MGMT 105 Exam # 1 Study Guide Lectures: 1 – 10- Planned Economy: economy that relies on a centralized government that controls factors of productiono Example: communism; socialism (government controls SOME of production)- Mixed Market Economy: features or characteristics of both planned and market economies- Important Parts of Private Enterprise System:o Private Property Rights: ownership of the resources used to create wealth is in the hands of the individuals o Freedom of Choice: one can sell their labor to any employer of their choiceo Profits: drives the market economy- 4 Types of Competitiono Monopoly: ONE entity that owns that business; no competition Example: College Station Utilities o Oligopoly: FEW competitors; hard to enter the market Example: airlineso Monopolistic Competition: MANY providers, easy to enter the market Example: Wendy’s burgers are square instead of round, therefore it makes consumers thinks that there is a difference in the product from somewhere with a round burger patty- Ethics: beliefs about what is right and wrong or good and bad in actions that affect others - Ethical Behavior: behavior that conforms to individual beliefs and social norms about what is right and good- Whistle Blowing Act: protects one from retaliation if one shows unethical behavioro Example: Dr. Welch talked about how he used to work for a hotel in Houston that were doing some unethical things that he wasn’t aware of. The hotel company told Dr. Welch that he was going to Louisiana for a meeting, however once he got to Louisiana the driver of the car took him from the airport to a place to get a polygraph exam. He took the exam but he never went back to that company because he didn’t want to be a part of a business that was doing unethical things because it was against one of his values.- Consumer Rights: President Kennedy “everyone has certain rights when purchasing a product; right to a safe product- Small Business: a business that doesn’t dominate the market- Almost 86% of all U.S. businesses have no more than 20 employees- Over ½ of small businesses are in the service industry- A benefit of buying an existing business is that it already has a customer-base- #1 source of financing the small business is from personal resources- People own businesses that are a part of trends and since trends are constantly changing, so are businesses - One must have systems to run a business successfully - People should work ON their business; not IN their business- 2 things that managers can control of business are food cost and labor- 44% of new start-ups can expect to survive for at least 4 years- The main reason for failure of a business is managerial incompetence or inexperience- Sole Proprietorship: ONE individual is responsible for the business; they want to be their own bosso Main advantage: freedomo Main disadvantage: limited liability- Partnership: TWO or more people come together to make a businesso Main advantage: more talent and moneyo Main disagreement: disagreements among partners- About 70% of businesses are sole proprietorships- Main advantage of a corporation is continuity (if the owner passes away the business will continue and someone else will take over the business)- Globalization: process by which the world economy is becoming a single interdependent system- Absolute Advantage: the ability to produce something more efficiently than any other countryo Example: Saudi Arabia - oil- Comparative Advantage: the ability to produce SOME products more efficiently than otherso Example: U.S. automobiles and agriculture- Embargo: a government order banning exportation- One of the barriers to international trade is social and cultural differences Example: Ford Pinto - they had to change their marketing technique when they marketed it to Brazil because pinto in Brazil means tiny male genitals Don’t forget to look over the slides that Dr.Welch told the class to take a picture of during lecture. From what he said in class, there are about 10 questions alone that are coming from those slides. I believe there are 3 slides to