Business test review.doc

21 Pages
138 Views

Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

This preview shows pages 1,2,3,4. Sign up to view the full 21 pages of the document.
Description
Business: an organization that seeks to earn profits by providing goods + services Profit: money that remains after a business’s expenses are subtracted from its revenue Expenses: money that a business spends producing goods/services and running the business (costs) Revenue: money a business earns selling products/services (sales) Economic system: the way in which a nation allocates its resources among its citizens Factors of Production: the resources used to produce goods and services -labour -land -capital -entrepreneur Labour: the mental and physical training and talents of people (human resources) Capital: the funds needed to operate an enterprise Entrepreneur: an individual who organizes and manages labour, capital, and natural resources to produce goods and services to earn a profit Natural Resources: items used in the production of G/S in their natural state including land, water, mineral deposits and trees Command Economy: government controls all or most factors of production and makes all decisions Market Economy: individuals control factors and production decisions Communism: a type of “COMMAND” economy in which government own and operates all industries Socialism: a type of “COMMAND” economy in which main industries are owned by government and less crucial industries by individuals Market: a mechanism for exchange between buyers and sellers of a particular G/S Capitalism: a type of “MARKET” economy offering private ownership of factors of production and profits from business activity Mixed-Marked Economy: elements of both command and market economy, practiced by many nations Privatization: transfer of government activities to public sector Deregulation: a reduction in the number of laws affecting business activity Government: customer, competitor, regulator, taxation agent, and provider of incentives & essential services. Revenue Taxes: main purpose is to fund government services/programs Progressive Taxes: levied at higher rate on higher income taxpayers and lower rate on lower-income taxpayers Regressive revenue taxes: taxes that cause poorer people to pay a higher percentage of income than richer people pay Restrictive Taxes: taxes (i.e alcohol, tobacco, gasoline) levied to control certain activities legislators believe should be controlled. Demand: willingness/ability of buyers to purchase a product/service Supply: willingness/ability of producers to offer a G/S for sale Law of Demand: buyers will purchase (demand) more of a product as its price drops and less of a product as its price increases Law of Supply: Producers will offer (supply) more of a product for sale as its prices rises Demand and Supply Schedule: assessment of the relationships between different levels of demand and supply at different price levels Demand curve: graph show how many units will be demanded Supply curve: graph showing how many units will be supplied Market Price/Equilibrium Price: Profit-maximizing price at which the quantity of goods demand and quantity if goods supplied are equal. Surplus: quantity supplied exceeds quantity demanded Shortage: quantity demanded exceeds quantity supplied Private Enterprise: economic system characterized by private property rights, freedom of choice, profits, and competition. Competition: the vying among businesses in a particular marker or industry to best satisfy consumer demand and earn profits Degrees of Competition Perfect Competition: a market or industry characterized by a very large number of small firms producing an identical item so that none of the firms has ability to influence price Monopolistic Competition: large number of firms supplying products that are similar but distinct enough from one another to give firms some ability to influence price Oligopoly: small number of very large firms that have the power to influence the price of their product Monopoly: one producer who can set the price of its product/service Natural Monopoly: having only one producer is more efficient since it can meet all of consumers demand of a particular product (i.e. electric company, postal service) External Environment: everything outside a companies’ boundary that might affect it (i.e. political, economic, technological, global, business, socio-cultural environments and emerging challenges and opportunities Economic Environment: conditions of an economic system in which an organization operates Business cycle: pattern of short-term ups/downs (expansions and contractions) in an economy Recession: period during which Aggregate output (measures by GDP) declines Depression: sever and long-lasting recession Aggregate output: total quantity of goods and services produced by an economic system during a given period Standard of Living: total quantity and quality of goods/services that countries citizen can purchase with the currency used in their economic system GDP-Gross Domestic Product: total value of all goods and services produces within a given period by a national economy through domestic factors of production GNP-Gross National Product: total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located (international activity) nominal GDP: GDP measured in current dollars or with all components valued at current price real GDP: GDP calculated to account for changes in currency value and price changes purchasing power parity: principle that exchange rates are set so that the prices of similar products in different countries are about the same Productivity: measure of economic growth that compares how much a system produces with the resources needed to produce. Main threats to economic stability: inflation and unemployment Key goals of Canadian economy: 1) economic growth 2) economic stability 3) full employment Balance of Trade: the total of a country’s export minus imports Trade surplus: positive trade; exports more than imports Trade deficit: negative trade; imports more than exports National Debt: total amount of money government owes to its creditors Budget Deficit: result of the government spending more in one year than it takes in during that year Economic Stability Stability: condition in an economic system in which the amount of money available and the quantity of goods and services produced are growing at about same rate Inflation: occurrence of widespread price increases throughout an economic system Deflation: a period of generally falling prices CPI-Consumer Price Index: measure of the prices of “typical” products purchased by consumers living in urban areas. Unemployment: level of joblessness among people actively seeking work in an economic system Fiscal Policy: policies measures in which government collect and spend revenues Monetary Policy: policy measure in which government controls that size of the nation’s money supply (in Canada Bank of Canada controls money supply) Stabilization policy: government policy embracing both fiscal and monetary policies in an attempt to have economic stability Core competency: skills/resources with which an organization competes best and creates most value for owners Outsourcing: strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services Small Business Small business: an owner-managed business with less than 100 employees New venture/firm: a recently formed commercial organization that provides goods and/or services for sale Entrepreneurship: the process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it Entrepreneurs: people who recognize and seize opportunities Private Sector: the part of the economy that is made up of companies and organizations that are not owned or controlled by the government Sales forecast: an estimate of how much of a product or service will be purchased by prospective customers over a specific period Franchise: an arrangement in which a buyer (franchisee) purchases the right to sell the product or service of the seller (franchiser) Business Plan: a document that describes the entrepreneur’s proposed business venture, explains why it is an opportunity and outlines its marketing plan, its operational and financial details, and its managers’ skills and abilities Collateral: assets that a borrower uses to secure a loan or other credit and that are subject to seizure by the lender if the loan isn’t repaid according to the specified repayment terms Franchising Agreement: stipulates the duties and responsibilities of the franchise and the franchisee Legal forms of Business Organizations Sole proprietorship: a business owned and operated by one person Unlimited liability: personal liability for all debts of the business Partnership: a form of organization established when two or more persons agree to combine their financial, managerial, and technical abilities for the purpose of operating a business for profit General partnership: a type of partnership in which all partners are jointly liable for the obligations of the business Limited partnership: a type of partnership with at least one general partner (who has unlimited liability) and one or more limited partners. The limited partners cannot participate in the day-to-day management of the business or they risk the loss of their limited liability status General partners: partners who are actively involved in managing the firm and have unlimited liability Limited partners: partners who don’t participate actively in the business and whose liability is limited to the amount they invested in the partnership Corporation: a business that is a separate legal entity that is liable for its own debts and whose owners’ liability is limited to their investment Shareholders: persons who own shares in a corporation Board of directors: a group of individuals elected by a firm’s shareholders and charged with overseeing and taking legal responsibilities for, the corporations’ actions Inside directors: members of a corporation’s board of directors who are also full- time employees of the corporation Outside directors: members of a corporation’s board of directors who are not also employees of the corporation Chief executive officer (CEO): the person responsible for the firm’s overall performance Public corporation: a business whose shares are widely held and available to sale to the general public Private Corporation: a business whose shares are held by a small group of individuals and is not usually available for sale to the general public Initial public offering (IPO): sale of shares in a company for the first time to the general investing public Limited liability: the liability of investors is limited to their personal investments in the corporation Shares: a share of ownership in a corporation Acquisition: one firm buys another firm and absorbs it into its operations Merger: the union of two companies to form a single new business Horizontal merger: a merger of two firms that have previously been direct competitors in the same industry Vertical merger: a merger of two firms that have previously had a buyer-seller relationship Conglomerate merger: a merger of two firms in completely unrelated businesses Friendly takeover: an acquisition in which the management of acquired company welcomes firm’s buyout by another company Hostile takeover: an acquisition in which the management of the acquired company fights the firm’s buyout by another company Divestiture: occurs when a company sells part of its existing business operations to another company Spinoff: strategy of setting up one or more corporate units as new, independent corporations Understanding International Business Globalization: the integration of markets globally Imports: products that are made or grown abroad and sold in Canada Exports: products made or grown in Canada that are sold abroad Per capita income: the average income per person of a country • High income countries: Canada, USA, UAE, Australia o Greater than $10 065 • Upper-middle-income: between $3255 - $10 065 • Low middle-income: between $825 - $3255 • Low income: lower than $825 Comparative advantage: a nation’s ability to produce some products more cheaply or better than it can others National Competitive Advantage: a country will be inclined to engage in international trade when factor conditions, demand conditions, related and supporting industries and strategies/structures/rivalries are favourable. International competitiveness: the ability of a country to generate more wealth than its competitors in world markets Balance of trade: the difference in value between a country’s total exports and its total imports Trade surplus: occurs when a country exports more than it imports Trade deficit: occurs when a country imports more then it exports Exchange rate: the ratio of one currency to another Euro: a common currency shared among most of the members of the European Union (excluding Denmark, Sweden and UK) Independent agent: a foreign individual, or organization, who agrees to represent an exporters interest in foreign markets Licensing arrangements: an arrangement by an owner of a process or product to allow another business to produce, distribute or market for a fee or royalty. Franchising is a special form of licensing which is now becoming more common. Branch office: a location that an exporting firm establishes in a foreign country in order to sell its products more effectively Strategic alliance: an enterprise in which two or more persons or companies temporarily join forces to undertake a particular project Foreign Direct Investment (FDI): buying or establishing tangible assets in another country The Foreign Investment Review Agency (FIRA) was established in 1973 to ensure FDI benefited Canadians Quota: a restriction by one nation on the total number of products of a certain type that can be imported from another nation Embargo: ultimate form of quota; a government order forbidding exportation and/or importation of a particular product Tariff: a tax levied on imported products Subsidy: a government payment to help domestic business compete with foreign firms Protectionism: protecting domestic business at the expense of free market competition Local-content laws: laws requiring that products sold in a particular country be at least partly made in that country Cartel: any association of producers whose purpose is to control the supply and price of a given product Dumping: selling a product for less abroad that in the producing nation: illegal in Canada European Union (EU): agreement among major Western European nations to eliminate or make uniform most trade barriers affecting group members North American Free Trade Agreement (NAFTA): agreement to gradually eliminate tariffs and other trade barriers among the US, Canada and Mexico. Business Strategy Goals: objectives that a business hopes and plans to achieve Purposes of Goal Setting: -provides direction, guidance, and motivation for all managers -helps firm allocate resources -helps to define corporate culture -helps manager assess performance Mission statement: an organization’s statement of how it will achieve its purpose in the environment in which it conducts its business Long-term goals: goals set for extended periods of time, typically five years or more into the future Intermediate goals: goals set for a period of 1 to 5 years Short-term goals: goals set for the very near future, typically less than one year Strategy formulation: creation of a broad program for defining and meeting an organization’s goals i) set strategic goals ii) analyze the organization and environment iii) match the organization and environment i) Strategic goals: long-term goals derived directly from a firm’s mission statement ii) SWOT analysis: identification and analysis of organizational Strengths and Weaknesses and environmental Opportunities and Threats as part of strategy formulation [external] Environmental analysis: the process of scanning the environment for threats and opportunities [internal] Organizational analysis: the process of analyzing a firm’s strengths and weaknesses iii) Matching the organization an environment: matching companies with their environments lays the foundation for successfully planning and conducting business Plans can be views on three levels: strategic, tactical and operational. Managerial responsibilities are defined at each level. Strategic Plan: plans that reflect decisions about resource allocations, company priorities, an steps needed to meet strategic goals Tactical Plans: are shorter range plans, concerned with implementing specific aspects of a company’s strategic plans. Typically involve upper or middle management Operational Plans: plans setting shot-term targets for daily, weekly or monthly performance. Typically by lower or middle level management Levels of Strategy: Corporate-level strategy: identifies the various businesses that a company will be in, and how these businesses will relate to each other. Examples of corporate-level strategies include: growth, concentration, integration, diversification, and investment reduction. Concentration strategy: involves focusing the company on one product or product line Growth: companies have several growth strategies, all of which focus on internal activities. • Market penetration: boosting sales of present products by more aggressive selling in the firm’s current markets • Product development: developing improved products for current markets • Geographic expansion: expanding operations in new geographic areas or countries Integration: two basic forms of integration include horizontal and vertical integration: • Horizontal integration: acquiring control of competitors in the same or similar markets with the same or similar products • Vertical integration: owning or controlling the inputs to the firm’s processes and/or the channels through which the product or services are distributed Diversification: expanding into related or unrelated products or market segments • Related diversification: adding new, but related products or services to an existing business • Conglomerate diversification: diversifying into products or markets that are not related to the firm’s present business Investment reduction: reducing the company’s investment in one or more of it lines of business • Retrenchment: reduction of an activity or operation • Divestment: involves selling or liquidating one or more of a firm’s businesses Business-Level (Competitive) Strategies: identifies the ways a business will compete in its chosen line of products or services. Examples of competitive strategies include: cost leadership, differentiation and focus Cost leadership: becoming the low cost leader in the industry. E.g. Wal-Mart is an industry cost leader. Differentiation: a firm seeks to be unique in its industry along some dimension that is valued by buyers. It emphasizes key features of the product/service that beats all in the market. Focus: selecting a market segment and serving the customers in that market niche better than competitors. Becoming more diversified in order to meet the needs of the consumer Functional Strategies: identify the basic courses of action that each department in the firm will pursue so that it contributes to the attainment of the business’s overall goals. Basically, regardless of choice of competitive strategy, it must be translated into functional strategies for all the departments within the firm. Managers and Managing Management: is the process of planning, organizing, leading and controlling a business’s financial, physical, human and information resources in order to achieve its goals. Example: CEO of Walt Disney Productions is a manager because he regularly carries out these four functions. Actors would not be seen as managers as they do not carry out these functions. Planning: the portion of a manager’s job concerned with determining what the business needs to do and the best way to achieve it. Planning process has five basic steps: 1-goals are established for the organization 2-managers identify whether a gap exists between company’s desire and actual position 3-managers develop plans to achieve the desired objectives 4-plans that have been decided upon are implemented 5-effectiveness of the plan is assessed Organizing: portion of a manager’s job concerned with mobilizing t
More Less
Unlock Document

Only pages 1,2,3,4 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit