Term
| What business practices are considered bad for the economy (short-term focused?) |
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Definition
Lower wages, job enlargement, off-shoring, out-sourcing, contract employees
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Term
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Definition
| Groups that have a stake in the success and outcomes of a business |
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Term
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Definition
| Study of how resources are distributed for the production of goods and services within a social system |
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Term
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Definition
Labor (physical and mental abilities that people use to produce goods and services) |
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Term
| Define: Financial Resources |
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Definition
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Term
| What 3 questions must be asked when determining the type of an economic system? |
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Definition
| What/how many goods and services will satisfy consumers' needs? Who will produce goods and services, how will they do it and with what resources? How are goods and services distributed to consumers? |
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Term
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Definition
Pure Capitalism (free market system): all economic decisions are made without the government (laissez-faire)
Modified Capitalism: Government regulates business to some extent (eg laws, loans, bonds, etc.) |
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Term
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Definition
| Government owns basic industries. |
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Term
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Definition
| People, regardless of class, own all resources and businesses through the government. |
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Term
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Definition
| Operate on elements from more than one economic system |
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Term
| What type of economic system is most widely used throughout the world? |
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Definition
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Term
| What 4 fundamental rights does free enterprise require in order to function? |
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Definition
Right to own and pass on property (motivates to work hard and save money)
Right to earn profits and use them as wished (within the law)
Right to control operations of the business (within laws of fairness)
Right to choose career, home, what to by, etc. Businesses must have right to choose where to locate, what to make, what resources to use, etc. |
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Term
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Definition
| Number of goods/services that consumers are willing to buy at a certain price and at a certain time |
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Term
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Definition
| Number of products businesses are willing to sell at a certain price and at a certain time. |
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Term
| Are businesses willing to supply more at higher or lower prices? |
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Definition
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Term
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Definition
| Many small businesses selling one standardized product; no one business controls the price - instead, prices are controlled by supply and demand (example: agriculture) |
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Term
| Define: Monopolistic Competition |
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Definition
| Fewer businesses than pure competition; difference among goods are small; businesses have some control over prices via advertising product differences (example: aspirin, soft drinks, etc.) |
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Term
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Definition
| Very few businesses selling a product; businesses have large control over prices |
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Term
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Definition
| One business controls whole market; total price control (example: utility companies, such as the electric company) |
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Term
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Definition
| % of people that want to work but cannot get jobs |
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Term
| Define: GDP (Gross Domestic Product) |
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Definition
| Sum of all goods/services produced in a country in a year |
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Term
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Definition
| Occurs when the government spends more money than what it takes in via taxes |
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Term
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Definition
| Person who risks wealth, time, and effort to develop for profit an innovative product or way of doing something |
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Term
| What form of capitalism does the United States use? |
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Definition
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Term
| What are the best ways to use human capital to your advantage? |
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Definition
| Foster high trust, align culture and strategy, get involved, make sure your employees are happy, engage your employees, pay attention to stakeholders, and keep things simple, stupid! |
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Term
| Define: International Business |
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Definition
Buying and selling of goods and services across international boundaries.
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Term
| Define: Absolute Advantage |
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Definition
| Country is the only source or producer of an item, or the most efficient producer of an item |
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Term
| Define: Comparative Advantage |
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Definition
| Country can produce an item at the lowest cost |
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Term
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Definition
| Transferring manufacturing and other tasks overseas to cut labor and supply costs |
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Term
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Definition
| Difference between the values of a nation's exports and imports |
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Term
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Definition
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Term
| Define: Balance of Payments |
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Definition
| Difference between flow of money into and out of a country |
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Term
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Definition
| Facilities supporting a country's economic development (roads, airports, etc.) |
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Term
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Definition
| Ratio of one nation's currency to another's |
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Term
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Definition
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Term
| Define: Exchange Controls |
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Definition
| Restrict the amount of currency that can be bought or sold |
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Term
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Definition
| Limits the number of product that can be imported |
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Term
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Definition
| Business sells a product at less than the cost of making the product |
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Term
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Definition
| Group of companies or nations that band together as a monopoly to generate a competitive advantage in world markets |
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Term
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Definition
| Buys goods in one country and sells them to buyers in another |
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Term
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Definition
| One company lets another use its name, products, etc in exchange for a fee or royalty |
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Term
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Definition
| Company agrees to provide the franchisee the name, logo, products, and materials in return for a financial commitment and the agreement to conduct business in accordance with the company’s standard of operations (examples: Wendy’s, McDonald’s, Pizza Hut, Holiday Inn) |
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Term
| Define: Contract Manufacturing |
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Definition
| Company hires another company (foreign) to produce some of the firm's product to specification |
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Term
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Definition
| Relocation of a business process to another country |
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Term
| Define: Strategic Alliance |
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Definition
| Formed to create a competitive advantage in the global market |
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Term
| Define: Direct Investment |
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Definition
| Ownership of overseas facilities |
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Term
| Define: Multi-national Strategy |
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Definition
| Customizing products, promotion, distribution, etc according to cultural and regional differences |
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Term
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Definition
| Standardization of products, distribution, and marketing throughout the world |
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Term
| What are some characteristics of a low-risk nation to invest in? |
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Definition
| Strong economy! (growing jobs and income) |
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Term
| What factors should you consider when deciding where to take your market? |
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Definition
| Real Domestic Product, economy type, productivity/efficiency, and rate of growth/change |
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Term
| How do you calculate Real GDP? |
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Definition
| (Base Year) x (Inflation) - End Year |
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Term
| When do you have a seller's market? (Higher Prices) |
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Definition
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Term
| When do you have a buyer's market? |
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Definition
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Term
| When are both the buyer and the seller satisfied? |
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Definition
At Equilibrium!
Demand = Supply |
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Term
| List 2 characteristics of a buyer's market. |
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Definition
1. Lower prices
2. Marketing plays a larger role |
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Term
| Business at its core is understanding _____ and ______. |
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Definition
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Term
| What happens when the dollar is devalued? |
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Definition
Less foreign currency is required to buy each dollar.
American products are cheaper in other countries and more expensive in the USA.
Should have a positive impact on the balance of trade.
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Term
| List the things that helped connect the world. |
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Definition
| Decline of communism in most countries; internet; workflow software (ability to link/work together from anywhere); open-sourcing (collaboration out of passion); out-sourcing; off-shoring; supply-chaining (efficient movement of throughout the world); in-sourcing (do something new to get into a new market); more information sources; mobility (operate from anywhere, ie cellphones) |
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Term
| Who would want stock prices to be volatile, rather than a steady rise in growth? |
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Definition
| Institutional Traders! (Big-volume trading - a second can make the difference between winning and losing!) |
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Term
| Warren Buffet lists 3 quick tests to determine whether a company is worth investing in. What are they? |
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Definition
1. There should be at least 10 years worth of consistent growth in earnings per share.
2. Debt should not exceed 5 times its net earnings.
3. The company should have higher gross margins than competitors (at least 40%). |
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Term
| Stocks are priced fundamentally on ________. |
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Definition
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Term
| What causes the price of a stock to change? |
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Definition
| When supply and demand change, the price changes. |
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Term
| What are 2 ways to raise capital? |
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Definition
1. Sell equities (stock)
2. Borrow money; sell bonds (raises cost) |
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Term
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Definition
| No say in how the company is ran; the stock price remains the same |
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Term
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Definition
| Voting rights on certain company matters; more votes per share |
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Term
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Definition
| Interest rate the Federal Reserve loans to banks |
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Term
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Definition
| Given to best customers for short term loans |
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Term
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Definition
| Pre-arrangement (kind of like a credit card); try not to use this! |
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Term
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Definition
| Loans backs by the assets of the borrower (like a mortgage), so you'd better be able to pay up! |
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Term
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Definition
| Borrow money from investment firm to buy stock |
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Term
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Definition
| Not controlled by the SEC, so it is riskier than other methods of stock trading! However, it can return higher rewards! |
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Term
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Definition
Credit extended by suppliers for the purchase of their goods and services. |
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Term
| Define: Working Capital Management |
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Definition
Managing short-term assets and liabilities |
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Term
| Define: Transaction Balances |
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Definition
Cash kept on hand by a firm to pay normal daily expenses, such as employee wages and bills for supplies and utilities |
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Term
| Define: Marketable Securities |
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Definition
Temporary investment of “extra” cash by organizations for up to one year in U.S. Treasury bills, certificates of deposit, commercial paper, or eurodollar loans |
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Term
| Define: Treasury Bills (T Bills) |
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Definition
Temporary investment of “extra” cash by organizations for up to one year in U.S. Treasury bills, certificates of deposit, commercial paper, or eurodollar loans |
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Term
| Define: Commercial Certificates (CD's) |
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Definition
Certificates of deposit issued by commercial banks and brokerage companies, available in minimum amounts of $100,000, which may be traded prior to maturity |
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Term
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Definition
A written promise from one company to another to pay a specific amount of money |
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Term
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Definition
A finance company to which businesses sell their accounts receivable— usually for a percentage of the total face value |
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Term
| Define: Long-term Liabilities |
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Definition
Debts that will be repaid over a number of years, such as long-term loans and bond issues |
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Term
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Definition
Debt instruments that larger companies sell to raise long-term funds |
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Term
| What is the difference between a secured bond (Debenture) and an unsecured bond? |
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Definition
Secured Bonds are backed by specific collateral that must be forfeited in the event that the issuing firm defaults.
Unsecured Bonds are not backed by collateral
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Term
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Definition
A special type of high interest-rate bond that carries higher inherent risks |
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Term
| Define: Retained Earnings |
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Definition
Earnings after expenses and taxes that are reinvested in the assets of the firm and belong to the owners in the form of equity |
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Term
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Definition
The dividend per share divided by the stock price |
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Term
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Definition
The market where firms raise financial capital |
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Term
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Definition
Stock exchanges and over- the-counter markets where investors can trade their securities with others |
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Term
| Define: Securities Market |
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Definition
Provide a mechanism for buying and selling securities. They make it possible for owners to sell their stocks and bonds to other investors. |
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