Definitions

Mixed economy.

Entrepreneurial resourcesThe initiative to combine natural, human, and capital resources

Opportunity costValue of the next-best alternative that is forgone to produce or obtain another product

CompetitorsEconomic decision-making

Economic resources

Private propertyRight to purchase, use, and discard of things of value

ServicesActivities that can be consumed at the time of purchase to satisfy needs and wants

ScarcityCondition that exists when wants or needs exceed resources available

EconomicsStudy of the decisions made for production, distribution, and consumption of goods and services to satisfy needs and wants

NeedsNecessities required for living

ConsumerNecessities required for livingBuys and uses the goods and services

Capital resourcesGoods and money used in the production of goods and services

Natural resourcesRaw materials supplied by nature

Human resourcesPeople using efforts, knowledge, and skills at work to produce goods and services

Free enterpriseEconomic system which freedom to consume and produce goods and services exists

Traditional economyEconomic system in which decisions are based on customs and centered on family

GoodsItems purchased to satisfy needs and wants

ProfitMoney left after selling goods and services and costs of operating a business have been paid

WantsGoods that are purchased to add comfort or pleasure to life

MarketplaceAnywhere goods and services exchange hands

MarketplaceProcess of giving up something for gaining something else

Market economyGoods and services are owned and controlled by the people

Freedom of choiceOpportunity to make choices of goods and services and accept consequences of decisions

Command economyEconomics system in which the government owns resources and dictates what is produced

Market priceThe point where supply and demand are equal

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DeflationA decrease in the general price level

Business CycleThe movement of an economy from one condition to another and back again

Capital Project SpendingSpending by businesses for items such as land, buildings, and equipment

Budget SurplusGovernment spends less than it takes in

DepressionA phase marked by a long period of high A unemployment, weak consumer sales, and business failures

BondRepresents debt for an organization

Personal IncomeSalaries and wages as well as investment income and government payments to individuals

GDP Per CapitaThe Gross Domestic product (GDP) divided by the total population of a country

ProductivityProduction output in relation to a unit of input, such as a worker

RecoveryThe phase in which unemployment decreases, demand for goods and services increases, and GDP begins to rise

InflationAn increase in the general price level

StockRepresents ownership in a corporation

Budget DeficitGovernment spending more than it takes in

Unemployment RateThe portion of people in the labor force who are not working

Retail SalesThe sales of durable and nondurable goods bought by consumers

ProsperityA period in which unemployment is low, businesses produce many goods and services, and wages are good

Price IndexA number that compares prices in one year with some earlier base year

RecessionA period in which demand, production, and GDP growth decreases and unemployment begins to rise

National DebtThe total amount owed by the federal government

Gross Domestic ProductThe total value of all final goods and services produced in a country in one year (GDP)

Domestic BusinessMaking, buying and selling of goods and services within a country

International Businessbusiness activities needed for creating, shipping, and selling goods and services across national borders. Also referred to as "foreign" trade or "world trade

Absolute Advantageexists when a country can produce a good or service at a lower cost than other countries

Comparative Advantagea situation in which a country specializes in the production of a good or service at which it is relatively more efficient

Importsitems bought from other countries

ExportsGoods and services sold to other countries

Foreign Debtthe amount a country owes to other countries

Balance of PaymentsThe difference in the amount of money that comes into a country and the amount that goes out of it

Positive or Favorable Balance of Paymentoccurs when a nation receives more money in a year than it pays out

Negative or Unfavorable Balance of Paymentoccurs when a nation pays out more money than it takes in in a year

Exchange Ratethe value of a currency in one country compared to the value of another

Foreign Exchange MarketBanks buying and selling different currencies

Culturethe accepted behaviors, customs, and values of a society

Infrastructurea nation's transportation, communications, and utility systems

Trade BarriersRestrictions to free trade created by governments

Formal Trade BarriersPolitical actions such as quotas, tariffs and embargoes

Informal Trade BarriersRestrictions to trade based on culture, traditions, and religion

QuotaLimits set by governments on quantities of a product that may be imported or exported

Tariffa tax that a government places on certain imported products

embargowhen the government stops the import or export of a product completely

Free Trade Zonea selected area where products can be imported duty-free and then stored, assembled, and/or used in manufacturing.

Free Trade AgreementWhen member countries agree to remove duties and trade barriers on products traded among them

common marketcompanies are free to invest in each other's country. also known as an "economic community"

Multinational Company (MNC)an organization that does business in several countries

Home CountryWhere the home office of a Multinational Company is located

Host CountryThe foreign country where a multi-national country places business activities

Global strategyusing the same product and marketing strategy worldwide.

Multinational Strategytreats each country market differently

Licensingselling the right to use some intangible property(production process, trademark, or brand name) for a fee or royalty

Franchisethe right to use a company name or business process in a specific way

Joint Venturean agreement between two or more companies to share a business project

World Trade Organization (WTO)created in 1995 to promote trade around the world

International Monetary Fundcreated in 1946 to help promote economic cooperation between countries

World Bankprovides economic aid to less developed countries

Interest RatesThe cost of using somone else's money

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Proprietorshipa business owned and run by just one person. It is the most common form of business ownership

Partnershipa business owned and controlled by two or more people who have entered into a written agreement.

Corporationa separate legal entitiy formed by documents filed with your state. Owned by one or more shareholders and managed by a board of directors

Partnership Agreementa written agreement among all owners of a partnership

Articles of Incorporationa written legal document that defines ownership and operating procedures and conditions for the business

Board of Directorsthe people who will make the major policy and financial decisions for a corporation

Limited Liability Partnershipa partnership in which some investors cannot lose more than the amount of their investment, but are not allowed to participate in the day-to-day management of the business.

Joint Venturea unique business organization by two or more other businesses to operate for a limited time and for a specific project. It is a type of partnership.

S-CorporationA corporation which passes all income through to the owners based on their investment and is taxed on their individual tax returns.

Limited Liability Company (LLC)A corporation which is much like a partnership and limits the liability of the owners

Nonprofit Corporationa group of people who join to do some activity that benefits the public.

Cooperativeis formed by a group of people who cooperate to provide goods and services that they all need. It is owned by the members.

Franchisea written contract granting permission to operate a business to sell products and services in a set way.

FranchisorThe company that owns a product or service and grants the rights to sell products and services in a set way to another business

FranchiseeA company that purchases the right to to sell products and services of another company in a set way

General Partnerplays an active role and has unlimited liability. (every partnership must have at least one general partner.)

Limited Partnerparticipates as an investor in the partnership but has limited liablility.

Secret Partnerplays an active role but is secret from society

Dormant Partnerplays no role and is not know to the public

Silent Partnerdoes not have an active role but is know to the public.

Domestic Corporationcorporation chartered in a specific state

Foreign Corporationcorporation chartered in one state but doing business in another state.

Alien Corporationcorporation chartered in another nation but doing business in a state.

Public Corporationcorporation established for government purposes.

Private Corporationcorporation established by individuals for business or charitable purposes.

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Managementthe process of accomplishing the goals of an organization through the effective use of people and other resources.

Planninginvolves analyzing information, setting goals, and making decisions about what needs to be done.

Organizingmeans identifying and arranging the work and resources needed to achieve the goals that have been set.

Staffingincludes all of the activities involed in obtaining, preparing, and compensating the employees of a business.

Implementingthe effort to direct and lead people to accomplish the planned work of the organization.

Controllingdetermines to what extent the business is accomlishing the goals it set out to reach in the planning stage.

Management Stylethe way a manager treats and involves employees

leadershipthe ability to motivate individual and groups to accomplish important goals

human relationsthe way people get along with each other.

influenceenables a person to affect the actions of others.

informal influencethe leadership role is not part of a formal structure

formal influencethe leadership position is part of the organization's structure

ethical business practiceensure that the highest standards of conduct are observed in a company's relationships with everyone who is a part of the business or is affected by the business' activities.

core valuesthe important principles that will guide decisions and actions in the company.

Executivestop-level managers with responsibilities for the direction and success of the entire business

Mid-managersspecialists with responsibilities for specific parts of a company's operations

supervisorsthe first level of management in a business

Tactical managementa management style in which the manager is more directive and controlling

Strategic managementA management style in which managers are less directive and involve employees in decision making

mixed managementthe combined use of tactical and strategic management

position influencethe ability to get others to accomplish tasks because of the position the leader holds

reward influenceresults from the leader's ability to give or withhold rewards

expert influencearises when group members recognize that the leader has special expertise in the area

Identity influencestems from te personal trust and respect members have for the leader

Ethicsthe principles of conduct governing an individual or a group

Workforce...

Downsizinga planned reduction in the number of employees needed in a firm in order to reduce costs and make the business more efficient.

Outsourcingremoves work from one company and sends it to another company that can complete it at a lower cost.

Job Analysisa specific study of a job to identify in detail the job duties and skill requirements

Compensationthe amount of money paid to an employee for work performed

Salaries and WagesThe 2 methods of direct payment of money to an employee for work completed

BenefitsCompensation in forms other than direct payment

Incentivesystems connect the amount of compensation to the quality or quantity of an employee's performance.

Promotionthe advancement of an employee to a position with greater responsibility

transferthe assignment of an employee to another job in the company with a similar level of responsibility

terminationends the employment relationship between a company and an employee

Organizational Culturethe environment in which people work, made up of the atmosphere, behaviors, beliefs, and relationships.

Work Environmentthe physical conditions and the psychological atmosphere in which employees work

Labor Unionan organized group of employees who negotiate with employers about issues such as wages and work conditions.

glass ceilingis an artificial limit placed on minority groups moving into positions of authority and decision-making.

Occupational Outlook Handbookoffers up-to-date information about the U.S. workforce

Service-producing industriesbusinesses that perform services that satisfy tne needs of other businesses and consumers

Goods-producing industriesbusinesses that produce or manufacture products used by other businesses or purchased by final consumers

White-collar workerone whose work is more mental than physical and involves the handling and processing of information

Blue-collar workerone whose job involves a great deal of manual work including the operation of machinery and equipment or other production activities.

Technologythe use of automated machinery, electronic equipment, and integrated computer systems to help increase the efficiency of producing goods and services

Human Resourcesthe people who work for a business

Planning and staffingA human resource activity involved in identifying and filling all of the jobs in the company with qualified people

performance managementA human resource activity involved in evaluating the work of employees and improving performance through training and development

Compensation and benefitsa human resource activity involved in planning and managing payroll, personnal records, and benefits programs.

Permanent employeean employee to whom a company makes a long-term commitment.

Temporary employeean employee who is hired for a specific time or to complete a specific assignment

Full-time employeean employee who regularly works a schedule of 30 hours or more per week

Part-time employeean employee who usually works less than 30 hrs per week either through shorter hours per day or fewer days per week

Commissiona form of pay in which an employee is paid a percentage of sales for which he or she is responsible

Piece RateA form of pay in which an employee receives a specific amount for each unit of work produced

Base plus incentivecombination of a wage or salary with an additional amount based on the employee's performance

Cafeteria Planallocates a certain amount of money to each employee that can be spent on benefits

Dischargetermination of employment due to inappropriate work behavior

Layoff Temporarlytemporarty or permanent reduction in the number of employees due to changing business conditions

Personal timea few hours each month that can be scheduled for non-job activities

Family Leavea policy which allows employees to take a leave of absense to care for a sick family member, or for other personal emergencies for the birth or adoption of a child

Flextimeallows employees some choice in how their work days and hours are arranged

Job Sharingoffers one job to two people. Each person works a part-time schedule

Flex-Plansome employees can complete part or all of their work away from the business site.

Collective BargainingFormal negotiations between Unions and Management

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Extraction and CultivationA form of production in which products are obtained from nature or grown using natural resources

ProcessingA form of production which involves changing and improving the form of another product.

Manufacturing productsA form of production which combines raw materials and processed goods into finished

ManufacturingProcess Usually involves several businesses using products or raw material to create other products to be used by customers

Manufacturing ProceduresThe way manufacturers set up production to make their products

Mass ProductionAn assembly process that makes a large number of identical products using a continuous, efficient procedere

Custom ManufacturingBuilding a specific and unique product to meet the needs of one customer.

Materials ProcessingChanging the form of raw materials so the can be consumed or used to make other products.

Continuous ProcessingA form of materials processing in which raw materials constantly move through specially designed equipment changing them into a specific product useable for consumption or further manufacturing

Intermittent ProcessingA form of materials processing which uses short production runs to produce a precise amount of a variation of a product.

Product Planninga two step process involving New Product Research and Product Design

Inventory managementMaintains the supply of all resources needed for production and the products produced.

Facilities ManagementThe type of business operation associated with a business's buildings

LogisticsManaging the acquisition, movement, and storage of supplies, materials, and finished products in a business.

Schedulinginvolves determining the activities that need to be completed, the people who will complete the work, and the resources needed for the task

Safety and SecurityProtection of people and property.

Operational Plana tool for business operations which identifies how work will be done, who will do it, and what resources will be needed.

Schedulea time plan for completing activities

StandardA specific measurement against which an activity or result is judged

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Management Information System (MIS)an ordered system of processing and reporting information in an organization

Components of MIS1.Financial Information 2.Production and Inventory Information 3.Marketing and Sales Information 4. Human Resource Information

E-commerce (e for electronic)refers to conducting business transactions over the internet or other technology

Roboticsthe use of mechanical devices programmed to do routine tasks, such as those in many factories

Artificial Intelligencesoftware that enables computers to reason, learn, and make decisions. It uses logical methods similar to the methods humans use.

Expert SystemsComputer programs that help people solve technical problems

Computer-aided design (CAD)the use of technology to create product styles and designs.

Telecommutinginvolves the activities of a worker using a computer at home to do a job instead of going to their employer's place of business

Business ethicsRules about how businesses and their employees ought to behave.

Social responsibilityThe duty of a business to contribute to the well-being of a community.

EthicsPrinciples of morality or rules of conduct.

Code of ethicsA set of rules for guiding the action of employees or members of an organization.

PatentThe exclusive rights of an inventor to make, sell, and use a product or process.

TrademarkA distinctive name, symbol, word, picture, or combination of these that a company uses to identify products or services.

CopyrightProtection of the creative work of authors, composers, and artists.

Public utilityAn organization that supplies a service or product vital to all people including companies that provides local telephone service, water, and electricity.

Nonrenewable resourceA natural resource that cannot be replaced

MonopolyWhen a business has control of the market for a product or service.

Antitrust lawsLaws intended to prevent unfair business practices such as false advertising, deceptive pricing, and misleading labeling.

ContractAn agreement to exchange goods or services for something of value, usually money.

Social responsibilityrefers to the duty of a busines to contribute to the wellbeing of a community

Non-renewableresource a natural resource that cannot be replaced when used up

Conservationsaving scarce natural resources

Pollutionoccurs when the environment is tainted with the by-products of human actions

EPAEnvironmental Protection Agency enforces govt's measurable standards for water and air quality

OSHAOccupation Safety and Health Administration

Ethicsprincipals of morality or rules of conduct

Marketing the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives...

Conflict of interestcan occur when an action by a company or individual results in an unfair benefit

Interstate commercerefers to business dealings involving companies in more than one state (Regulated by the Federal Government)

Intrastate commercerefers to business dealing involving companies that do business within one state (Regulated by the State Government)

Marketing Strategy a company's plan to achieve its goals...

Intellectual propertyis purely intangible with no physical characteristics- no one can touch it.

Copyrightprotects the creative work of authors, composers, and artists

Public utilityan oranization that supplies a service or product vital to all people

Revenuegovernment income

Income taxesTaxes levied on the income of individuals and corporations

Property taxtax based on the value of property such as land and buildings

Sales taxa state or local tax on goods and services that is collected by the seller

Government borrowinggov't borrows money by selling bonds

Federal Trade Commission (FTC)enforces antitrust laws

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Target Marketa specific group of consumers that have similar wants and needs

Marketing Mixthe blending of four marketing elements-product, distribution, price, and promotion

Marketing Orientationconsiders the needs of customers when developing a marketing mix

Final Consumerspersons who buy products and services mostly for their own use

Business Consumerspersons, companies, and organizations that buy products for the operation of a business, for incorporation into other products and services, or for resale to their customers

Consumer Decision-Making Processthe specific sequence of steps consumers follow to make a purchase

Buying Motivesthe reasons consumers decide what products and services to purchase

Marketing Researchfinding solutions to problems through carefully designed studies involving consumers

Producteverything a business offers to satisfy a customer's needs

Servicesactivities that are consumed at the same time they are produced

Intangiblehave no physical form

Pricethe money a customer must pay for a product or service

Markupthe amount added to the cost of a product to set the selling price

Encoding preparing the information to be communicated...

Decodingthe receiver obtains the information from the channel and interprets it for understanding

Distributionthe locations and methods used to make a product or service available to the target market

Channel of Distributionthe route a product follows and the businesses involved in moving a product from the producer to the final consumer

Promotionany form of communication used to inform, persuade, or remind

Effective communicationthe exchange of information so there is common understanding by all participants

Personal sellingdirect, individualized communication with prospective customers to assess their needs with appropriate products and services eds and assist them in satisfying those needs

Advertisingany paid form of communication through mass media directed at identified consumers to provide information and influence their actions

Channel Membersthe businesses that take part in a channel of distribution

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Are banks like businesses?Banks are businesses because they sell services such as checking accounts, saving accounts and loans. They want to earn revenues and make profits.

Can anyone start a bank?No, not everyone can start a bank. They have to meet federal and government's state requirements. They take people's money so they must be fair. Must have enough capital.

How can people start a bank?People can start a bank, but they have to apply for charter from the federal government. If they apply to their state and the charter is granted, the bank will open as a state bank. If it is a charter from the federal government it will operate as a national association (N.A).

Is government regulation of a bank necessary?Yes, it is necessary because if a bank fails thousands of people will loose money. The government has to regulate the banking laws to assure the saftey of customers' money. State banks= state banking laws and National banks= federal law

Deposit type institutionsaccept deposits for people in the future. (main types: commercial, s&l, mutual, credit union)

Commercial banksFull service banks that offer a wide range of financial services. Bank offer checking accounts, provide savings accounts, make loans to individuals and to businesses, And offer other services. Have been opened in supermarkets and offer everything!

Federal Deposit Insurance Corporation FDICProtects depositors money in case of failure... Insures all account in same bank

Savings and Loans AssociationSpecalized in savings accounts and making loans for home mortages

Mutual Savings BankProvides a variety of services. It organized mainly savings accounts and to make loans to home buyers. Owned by depositors

Credit unionIs a user-owed, not-for-profit, cooperative financial instution. Usually formed by peeps in same company, church, community,etc. Offer other services...(NCUA- insures depositors funds in case of failure) like FDIC

Nondeposit financial institutionRefers to financial institution

Life insurance companiesPeople buy this to provide financial security for dependents. Offer financial services and helps expand business in economy

Investment companiesAllow people to choose investment opportunity for long term growth of their money.

Consumer finance companySpecializes in making loans for long lasting or durable goods and for financial emergencies

Mortages companiesProvide loans for purchasing a home or restate

Check cashing companiesPeople who don't have banks may use for check cashing outlets to cash paychecks

PawnshopsMake loans based on tangible possessions

Accepting Deposits (Financial Services)safe storage funds for the future. One of main services is they offer to keep money for safe keeping.

Interestthe amount paid for the use of money

Transferring funds (Financial Services)the ability to transfer to others is extremely important . Money in a checking account can be accessed at any time, by writing a check and this can be deposited in the account of the person who receives the checkElectronic Funds Transfer (EFT)a system through which funds are moved electronically from one account to another and from one bank to another.

ATMs (Automatic Teller MachinesHome bankingDirect depositPoint of sale transactionsLending moneySafe Deposit BoxInvestments