BMGT 110 Quiz 1 Study Guide Business any activity that seeks to produce goods services to others while operating at a profit Goal generate revenue GOODS 30 tangible products food clothes computers JOBS SERVICES 70 intangible products education travel insurance Entrepreneur risks time and money to start and manage a business Revenue the total amount of money a business takes in during a given period of selling goods services Profit amount of money a business earns above and beyond what it spends for salaries expenses you want revenue expense to earn profit Loss occurs when a business s expenses are more than revenue Risk chance an entrepreneur takes of losing time money on a business that may not be profitable High risk high return Low risk low return Standard of Living amount of goods services people can buy with the money they have value of the cost of living high S O L good Businesses provide jobs and pay taxes to gov t development Quality of Life general well being of a society in terms of political freedom natural environment education healthcare safety rewards how well living is Stakeholders all the people who stand to gain lose by the policies activities of a business and whose concerns the business needs to address good business meets the concerns and needs of all stakeholders Suppliers media bankers stockholders customers community environmentalists dealers gov t leaders These stakeholders needs concerns often conflict Outsourcing contracting with other companies to do some or all of a firm s tasks production accounting customer service takes away jobs Insourcing foreign companies set up design and production facilities here creates jobs Non Profit Organizations goals do not include making a personal profit for owners organizers Examples Red Cross Salvation Army Habitat for Humanity Social Entrepreneurs people who use business principles to start and manage not for profits and help address social issues 5 Factors of Production Create wealth LAND natural resources LABOR workers CAPITAL machines buildings production of goods ENTREPRENEURSHIP KNOWLEDGE Freedom THE BUSINESS ENVIRONMENT The Business Environment surrounding factors that either help hinder development of businesses 1 Growth of global competition 2 3 Efficient communication and distribution advances Increase of free trade among nations A Economic Legal Environment Freedom of ownership contract laws elimination of corruption tradable currency minimum taxes regulation FAVORS BUSINESSES Gov t minimizing taxes regulations Gov t allowing private ownership Gov t minimizing interference with free exchange of goods services LESSENS RISKS Gov t establish currency tradable in world market Gov t pass laws that enable enforceable contracts Gov t minimize corruption in country B Technological Environment Information technology databases bar codes Internet Make business more efficient effective and productive EFFICIENCY producing goods services using the least amount of EFFECTIVENESS producing desired result PRODUCTIVITY amount of output generated given the amount of input Database barcodes electronic storage file for purchase information Companies compare databases to promote business and resources ads E commerce buying and selling of goods over Internet B2C Amazon Ebay and B2B IBM Identity Theft obtaining individuals personal info Social Security Credit Card number for illegal purposes TRENDS Info communication technology 24 7 Business cell phones email etc Educated consumers Google products before purchasing Aging workforce CONTINUAL LEARNING because we have to keep up with new learning C Competitive Environment Customer service stakeholder recognition employee service concern for environment exceeding customer expectations EMPOWERMENT giving the frontline workers the responsibility authority freedom training and equipment they need to respond quickly to customers requests D Social Environment Diversity demographic changes family changes DEMOGRAPHY statistical study of the human population with regard to its size density and other characteristics such as age race gender and income DIVERSITY all sorts of diversities now disabilities races sensitivity levels etc E Ecological Environment CLIMATE CHANGE GREENING trend towards saving energy and producing products that cause less harm to environment Economics study of how society chooses to employ resources to produce goods services and distribute them for consumption among various competing groups and individuals Macroeconomics looks at the operation of a nation s economy as a whole gross resources national debt population effects Microeconomics looks at behavior of people and organizations in particular markets supply demand Secret to economic development business owners provide jobs and economic growth for themselves others and their communities ADAM SMITH freedom is vital to the survival of any economy land resources incentive rewards Invisible hand Smith s phrase to describe the process that turns self directed gain into social economic benefits for all CAPITALISM economic system in which all or most of the factors of production distribution are privately owned operated for profit Foundation of the U S economy State Capitalism state runs some businesses instead of private owners Foundations of Capitalism Make people more willing to take RISKS 1 RIGHT TO OWN PRIVATE PROPERTY buy sell property and pass onto family full ownership and rights over property 2 RIGHT TO OWN A BUSINESS AND KEEP ALL PROFIT profit incentive 3 RIGHT TO FREEDOM OF COMPETITION free to compete with individuals or businesses 4 RIGHT TO FREEDOM OF CHOICE free to choose employment careers where to live operate what to buy and sell FREE MARKET decisions about what and how much to produce is made by the market the buyers and sellers negotiating prices for goods and services BUYERS choose what to buy signals to the producers what to PRODUCE Price tells producers how much to produce if something is wanted but not available the price goes up until someone makes more sells available items or creates a substitute Supply Demand Supply quantity of products that manufacturers owners are willing to sell at different prices at a specific time Amount supplied goes up as price goes up because sellers have more money to make more products Demand quantity of products that people are willing to buy at different prices at a specific time Demand increases as price decreases because people want to buy more cheap items
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