BMGT110 Exam One Study Guide What is a business Key Business Terms All activities involved in providing goods and services for profit or not Profit the amount remaining after all expenses have been deduced from the revenues of a business Revenue total amount business receives Risk probability of loss associated with any business activity Entrepreneur Person who takes the risk of organizing and operating a new business venture Stakeholders entities customer employees shareholders community shareholders that stand to gain or lose by activities of any business Stakeholders are 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 Productivity output of business Economics how society chooses to employ resources to produce various goods and services Technology anything that makes business more efficient Business Standard of Living and the Creation of Wealth After all the chief business of the American people is business Calvin Coolidge Nations standard of living is quality of life enjoyed by population depends on income housing conditions health education political freedom free time It s the amount of goods and services that people can buy with the money that they have Nation s business is a huge contributor to the standard of living through taxes employment creation of wealth The Business Environment All businesses operate in a complex environment that encompasses many elements economic legal technological competitive social When elements are compiled in a healthy way they allow businesses to grow and prosper Factors of Production The rescources used to create wealth Land labor capital entrepreneurship and knowledge The business environment The surrounding factors that either help or hinder the development of busniesses The five elements in the business environment are 1 The economic and legal environment 2 The technological environment 3 The competitive environment 4 The social environment 5 The global business environment Economic and Legal Environment Government can help create positive business by Freedom of ownership allowing private ownership is tremendous boost to business environment Contract and business laws being able to write and enforce contracts is critical to minimizing risk Corruption government can work to eliminate corruption throughout various interactions with business environment Currency creating and maintaining a tradable currency is vital for global trade Taxes and Regulations low taxes and less restrictive regulation attracts entrepreneurs and promotes business Technological Environment Anything that increases business efficiency and productivity Manufacturing Technology create incredibly complex products with extremely high levels of quality Computer hardware software network Symbologies Internet E commerce Competitive Environment rival sellers try to gain extra business at another s expense but want to hold down prices A healthy competitive environment promotes efficient business even if some will fail Competition in the market place is fierce Meeting exceeding customer expectations becoming more customer driven Increasing speed of delivery response time important Corporate reconstructing changes in organization empowerment Giving frontline workers the responsibility authority freedom training and equipment they need to respond fast to customers requests Social Environment a distinctive economic organization of interacting people who share region common identity culture Societies often in a state of change with shifts in the way people live cultural backgrounds what they buy etc Example shift in many social sectors aging population two income families single parent Demography study of human population with regard to size density age race gender etc the statistical study of the human population with regard to its size density and other characterisitics such as age race gender and income Global Environment single home country Business transcend national boundaries and are not often committed to a Globally international competition and free trade are on the rise Global business environment holds great promise but the challenge is tremendous Global environment is rapidly changing Perspective in Business Ethics Common standards of ethical behavior vary but cultures value basic moral values Ethical dilemmas will occur with relative frequency throughout career Ages 13 17 start developing ethnic beliefs Basic Economics and Economic Systems Economics s the study of how society chooses to employ resources to pro duce goods and 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 the whole United States overall economy using info such as unemployment inflation Microeconomics looks for individual parts household firms and how decisions affect them looks at the behavior of people and organizations in markets for particular products or services History Western civilization began largely with the Greeks The scholastics 13th and 14th century created economic dogma concerned with property justice in economic exchanges and money Mercantilists 1500 1700 sought advantages of specific trade merchant joint stock company or social group with their primary objective being to increase the power of nation state Economies that followed mercantilism policies tended to see trade colonialism and conquest as primary wealth Adam Smith Scottish economist published An inquiry into the nature and causes of the wealth of nations aka wealth of nations Rather than believing fixed resources had to be divided among competing groups and individuals Scottish economist Adam Smith envisioned creating more resources so that everyone could become wealthier Wealth Of Nations introduced pivotal concepts Invisible Hand used to describe the process that turns self directed gain into social and economic benefits for all Role of Self Interest Function of Markets Benefits of Free Trade Division of Labor Impacts of laissez faire Benefits of specialization Freedom of ownership Smith is most recognized for invisible hand How self interest guides most efficient use of resources in nations economy with public welfare Argued that state and personal efforts are ineffective Laissez faire hands of Capitalism under capitalism all or most of the factors of production and distribution such as land factories railroads and stores are
View Full Document
Unlocking...