business all profit
TRANSCRIPT
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business all profit-seeking activities and enter-
prises that provide goods and services necessary
to an economic system.
profits rewards for businesspeople who take
the risks involved to offer goods and services to customers.
factors of production four basic inputs for effec-
tive operation: natural resources, capital, human resources,
and entrepreneurship.
private enterprise system economic system that
rewards firms for their ability to identify and
serve the needs and demands of customers.
competition battle among businesses for consumer acceptance.
entrepreneur person who seeks a profitable
opportunity and takes the necessary risks to set
up and operate a business.
brand name, term, sign, symbol, design, or some
combination that identifies the products of one
firm and differentiates them from competitors
offerings.
relationship managementcollection of activities
that build and maintain ongoing, mutually ben-
eficial ties between a business and its customers
and other parties.
outsourcing using outside vendors to produce
goods or fulfill services and functions that were
previously handled in-house or in-country.
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not-for-profit- organization organization that has
primary objectives such as public service rather
than returning a profit to its owners.
natural resources all production inputs that are
useful in their natural states, including agricul-
tural land, building sites, forests, and mineral
deposits.
capital production inputs consisting of technology,
tools, information, and physical facilities.
human resources production inputs consisting of
anyone who works, including both the physical
labor and the intellectual inputs contributed by
workers.
entrepreneurship willingness to take risks to
create and operate a business.
capitalism economic system that rewards firms
for their ability to perceive and serve the needs
and demands of consumers; also called the pri-
vate enterprise system.
competitive differentiation unique combination of
organizational abilities, products, and approaches
that sets a company apart from competitors in the
minds of customers
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private property most basic freedom under the
private enterprise system; the right to own,
use, buy, sell, and bequeath land, buildings,
machinery, equipment, patents, and various
intangible kinds of property
consumer orientation business philosophy that
focuses first on determining unmet consumer
needs and then designing products to satisfy
those needs.
branding process of creating an identity in con-
sumers minds for a good, service, or company;
a major marketing tool in contemporary business.
transaction managementbuilding and promoting
products in the hope that enough customers will
buy them to cover costs and earn profits
relationship era the business era in which firms
seek ways to build long-term relationships with
customers by managing every interaction.
technology business application of knowledge
based on scientific discoveries, inventions, and
innovations.
partnership form of business ownership in which
the company is operated by two or more people
who are co-owners by voluntary legal agreement.
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strategic alliance partnership formed to create
a competitive advantage for the businesses
involved; in international business, a business
strategy in which a company finds a partner in
the country where it wants to do business.
diversity blending individuals of different genders,
ethnic backgrounds, cultures, religions, ages, and
physical and mental abilities to enhance a firms
chance of success
offshoring relocation of business processes to
lower-cost locations overseas.
nearshoring outsourcing production or services to
locations near a firms home base.
vision perception of marketplace needs and the
methods an organization can use to satisfy them
critical thinking ability to analyze and
assess information to pinpoint problems or
opportunities
creativity capacity to develop novel solutions to
perceived organizational problems.
chapter 2
business ethics standards of conduct and moral
values involving right and wrong actions arising
in the work environment
conflict of interestsituation in which an
employee must make a decision about a busi-
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nesss welfare versus personal gain.
whistle-blowing employees disclosure to com-
pany officials, government authorities, or the
media of illegal, immoral, or unethical practices
committed by an organization.
code of conductformal statement that defines
how the organization expects employees to
resolve ethical issues
stakeholders the customers, investors, employ-
ees, and public affected by or with an interest in
a company.
social responsibility businesss consideration of
societys well-being and consumer satisfaction, in
addition to profits.
recycling reprocessing of used materials for reuse.
corporate philanthropy act of an organization
making a contribution to the communities in
which it earns profits.
consumerism public demand that a business
consider the wants and needs of its customers in
making decisions.
discrimination biased treatment of a job candi-
date or employee
sexual harassmentunwelcome and inappropri-
ate actions of a sexual nature in the workplace.
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Sarbanes-Oxley Actfederal legislation designed
to deter and punish corporate and accounting
fraud and corruption and to protect the interests
of workers and shareholders through enhanced
financial disclosures, criminal penalties on
CEOs and CFOs who defraud investors, safe-
guards for whistle-blowers, and establishment
of a new regulatory body for public accounting
firms.
integrity adhering to deeply felt ethical principles
in business situations
social audits formal procedure that identifies
and evaluates all company activities that relate
to social issues such as conservation, employ-
ment practices, environmental protection, and
philanthropy
pollution environmental damage caused by a
companys products or operating processes.
green marketing marketing strategy that pro-
motes environmentally safe products and produc-
tion methods.
product liability responsibility of manufactur-
ers for injuries and damages caused by their
products.
family leave granting up to 12 weeks of unpaid
leave annually for employees who have or adopt
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a child, are becoming foster parents, are caring
for a seriously ill relative or spouse, or are them-
selves seriously ill.
Equal Employment Opportunity Commission
(EEOC) government agency created to increase
job opportunities for women and minorities and
to help end discrimination based on race, color,
religion, disability, gender, or national origin in
any personnel action.
sexism discrimination against members of either
sex, but primarily affecting women.
chapter 3
economics social science that analyzes the choices
people and governments make in allocating
scarce resources.
microeconomics study of small economic units,
such as individual consumers, families, and businesses.
macroeconomics study of a nations overall eco-
nomic issues, such as how an economy maintains
and allocates resources and how a governments
policies affect the standards of living of its citizens.
demand willingness and ability of buyers to
purchase goods and services.
supply willingness and ability of sellers to pro-
vide goods and services
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recession cyclical economic contraction that lasts
for six months or longer.
productivity relationship between the number of
units produced and the number of human and
other production inputs necessary to produce
them.
gross domestic product (GDP) sum of all goods
and services produced within a countrys bound-
aries during a specific time period, such as a
year.
inflation rising prices caused by a combination
of excess consumer demand and increases in
the costs of raw materials, component parts,
human resources, and other factors of ori-
duction.
monetary policy government actions to increase
or decrease the money supply and change bank-
ing requirements and interest rates to influence
bankers willingness to make loans.
fiscal policy government spending and taxation
decisions designed to control inflation, reduce
unemployment, improve the general welfare of
citizens, and encourage economic growth.
budgetorganizations plan for how it will raise
and spend money during a given period of time.
demand curve graph of the amount of a product
that buyers will purchase at different prices; gen-
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erally slopes downward to reflect larger quantities
likely to be purchased as prices decline.
supply curve graph of the amount of a product
that suppliers will offer for sale at different
prices; generally slopes upward to reflect larger
quantities likely to be offered for sale as prices
increase.
equilibrium price prevailing market price; the
point at which the quantity demanded of a prod-
uct equals the quantity supplied.
pure competition market structure, like that of
small-scale agriculture, in which large numbers
of buyers and sellers exchange homogeneous
products and no single participant has a signifi-
cant influence on price.
monopolistic competition market structure,
like that for retailing, in which large numbers
of buyers and sellers exchange relatively
well-differentiated (heterogeneous) products,
so each participant has some control over
price.
oligopoly market structure, like those in the air-
line and steel industries, in which relatively few
sellers compete and high start-up costs form
barriers that keep out most new competitors.
monopoly market structure in which a single seller
dominates trade in a good or service for which
buyers can find no close substitutes.
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deregulation regulatory trend toward elimination
of legal restraints on competition in industries
previously served by a single firm in an attempt
to improve customer service and lower prices
through increased competition.
planned economy economic system in which strict
government controls determine business owner-
ship, profits, and resource allocation to accom-
plish government goals rather than those set by
individual firms.
socialism planned economic system
characterized by a government ownership and
operation of major industries.
communism planned economic system in which
private property is eliminated, goods are owned
in common, and factors of production and pro-
duction decisions are controlled by the state
mixed market economy economic system that
combines characteristics of both planned and
market economies in varying degrees, including
the presence of both government ownership and
private enterprise.
privatization recent international trend to convert
government-owned and operated companies
into privately held businesses.
core inflation rate the underlying inflation rate of
the economy after energy and food prices are
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removed.
deflation falling prices caused by a combination
of reduced consumer demand and decreases
in the costs of raw materials, component parts,
human resources, and other factors of production.
Consumer Price Index (CPI) monthly measure of
changes in retail price levels by comparisons of
changes in the prices of a market basket of
goods and services most commonly purchased
by urban consumers.
unemployment rate indicator of a nations
economic health, typically expressed as a per-
centage of the total workforce who are actively
seeking work but are currently unemployed.
budget deficitfunding shortfall in which govern-
ment spends more than the amount of funds
raised through taxes and fees.
national debtmoney owed by government to
individuals, businesses, and government agen-
cies who purchase Treasury bills, Treasury notes,
and Treasury bonds sold to cover expenditures.
budget surplus excess funding that occurs when
government spends less than the amount of
funds raised through taxes and fees.
balanced budgetsituation in which total revenues
raised by taxes and fees equal total proposed
government spending for the year.
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chapter 5
small business firm that is independently owned
and operated, is not dominant in its field, and
meets industry-specific size standards for income
or number of employees
business plan written document that provides
an orderly statement of a companys goals, the
methods by which it intends to achieve those
goals, and the standards by which it will mea-
sure achievements.
Small Business Administration (SBA) federal
agency that aids small businesses by providing
management training and consulting, financial
assistance, and support in securing government
contracts.
business incubator organization that provides
temporary low-cost, shared facilities to small
start-up ventures.
franchising contractual agreement that specifies
the methods by which a dealer can produce and
market a suppliers good or service.
sole proprietorship form of business ownership in
which the company is owned and operated by one person.
partnership form of business ownership in which
the company is operated by two or more people
who are co-owners by voluntary legal agreement.
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corporation business that stands as a legal entity
with assets and liabilities separate from those of
its owner(s).
stockholder person or organization who owns
shares of stock in a corporation.
board of directors elected governing body of a
corporation.
merger combination of two or more firms to form
one company.
acquisition procedure in which one firm
purchases the property and assumes the
obligations of another.
home-based businesses firms operated from the
residence of the business owner.
microloans Small Business Administration-
guaranteed loans of up to $35,000 made to
start-ups and other very small firms.
Small Business Investment Company (SBIC)
business licensed by the Small Business
Administration to provide loans to small busi-
nesses.
set-aside program component of a government
contract specifying that certain government
contracts (or portions of those contracts) are
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restricted to small businesses and / or to women-
or minority-owned companies.
franchisee small-business owner who contracts to
sell the good or service of a supplier (the franchi-
sor) in exchange for a payment (usually a flat
fee plus a percentage of sales).
franchisor business owner who permits the
franchisee to sell its products and use its
name, as well as providing a variety of mar-
keting, management, and other services in
return for the payment of various fees and a
percentage of sales.
S corporation modified form of the traditional
corporate structure often used by firms with fewer
than 100 shareholders; such businesses can
elect to pay federal income taxes as partnerships
while retaining the liability limitations typical of
corporations.
limited- liability company (LLC) legal form of
organization allowing business owners to secure
the corporate advantage of limited liability while
avoiding the double taxation characteristic of
corporations.
domestic corporation firm that operates in the
state where it is incorporated.
foreign corporation firm that operates in states
where it is not incorporated.
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alien corporation firm incorporated in one nation
and operating in another nation.
corporate charter legal document that formally
establishes a corporation.
preferred stockstock whose holders have prior-
ity over common stockholders in the payment of
dividends but usually have no voting rights.
common stockshares of ownership in a corpo-
ration.
employee ownership business in which workers
purchase shares of stock in the firm that employs
them.
not-for-profit corporation business-like organization such as a charitable group, social
welfare group, or religious congregation that
pursues objectives other than returning profit to
its owners.
vertical merger combination of two or more firms
operating at different levels in the production
and marketing process.
horizontal merger combination of two or more
firms in the same industry that wish to diversify,
increase their customer bases, cut costs, or offer
expanded product lines.
conglomerate merger combination of two or
more unrelated firms, usually with the goal of
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diversification, spurring sales growth, or spend-
ing a cash surplus that might otherwise make the
firm a tempting target for a takeover attempt.
joint venture partnership between companies
formed for a specific undertaking.
public ownership organization owned and
operated by a unit or agency of government.
cooperative (co-op) organization whose owners
join forces to collectively operate all or part of the
functions in their business.
chapter 6
entrepreneur person who seeks a profitable
opportunity and takes the necessary risks to set
up and operate a business
classic entrepreneur person who identifies a
business opportunity and allocates available
resources to tap that market.
serial entrepreneur person who starts one busi-
ness, runs it, and then starts and runs additional
businesses in succession
social entrepreneur person who recognizes
societal problems and uses business principles
to develop innovative solutions.
lifestyle entrepreneur person who starts a bus-
ness to reduce work hours and create a more
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relaxed lifestyle.
seed capital initial funding needed to launch a
new venture.
debt financing borrowed funds that entrepreneurs
must repay.
equity financing funds invested in new ventures
in exchange for part ownership.
venture capitalistbusiness firms or groups of
individuals that invest in new and growing firms
in exchange for an ownership share.
angel investor wealthy individuals who invest
directly in a new venture in exchange for an
equity stake.
intrapreneurship process of promoting innovation
within the structure of an existing organization.
enterprise zones specific geographic areas
designated for economic revitalization.
skunkworks project initiated by a company
employee who conceives the idea, convinces top
management of its potential, and then recruits
human and other resources from within the firm
to turn it into a commercial project
pacing programs company-initiated and financed
program to develop new products
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chapter 7
electronic business (e-business) conducting
business via the Internet.
corporate Web site Web site designed to
increase a firms visibility, promote its offerings,
and provide information to interested parties.
marketing Web site Web site whose main pur-
pose is to increase purchases by visitors.
business-to-business (B2B) e-business
electronic business transactions between organi-
zations using the Internet
extranetsecure network used for e-business and
accessible through an organizations Web site;
available to external customers, suppliers, and
other authorized users.
business-to-consumer (B2C) e-business
selling directly to consumers over the Internet
electronic storefrontcompany Web site that sells
products to customers
phishing high-tech scam that uses authentic look-
ing e-mail or pop-up ads to get unsuspecting
victims to reveal personal information.
blog online journal written by a blogger.
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search marketing paying search engines, such as
Google, a fee to make sure that the companys
listing appears toward the top of the search
results.
click-through rate number of visitors who click on
a Web banner ad.
conversion rate percentage of visitors to a Web
site who actually make a purchase.
electronic data interchange (EDI) computer-
tocomputer exchanges of invoices, purchase
orders, price quotations, and other information
between buyers and sellers.
private exchange secure Web site at which a
company and its suppliers share all types of
data related to e-business, from product design
through order delivery.
electronic exchange online marketplace that
caters to an industrys specific needs.
e-procurementuse of the Internet by business
and government agencies to solicit bids and
purchase goods and services from suppliers.
electronic shopping cartfile that holds items
that the online shopper has chosen to buy
botshort for robota program that allows
online shoppers to compare prices for a specific
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product at several e-tailers.
encryption process of encoding data for secu-
rity purposes, using software that encodes and
scrambles messages.
Secure Sockets Layer (SSL) technology that
secures a Web site by encrypting information
and providing authentication
electronic walletsecure computer data file set up
by an online shopper at an e-business site that
contains credit card and personal identification
information.
firewall electronic barrier between a companys
internal network and the Internet that limits
access into and out of the network.
vishing variation on phising that involves
a voice system in which the intended victim
receives a voice message directing him or her to
reveal personal financial information.
channel conflictconflict between two or more
members of a supply chain, such as a manufac-
turer, wholesaler, or retailer.
spam popular name for junk e-mail.
electronic bulletin board Internet chat room that
allows users to post and read messages on a
specific topic
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newsgroup noncommercial online forum
wiki Web page that can be edited by users.
podcastaudio or video blog.
banner ad ad placed by an organization on
another organizations Web site; interested
parties click on the ad for more information.
pop-up ad Internet ad that pops-up in a new
window; interested parties can click on the ad
for more information.
pre-roll video ad a short advertising video clip
that begins automatically whenever a users visits
a particular Web site
Web-to-store use of the Web to aid shoppers at
brick-and-mortar retailers.
display ad glossy-looking online ad often targeted
at a specific user
chapter 8
managementprocess of achieving organizational objectives through people and other resources.
planning process of anticipating future events
and conditions and determining courses of
action for achieving organizational objectives.
vision perception of marketplace needs and the
methods an organization can use to satisfy them.
mission statementwritten explanation of an
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organizations business intentions and aims.
objectives guideposts by which managers define
the organizations desired performance in such
areas as profitability, customer service, growth,
and employee satisfaction.
decision making process of recognizing a
problem or opportunity, evaluating alternative
solutions, selecting and implementing an alter-
native, and assessing the results.
leadership ability to direct or inspire people to
attain organizational goals.
corporate culture organizations system of prin-
ciples, beliefs, and values.
organization structured grouping of people work-
ing together to achieve common goals.
departmentalization process of dividing work
activities into unites within the organization
delegation act of assigning work activities to
subordinates.
span of managementnumber of subordinates a
manager can supervise effectively.
chain of command set of relationships that
indicates who directs which activities and who
reports to whom.
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top managementmanagers at the highest level
of the management pyramid who devote most
of their time to developing long-range plans for
their organizations.
middle managementsecond tier in the
management pyramid that focuses on specific
operations within the organizations.
supervisory managementfirst-line management;
includes positions such as supervisor, line man-
ager, and group leader; responsible for assigning
nonmanagerial employees to specific jobs and
evaluating their performance every day.
technical skills managers ability to understand
and use techniques, knowledge, and tools and
equipment of a specific discipline or department.
human skills interpersonal skills that enable a
manager to work effectively with and through
people; the ability to communicate with,
motivate, and lead employees to accomplish
assigned activities.
conceptual skills ability to see the organization
as a unified whole and to understand how each
part interacts with others.
organizing process of blending human and
material resources through a formal structure of
tasks and authority; arranging work, dividing
tasks among employees, and coordinating them
to ensure implementation of plans and accom-
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plishment of objectives.
directing guiding and motivating employees to
accomplish organizational objectives.
controlling function of evaluating an organiza-
tions performance to determine whether it is
accomplishing its objectives.
strategic planning process of determining the
primary objectives of an organization and then
acting and allocating resources to achieve those
objectives.
tactical planning implementing the activities
specified by strategic plans.
operational planning detailed standards that
guide implementation of tactical plans.
contingency planning plans that allow a firm to
resume operations as quickly and as smoothly as
possible after a crisis while openly communicat-
ing with the public about what happened.
SWOT analysis method of assessing a companys
internal strengths and weaknesses and its exter-
nal opportunities and threats.
competitive differentiation unique combination of
organizational abilities, products, and approaches
that sets a company apart from competitors in the
minds of customers.
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programmed decision simple, common, and fre-
quently occurring problem for which a solution
has already been determined.
nonprogrammed decision complex and unique
problem or opportunity with important conse-
quences for the organization.
autocratic leadership management approach
whereby leaders make decisions on their own
without consulting employees.
democratic leadership management approach
whereby leaders delegate assignments, ask
employees for suggestions, and encourage their
participation
empowermentgiving employees authority and
responsibility to make decisions about their work
without traditional managerial approval and
control.
free-rein leadership management style of leaders
who believe in minimal supervision and leave
most decisions to their subordinates
organizational chartvisual representation of a
firms structure that illustrates job positions and
functions.
centralization decision making based at the top
of the management hierarchy.
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decentralization decision makeup based at lower
levels of the organization
line organization organizational structure that
establishes a direct flow of authority from the
chief executive to subordinates.
line-and-staff organization structure that com-
bines the direct flow of authority of a line organi-
zation with staff departments that support the line
departments.
line manager executive involved with the func-
tions of production, financing, or marketing.
staff manager executive who provides informa-
tion, advice, or technical assistance to aid line
managers; does not have the authority to give
orders outside his or her own department or to
compel line managers to take action.
committee organization organizational structure
that places authority and responsibility jointly in
the hands of a group of individuals rather than a
single manager.
matrix structure project management structure that
links employees from different parts of the organi-
zation to work together on specific projects.