exam 1 Flashcards

Terms Definitions
what has changed about businesses in the last decade?
the players 
what consumers want
how we buy
any activity that provides goods and services in an effort to earn profit
non-profit organizations
focus on causes not profit
financial reward that comes from starting and running a business, the money earned in sales minus expenses.
Industrial Revolution
tech advances led to industrialization
mid 1700s to mid 1800s
mass production and factories
work specialization (semi skilled workers)
result being production efficiency but loss of individual ownership and pride
Entrepreneurship Era
second half of 1800s 
enormous wealth, increased standard of living
many entrepreneurs dominated their markets forcing out competition, manipulating prices, exploiting workers
gov stepped in passing laws to regulate businesses
the production era
early 1900s
focus on efficiency 
jobs became more specialized, increasing productivity and lowering prices/costs
in 1913 Henry Ford introduced the assembly line
the "hard sell"
emerged during the Great Depression
aggressive persuasion designed to separate consumers from cash
the marketing era
after WWII consumers were new focus
developed brands or distinctive identities to differentiate
marketing concept
a consumer focus that permeates successful companies in every department, at every level
the relationship era
aim to build long-term relationships
rely on satisfied customers to spread the word of their business
key tool is technology
Factors of Production
natural resources
human resources
entrepreneurship(key tool)
5 Key Dimensions of the Business Environment
the economic environment
competitive environment
social environment
technological environment
global environment
country's overall economy
consumers, families, individual businesses
fiscal policy
government efforts to influence the economy

government spending
controlled by congress/budget process 
monetary policy
federal reserve actions to shape the economy

supply and demand of money
controlled by the FED
conduct monetary policy
changes in the discount rate
changes in reserve requirement 
open market operations
M1 money supply
all currency, paper and coins, plus checking accounts and traveler's checks
M2 money supply
all M1 plus most savings accounts, money markets, and certificates of deposit
the free market
private ownership
economic freedom
fair competition
innovation and hard work
the study of how people, companies, and governments allocate resources
a financial and social system of how resources flow through society
budget surplus
overage that occurs when revenue is higher than expenses over a given period of time
budget deficit
shortfall that occurs when expenses are higher than revenue over a given period of time
federal debt
the sum of all the money that the Fed Gov has borrowed over the years and not yet repaid
open market operations
the Fed Reserve function of buying and selling government securities, which include treasury bonds, notes, and bills
a federal agency that insures deposits in banks and thrift institutions for up to $100,000 per customer, per bank
Reserve Requirement 
a rule set by the Fed, which specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the banks deposits
economic system
a structure for allocating limited resources
an economic system- also known as the private enterprise or free market system- based on private ownership, economic freedom and fair competition.
pure competition
a market structure with many competitors selling virtually identical products.
barriers to entry are quite low
monopolistic competition
a market structure with many competitors selling differentiated products
barriers to entry are low
a market structure with only a handful of competitors selling products that are either similar or different.
barriers to entry are typically high
a market structure with one producer completely dominating the industry, leaving no room for any significant competitors.
Barriers to entry tend to be virtually insurmountable.
natural monopoly
a market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. most natural monopolies are government sanctioned and regulated
direct investment
when firms either acquire foreign firms or develop new facilities from the ground up in foreign countries
joint ventures
when two or more companies join forces- sharing resources, risks, and profits, but not actually merging companies- to pursue specific opportunities
a formal, typically long-term agreement between two or more firms to jointly pursue a specific opportunity without actually merging their businesses
strategic alliance
an agreement between two or more firms to jointly pursue a specific opportunity without actually merging their businesses. strategic alliances typically involve less formal, less encompassing agreements than partnerships.
sociocultural differences
differences among cultures in language, attitudes, and values
the quantity of products that producers are willing to offer for sale at different market prices
supply curve
the graphed relationship between price and quantity from a supplier standpoint
the quantity of products that consumers are willing to buy at different market prices
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