What is business all activities involved in providing goods and services for profit or not to satisfy cus tomer requirements What are the 6 parts of the business environments economic and legal environment freedom of ownership allowing private owner ship tremendous boost contract and business laws being able to write and en force contracts minimizes risk corruption governments can work to eliminate cor ruption through interactions with the business environment currency creating and maintaining a tradable currency is vital for global trade taxes and regulations low taxes and less destructive regulations attracts entrepreneurs and promotes busi ness What is the technological environment the technological environment is basically anything that increases business efficiency and productivity manufacturing technology creates incredibly complex products with high extreme levels of quality symbologies is a computer machine readable lan guage that expresses numbers letters in a way that can easily be read automatically Explain the difference between micro and macro economics macro is the study and analysis of the overall economy using information such as employment inflation production GDP and price levels micro is concerned with in dividual parts of the economy such as decisions made by individuals Who were the mercantilists They sought advantage for specific trade merchant joint stock company or social group their primary objective was to increase the power of the nation state the economies that followed this tended to see trade colonialism and conquest as pri mary ways of increasing wealth Who was Adam Smith a scottish economist who published works in 1776 His work called the Wealth of the Nations discussed the role of self interest in the economy functions of markets the concept of invisible hand benefits of free trade division of labor lasseiz faire econ omy and impacts specialization benefits freedom of ownership What is the invisible hand Adam Smith s theory that he used to demonstrate how self interest guides the most efficient use of resources in a nations economy with public welfare coming as a by product Describe the benefits and disadvantages of the free market system benefits are capitalism creation of wealth and improved standards of living disad vantages are distribution of wealth greed unethical things hunger exploitation pol lution poverty and homelessness What is socialism socialism is a system where the government rather than the private individuals owns and operates much of the basic production and distribution making the benefits more evenly distributed among the people Taxes tend to be very high even for indi viduals In return socialist nations usually supply heavily subsidize health education retirement unemployment and other social services What are some benefits and some disadvantages of socialism the benefits are free education and childcare and longer vacations the negatives are brain drain people tend not to work as hard as they could and should stifles innova tion leading to fewer inventions and jobs as well What happens in a communist economy Karl Marx delineated the economic system where the government makes all the eco nomic decisions and owns all the major factors of production in this kind of econ omy shortages are very common What are mixed economies all countries combine both free market economies and command economies since mixed economies help offset deficiencies of the dominant systems Describe the business cycle in the US economy 1 economic boom aka increased amount of activity of a period of time 2 recession aka two or more consecutive quarters of decline of GDP 3 if a recession continues for a long time it turns into a depression accompanied by deflation 4 at some point you get out of the depression and into recovery mode aka when the economy starts to grow and stabilize The government uses fiscal and monetary policy to at tempt to keep inflation recession and all that in check What is sole proprietorship this is most common type of business ownership and entrepreneurship and is very easy to start It is usually owned and managed by one person there are no special taxes and you get to keep all of the profit the disadvantages are there is unlimited li ability because there aren t really any ways to protect yourself there is a heavy work load there is limited growth and a limited lifespan What is partnership partnership gives you the opportunity to split your unlimited liability with 3 other peo ple limited partnership limits liability you re liable for however much or little you ac tually put in The only difference is now you have other people involved there are still all the issues you have when you have a sole proprietorship What is a corporation almost everyone corporates now incorporating a business offers a host of benefits individuals can also incorporate in a corporation there is limited liability sell and is sue stock growth and longevity ease of sale and transfer and separation of owner ship and management There is a lot less personal liability because the legal entity separates you corporations can also choose to have a public or privately held own ership privately held corporations can exist even when corporations are huge the disadvantages of corporations are that it s expensive required infrastructure taxa tion issues because you have double taxation and people have to be involved What is the difference between S Corps and LLC LLC does not have all the same restrictions as S Corps do S Corps tend to have more restrictions What are mergers and acquisitions when firms join together by choice and some that are forced against the firms will more specifically mergers are when 2 firms join together and form one these firms can be in the same sphere and have the same product or it can be 2 completely dif ferent companies acquisitions are when you straight up buy a company some com panies wreck their companies so they don t have to have this happen to them Merg ers and acquisitions rely heavily on the creation of synergies What happens if you want to be a franchisor you pay a fee can be a large fee you get training supplies a protected market and technical assistance from the franchisor These generally have a lower failure rate What are some qualities entrepreneurs have should have opportunity the american dream profit motivation to be rich independence you must be able to be your own boss challenge you have to work hard to overcome risks
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