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BMGT110 Exam One Study Guide-What is a business? - All activities involved in providing goods and services for profit or not-Key Business Terms:- 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 variousgoods 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 manyelements (economic, legal, technological, competitive, social)- When elements are compiled in a healthy way, they allow businesses to grow and prosperFactors 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 thedevelopment 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 productivityManufacturing Technology- create incredibly complex products with extremelyhigh levels of quality Computer hardware/software/network Internet/E-commerce Symbologies--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- Business transcend national boundaries and are not often committed to a single home country.- 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 moralvalues- 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 inmarkets 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: Role of Self Interest Function of Markets “Invisible Hand”- used to describe the process that turns self-directed gain into social and economic benefits for all. 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


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UMD BMGT 110 - Exam 1

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