)
Economic expansion (inflation) Vs contraction
Expansion- Occurs when an economy is growing and people are spending more money. Purchases stimulate production and employment
Contraction- Slowdown of the economy characterized by a decline in spending and during which businesses cut back and production and lay off workers
Inflation- A condition characterized by a continued rise in prices
Recession Vs Depression
Recession- A decline in production, employment, and income
Depression- A condition of the economy in which unemployment is very high, consumer spending is low, and businesses output is sharply reduced
Gross Domestic Product (GDP)
The sum of all goods and services produced in a country during a year
Budget deficit/surplus
Deficit- The condition in which a nation spends more than it takes in from taxes
Surplus- Income or revenue exceeds expenditures
Sole proprietorship (7 Adv V 6 Dis)
Def- Businesses owned and operated by one individual
Adv- Ease/cost of formation, secrecy, distribution/use of profit, flexibility/control of the business, gov regulation, taxation, closing the business
Dis- Unlimited liability, limited source of funds, limited skills, lack of continuity, lack of qualified employees, taxation
Partnership (5 Adv V 5 Dis and articles)
Def- An association of two or more persons who carry on as co-owners of a business for profit
Adv- Ease of organization, availability of capital/credit, combined knowledge/skills, decision making, regulatory controls
Dis- Unlimited liability, Business responsibility, life of the partnership, distribution of profits, limited source of funds
Articles- legal documents that set forth the basic agreement between partners
Corporation (5 Adv V 4 Dis)
Def- A legal entity, created by the state, whose assets and liabilities are separate from its owners
Adv- Limited liability, Ease of transfer of ownership, perpetual life, external source of funds, expansion potential
Dis- Double taxation, forming a corporation, disclosure of information, employee-owner separation
