KSB-100 Study Guide - Midterm Guide: Nonprofit Organization, Insourcing, Comparative Advantage
13 Jun 2018
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CHAPTER1
• Business→ any activity that seeks to provide goods and services to others while
operating at a profit.
• Goods→ are tangible products such as computers, foods, clothing, cars, and
appliances.
• Services→ are intangibles products cant be held such as education, health care,
insurance, recreation, and travel and tourism.
• Entrepreneur→ a person who risks time and money to start and manage a business.
• Revenue→ the total amount of money a business takes in during a given period by
selling goods and services.
• Profit→ the amount of money a business earns above and beyond what it spends for
salaries and other expenses needed to run the operation.
• Loss→ occurs when a businesss expenses are more than its revenue.
• Risk→ chance an entrepreneur takes of losing time and money on a business that
may not prove profitable.
• Businesses and their employees pay taxes that the federal government and local
communities use to build hospitals, schools, etc. A nations businesses are part of an
economic system that contributes to the standard of living.
• Standard of living→ refers to the amount of goods and services people can buy with
the money they have.
• Quality of life→ the general well-being of a society in terms of its political freedom,
natural environment, education, health care, safety, amount of leisure and rewards
that add to the satisfaction and joy that other goods and services provide. The more
money business creates, the more is potentially available to improve quality of life
of everyone.
• Stakeholders→ all the people who stand to gain or lose by the policies and activities
of a business and whose concerns the business needs to address. Include customers,
employees, stockholders, suppliers, dealers (retailers), bankers, people in the
surrounding community, the media, environmentalists, and elected government
leaders.
• Staying competitive in a business calls for outsourcing, meaning contracting with
other companies (often in other countries) to do some or all the functions of a firm,
like its production or accounting tasks. Have cost companies to loss company to
overseas competitors.
• Insourcing→ bringing the company to the US.
• Nonprofit organization→ an organization whose goals do not include making a
personal profit for its owners or organizers. Do not strive for financial gains, but to
meet social or educational goals.
• Social entrepreneurs→ people who use business principles to start a manage not-
for-profits and help address social issues.
• Businesses owned by minority women are growing faster than those owned by men
or nonminority women. Women of color are establishing businesses at twice the
rate of their male counterparts and more than four times that of non-minority
entrepreneurs.
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• Five factors of production:
1. Land (natural resources)
2. Labor (workers)
3. Capital (machines, tools, buildings, or whatever else is used in the production
of goods. May not include money; money is used to buy factors of production
but is not always considered a factor itself)
4. Entrepreneurship
5. Knowledge
• Most important factor= knowledge
• What makes rich countries is entrepreneurship and effective use of knowledge.
• Business environment→ the surrounding factors that either help or hinder the
development of businesses. The five elements in business environment are:
1. The economic and legal environment
2. The technological environment
3. The competitive environment
4. The social environment
5. The global business environment
• Creating the right business environment is the foundation for social benefits of all
kinds, including good schools, clean air and water, good health care, and low rates of
crime.
• One of the best things the governments of developing countries can do is to
minimize interference with the free exchange of goods and services.
• Government can lessen the risks of entrepreneurship by passing laws that enable
businesspeople to write enforceable contracts. They can also establish a currency
thats tradable in world markets. They can also help minimize corruption in
business and in its own ranks.
• Technology→ means everything from phones and copiers to computers, medical
imaging devices, and the various software programs that make business processes
more effective, efficient, and productive.
• Productivity→ the amount of output you generate given the amount of input, such
as the number of hours you work. The more you can produce in any given period,
the more money you are worth to companies. So many workers are productive that
less workers are needed, increasing unemployment rate.
• E-commerce→ the buying and selling of goods over the Internet. Two major types of
e-commerce transactions: business-to-consumer (B2C) and business-to-business
(B2B).
• Database→ electronic storage file for information.
• Identity theft→ obtaining of individuals personal information, such as Social
Security and credit card numbers, for illegal purposes.
• Business have become customer-driven not management-driven. Organizations
have to listen closely to customers wants and needs.
• To meet the needs of customers, firms must give their frontline workers the
responsibility, authority, freedom, training, and equipment they need to respond
quickly to customer requests, also known as empowerment.
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• Demography→ the statistical study of the human population with regard to its size,
density, and other characteristics such as age, race, gender, and income.
• Diversity has come to mean more than recreating and keeping minority and female
employees but also seniors, people with disabilities, homosexuals, atheists,
extroverts, introverts, married people, singles and the devout.
• People ages 65-74 are the riches demographic group in the US.
• Globalization, or world trade, has grown thanks to the development of efficient
distribution systems and communication advances such as the Internet. It has
greatly improved living standards around the world.
• Climate change→ the movement of the temperature of the planet up or down over
time. Saving energy and producing products that cause less harm to the
environment is a trend called greening.
• Agriculture is a major industry in the US.
• Today services make up over 70% of the value of the US economy. Although service-
sector growth has slowed, it remains the largest area of growth.
CHAPTER 2
• Economics→ the study of how society chooses to employ resources to produce
goods and services and distribute them for consumption among various competing
groups and individuals. Two major branches:
- Macroeconomics→ looks at the operation of a nations economy as a whole
- Microeconomics→ looks at the behavior of people and organizations in
markets for particular products or services.
• Resource development→ the study of how to increase resources (say, by getting oil
and gas from shale and tar sands) and create conditions that will make better use of
them (like recycling and conservation).
• The challenge for macroeconomists is to determine what makes some countries
relatively wealthy and other countries relatively poor, and then to implement
policies and programs that lead to increased prosperity for everyone in all
countries.
• Adam Smith→ envisioned creating more resources so that everyone could become
wealthier. Believed freedom was vital to the survival of any economy, especially the
freedom to own land or property and to keep the profits form working the land or
running a business. Believed people will work long and hard if they have incentives
for doing so if they know theyll be rewarded. As a result of those efforts, the
economy will prosper, with plenty of food and all kinds or products available to
everyone. People work primarily for their own prosperity and growth.
• Invisible hand→ used to describe the process that turns self-directed gain into
social and economic benefits for all.
• Smith assumed that as people became wealthier, they would naturally reach out to
help the less fortunate in the community.
• Capitalism→ the economic system that has led to wealth creation in much of the
world. Under capitalism all or most of the factors of production and distribution-
such as land, factories, railroads, and stores- are owned by individuals. They are
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Document Summary
Have cost companies to loss company to overseas competitors. Insourcing bringing the company to the us: nonprofit organization an organization whose goals do not include making a personal profit for its owners or organizers. They can also establish a currency that(cid:495)s tradable in world markets. The more you can produce in any given period, the more money you are worth to companies. So many workers are productive that less workers are needed, increasing unemployment rate: e-commerce the buying and selling of goods over the internet. Two major types of e-commerce transactions: business-to-consumer (b2c) and business-to-business (b2b): database electronic storage file for information. Identity theft obtaining of individuals(cid:495) personal information, such as social: business have become customer-driven not management-driven. It has greatly improved living standards around the world: climate change the movement of the temperature of the planet up or down over time.
