Chapter1: The Foundations of Business Notes

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Department
International Business
Course
INTB 1202
Professor
Ronald S.Thomas
Semester
Fall

Description
Chapter 1: The Foundations of Business 1.1 Introduction A. recession a. eco. turmoil in housing & mortgage -> banks stopped making loans -> $700 bil. Wall St. bailout b. unemployment incr. 1.2 Getting Down to Business A. business- any activity that provides goods/services to consumers to make profit B. nonprofit org. a. ex: Boys and Girls Clubs C. participants & areas of business a. participants = owners (invest $), employees, customers b. management- planning for org., staffing, directing, & controlling co.’s resources to achieve its goals c. operations- converts resources -> goods/services d. marketing- everything co. does to identify customer’s needs & design prod. to meet those needs e. accounting- measuring, summarizing, communicating financial & managerial info i. fin. accountants- prepare fin. stmts -> assess co.’s strength (both int. & ext.) ii. managerial acc.- info. for internal use only f. finance- planning for, obtaining, managing co.’s funds 1.3 What is economics? A. economics- study of production, distribution, and consumption of goods & services B. resources- inputs used to produce outputs a. factors of production i. land/natural resources ii. labor iii. capital iv. entrepreneurship C. circular flow model D. 3 fundamental ?s of econ. a. what goods/services to produce b. how to produce goods/services c. who should get goods/services E. economic system- means by which society makes decisions about allocating resources a. planned system- gov. control i. communism- gov. owns all/most enterprises 1. ex: North Korea, Cuba ii. socialism- industries providing essential services are gov. owned, others are privately owned 1. ex: France, Sweden b. free market system (capitalism)- most businesses owned & operated by indiv. i. ex: Japan (based on it) c. mixed market eco.- relies on both markets & gov. to allocate resources i. privatization- conversion of businesses previously gov. owned -> priv. ownership ii. ex: US eco. d. Adam Smith’s Wealth of Nations i. “invisible hand” of competition 1.4 Perfect Competition Supply & Demand A. perfect competition a. many consumers buying standardized products from many sellers b. sellers are price takers B. demand- quantity buyers willing to purchase @ various prices C. supply- quantity of products sellers willing to sell @ various prices D. supply & demand graph intersection = equilibrium point 1.5 Monopolistic Competition, Oligopoly, & Monopoly A
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