Goods tangible products such as computers food clothing cars and appliances Services intangible products such as education health care insurance recreation and travel and tourism Business an activity that seeks to provide goods and services to others while operating at a profit Entrepreneur a person who risks time and money to start and manage business Revenue total amount of money a business takes in during a given period by selling goods and services Profit the amount of money a business earns above and beyond what it spends for salaries and other expenses Loss when a business s expenses are more than its revenues Risk the chance an entrepreneur takes of losing time and money on a business that may not prove profitable Standard of living the amount of goods and services people can buy with the money they have Quality of life the general well being of a society in terms of its political freedom natural environment education healthcare safety amount of leisure and rewards that add to the satisfaction and joy that other goods and services provide Stakeholders all the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address Outsourcing contracting with other companies to do some or all of the functions of a firm like its production or accounting tasks Nonprofit organization organization whose goals do not include making a personal profit for its owners or organizers Do not strive for financial gains but they use them to meet their social or educational goals rather than for personal profit Business environment the surrounding factors that either help or hinder the development of businesses Five factors of production land labor capital entrepreneurship and knowledge Creating the right atmosphere sets the success for business Economic and legal environment technological environment competitive environment social environment global business environment One way for gov to actively promote entrepreneurship is to allow private ownership of business best thing for gov to do is to minimize the interference with the free exchange of goods and services Technology has changed the way we communicate with one another Productivity the amount of output you generate given the amount of input E commerce the buying and selling of goods over the Internet B2C AND B2B Due to database identity theft becomes possible Businesses can meet and beat competition Competing by exceeding expectations Competing by restructuring empowerment Traditional business Modern business Customer satisfaction delighting the customer Customer orientation customer stakeholder orientation Profit orientation profit and social orientation Reactive ethics proactive ethics Product orientation quality and service orientation Managerial focus customer focus Social Environment Demography the statistical study of the human population with regard to its size density and other characteristics such as age race gender and income Managing diversity the increase in single parent families number of older citizens draining the economy of wealth due to social security The global environment greatly effects business War and terrorism draw billions of dollars from the economy climate change the process of greening which is a trend toward saving energy and producing products that cause less harm to the environment Economics the study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals Macro the part of econ study that looks at the operation of a nations economy as a whole Micro the part of econ study that looks at the behavior of people and organizations in particular markets Resource development the study of how to increase resources and to create the conditions that will make better the use of those resources Some economists believe that resources need to be carefully divided among people by the government Businesses can contribute to an economic system by inventing products that greatly increase available resources New energy sources growing food new ways of creating needed goods and services Business owners provide jobs and economic growth for their employees and communities as well as for themselves Adam Smith envisioned creating more resources so that everyone could become wealthier Believed freedom was vital to the survival of an economy Believed people will work long and hard if they know they will prosper in the end Considered the father of modern economics Invisible hand a phrase coined by smith to describe the process that turns self directed gain into social and economic benefits for all Capitalism an economic system in which all or most of the factors of production and distribution are privately owned and operated for profit 4 basic rights under free market capitalism The right to own private property The right to own a business and keep all that the business s profits The right to freedom of competition The right to freedom of choice Free market is one in which decisions about what and how much to produce are made by the market buyers and sellers negotiating prices for goods and services Supply the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time Demand the quantity of products that people are willing to buy at different prices at a specific time Market price the price determined by supply and demand price toward which the market will trend In countries without a free market it is difficult to reveal to businesses what to produce and in what amounts so there are often shortages or surpluses Competition within free markets 4 degrees of competition Perfect competition monopolistic competition oligopoly and monopoly Perfect competition the degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product Monopolistic competition the degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different Oligopoly a degree of competition in which just a few sellers dominate the market Monopoly a degree of competition in which only one seller controls the total supply of a product or service and sets the price Socialism an economic system based on the premise that same if not most basic businesses should be owned by the government so that profits can be more evenly distributed among the
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