BUSN 110 Notes pdf PDF

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BUSN 110 1! Louisiana Tech University Dr. Jarrell BUSN 110 Notes

9/10/18 • Business: Organization or activity that provides goods and services to earn a profit. • Profit: Money that a business earns in sales, minus expenses. • Loss: Occurs when expenses are greater than revenue • Entrepreneurs: People who risk their resources, time, and money to start and manage a business.

Business: • Improves the standard of living of people and contributes to higher quality of life. “Standard of living impacts the way you live, example… 30-35% of you’re monthly income can be put on a house note.” • Provides the products and services that people enjoy and also need. • Contributes to society through innovation.

Business Eras: • From the mid-1700s to the mid-1800s, technological advances fueled rapid industrialization in America (Industrial Revolution).

BUSN 110 2! • In the early 1900s, business refined production process and created greater efficiencies. (Production Era) “Henery Ford and the assembly line.” • After WWII, business began to develop brands to help consumers understand the differences among products. (Marketing Era) “After the rations of the great depression and WWII there was a huge demand for the brand and value of things, differentiation of products.” • Today, firms aim to build long-term relationships with customers.(Relationship Era) “Repeat customers with stable employees.” Nonprofits and the economy • Nonprofits: Business-like establishments that employ people and produce goods and services. Their goal is to contribute to the community.

Factors of production: • Elements that businesses need to achieve their objective.

- Natural resources • Inputs that offer value in their natural state

- Capital • Synthetic resources that a business needs to produce goods or services

- Human resources • Physical, intellectual, and creative contributions of everyone who works within an economy “Critical Thinking”

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- Entrepreneurship • Entrepreneurs take the risk of launching and operating their own business • Creates opportunities by harnessing other factors of production “Person who is more creative in their thinking, take the rest to make the investment and take the jump.” Business Environment: •

Setting in which a business operates

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Components •

Economic environment

BUSN 110 4! •

Governments take active steps to reduce the risks of business

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Affected by corruption and ethical lapses

Competitive Environment: • Companies develop long-term, mutually beneficial relationships with customers • Speed-to-market provides competitive advantage “How fast you get it to market” • Speed-to-market: Rate at which a new product moves from conception to commercialization • “Smaller business can find a niche that larger companies do not offer” • “You will never know everything you want to know, you have to make the best decision and move forward otherwise it will cost you money by losing time and market share.” Workforce advantage and technological advancements: • Workforce advantage • Finding and holding the best talent contributes to a firm’s competitive edge • Technological environment - Impact of technology has transformed businesses • Business technology: Tools used by businesses to become efficient and effective • World Wide Web • e-commerce Social Environment: • Embodies shared values, attitudes, customs, beliefs, and demographics

BUSN 110 5! • Demographics: Measurable characteristics of a population • Dimensions • Diversity • Aging population “Generational gaps” • Rising worker expectations “workers want more” • Ethics and social responsibility Global Environment: • Technology and free trade have blurred lines between individual economies in the world • Free trade: Movement designed to help goods and services flow freely across international boundaries •

General Agreement on Tariffs and Trade (GATT): International trade agreement that has taken bold steps to lower tariffs and promote free trade world wide. “Removing barriers and making it easier”

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“We are more interconnected than we have ever been before, with free trade we have allowed to trade with more countries than before, free trade has removed the boundaries.”

Business and Individual career choices: • Following one's passion boosts the chances of both financial and personal success • Financial success is influenced by the economy and by one’s business skills • Right career choice is made on the basis of what one loves to do

BUSN 110 6! “Review Summary Slide”

9/12/18 Economy: Financial and social system of how resources flow through society. Economics: Study of the choices made by people, companies, and governments to allocate society’s resources • Macroeconomics: Study of a country’s overall economic dynamics • Microeconomics: Study of smaller economic units Fiscal Policy V. Monetary Policy

- Fiscal-Government efforts to influence the economy through taxation and spending. - Designed to encourage growth, boost employment, and curb inflation. - Increasing the debt ceiling in 2011 create the fiscal cliff. - Debt Ceiling-Maximum amount congress lets the government borrow. - Fiscal Cliff Across-the-board spending cuts and sharp tax hikes to decrease the U.S Budget deficit.

- Budget surplus-overage that occurs when revenue is higher than expenses over a given period of time

- Fiscal policy how we tax and spend money. Monetary Policy

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- Monetary-Federal reserve decisions that shape the economy by influencing interest rates and supply of money.

- Functions of the Federal Reserve - Influence the size of the money supply - Open Market Operation - Federal reserve function of buying and selling government securities. Fundamental Rights of Capitalism:

- Right to own a business and keep after-tax profits - Right to private property - Right to free choice - Right to fair competition Degrees of competition:

- Pure: Many competitors selling virtually identical products “Ag” - Monopolistic: Many competitors selling differentiated products “Branding, advertising, in store products”

- Oligopoly: Handful of competitors selling products that can be similar or different “Railroads, Airlines”

- Monopoly: Single producer dominating the industry, leaving no room for competitors “Natural Monopoly”

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- Natural monopoly arises when a single supplier is more efficient than multiple, competing ones.

BUSN 110 9! Supply and Demand Curve: ^^^

- Production (Supply) increases when demand increase.

Planned Economy:

- Socialism: Government owns and operates key enterprises that directly affect public welfare - Communism: Public ownership of all enterprises - Under the direction of a strong central government Mixed Economy:

- Embody elements of planned and market-based economic systems - Help in meeting the needs of the citizens - Privatization: Process of converting government-owned businesses to private ownership - Gross domestic product (GDP) - Total value of all final goods and services produced within a nation’s physical boundaries over a given period of time

- Vital measure of economic health - Measures the economic performance of individual nations - Compares the growth among nations

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- Unemployment rate: Percentage of people in the labor force over age 16 who do not have jobs and are seeking employment

- Frictional unemployment - When it is possible to find better jobs - Structural unemployment - Unemployment for a longer term as skills are no longer relevant - Cyclical unemployment - Layoffs during recessions - Seasonal unemployment - Job loss related to the time of year Business Cycle:

- Periodic contraction and expansion of the economy - Contraction: Period of economic downturn “Think of dot.com bubble” - Recession: Marked by a decrease in the GDP for two consecutive quarters “Two consecutive quarters of contraction”

- Depression: Long-lasting recession “U.S has not gone back into recession until the 1920s”

- Recovery: Period of rising economic growth and employment - Expansion: Period of strong economic growth and high employment “Everyone who wants a job has a job”

BUSN 110 !11 Ethics: • Set of beliefs about: • Right and wrong • Good and bad • Universal ethical standards: Ethical norms that apply to people across a broad spectrum of situations • Business ethics: Application of right and wrong, good and bad, in a business setting • Ethical dilemmas: Decisions that involve a conflict of values Multiple touch point of Ethics: • Ethics and the individual • Influenced by personal needs, family, culture, religion, and personality traits • Business leaders who scored high on personal empathy exhibited high levels of ethical leadership • Ethics and the organization • Organizations influence the ethical conduct of employees • Elements of a strong culture • Comprise ethics-related actions at all levels of an organization and accountability for those actions

BUSN 110 12 ! • Establishing an ethical culture • Involves backing up ethical words with documented practices, processes, and procedures Code of Ethics: • Formal written document that defines the ethical standards of an organization • Gives employees the information required to make ethical decisions across a range of situations Whistle Blowers: • Establish protection for whistle-blowers • Whistle-blowers: Employees who report their employer’s illegal or unethical behavior to either the authorities or the media Social Responsibility: •

Planned obsolescence: Deliberately designing products to fail in order to shorten the time between consumer purchases

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Responsibility to investors •

Sarbanes-Oxley Act: Sets higher ethical standards for public corporations and accounting firms •

Provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the validity of financial statements

BUSN 110 13 ! Social Responsibility to the community: • Corporate philanthropy: Business donations to nonprofit groups • Cause-related marketing: Marketing partnerships between businesses and nonprofit organizations • Corporate responsibility: Business contributions to the community through the actions of the business itself rather than donations of money and time

BUSN 110 14 ! Business 110 Key Terms Chapters 1-4 study guide:

business any activity that seeks to provide goods and services to others while operating at a profit

goods tangible products such as computers, food, clothing, cars, and appliances

services intangible products such as education, health caare, insurance, recreation, and travel

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 fro salaries and other expenses

loss when a business's espenses are more than its revenues

risk the chance an entrepreneur takes of losing time and money on a business that may not prove profitable

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standard of living the amount of goods and services people can buy with the money they have

quality of life the gerneral 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

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

outsourcing contracting with other companies to do some or all of the functions of a firm, like its production or accounting tasks

nonprofit organization an organization whose goals do not include making a personal profit for its owners or organizers

factors of production the resources used to create wealth: land, labor, capital, entrepeneurship, and knowledge

business environment the surrounding factors that either help or hinder the development of businesses

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technology everything from phones and copiers to computers, medical imaging devices, personal digital assistants, 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

e-commerce the buying and selling of goods over the internet

database an electronic storage file for information

identity theft the obtaining of individuals' personal information such as Social Security and credit card numbers, for illegal purposes

empowerment giving frontline workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests

demography the statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income

economics

BUSN 110 17 ! 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

microeconomics the part of economics study that looks at the behavior of people and organizations in particular markets

macroeconomics the part of economics study that looks at the operatiion of a nation's economy as a whole

resource development the study of how to increase resources and to create the conditions that will make better use of those resources

capitalism an economic system in which all or most of the factors of production and distribution are privately owned and operated fro profit

supply the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time

demand the quantity of products that people are willing to buy at different prices at a specific time

market price the price determined by supply and demand

BUSN 110 18 ! perfect competition the degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different

oligopoly a degree of competition in which just a few sellers dominate the market

monopoly a degree of competition in which only one seller controls the total supply of a product or service, and sets the price

socialism an economic system based on the premise that some, if not most, basic businesses should be owned by the government so that profits can be more evenly distributed among the people

brain drain the loss of the best and brightest people to other countries

communism an economic and political system in which the government makes almost all economic decisions and owns almost all the major factors of production

free-market economies economic systems in which the market largely decides what goods and services will be produced, who will get them, and how the economy will grow

command economies economic systems in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow

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mixed economies economic systems in which some allocation of resources is made by the market and some by the government

gross domestic product the total value of final goods and services produced in a country in a given year

unemployment rate the number of civilians at least 16 years ofld who are unemployed and tried to find a job within the prior four weeks

inflation a general rise in the prices of goods and services over time

deflation a situation in which prices are declining

stagflation a situation when the economy is slowing but prices ar going up anyhow

consumer price index monthly statistics that measure the pace of inflation or deflation

business cycles the periodic rises and falls that occur in economies over time

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recession two or more consecutive quarters of decline in the gross domestic product

depression a severe recession, usually accompanied by deflation

fiscal policy the federal government's efforts to keep the economy stable by increasing or decreasing taxes or government spending

importing buying products from another country

exporting selling products to another country

free trade the movement of goods and services among nations without political or economic barriers

absolute advantage the advantage that exists when a country has a monopoly on producting a specific product or is able to produce it more efficiently than all other countries

balance of trade the total value of a nation's exports compared to its imports measured over a particular period

trade surplus

BUSN 110 21 ! a favorable balance of trade; occurs when the value of a country's exports exceeds that of its imports

trade deficit an unfavorable balance of trade; occurs when the value of a country's imports exceeds that of its exports

licensing a global strategy in which a firm (the licensor) allows a foreign company (the licensee)to produce its product in exchange for a fee (a royalty)

exchange rate the value of one nation's currency relative to the currencies of other countries

tariff a tax imposed on imports

import quota a limit on the number of products in certain categories that a nation can import

embargo a complete ban on the import or export of the certain product, or the stopping of all trade with a particular country

North American Free Trade Agreement (NAFTA) agreement that created a free-trade area among the United States, Canada, and Mexico ethics standards of moral behavior that is, behavior accepted by society as right verses wrong

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whistleblowers insiders who report illegal or unethical behavior

corporate social responsibility (CSR) A business's concern for the welfare of society Chapter One Quizlet Review: What term denotes a nation's basis for allocating its resources among its citizens? economic system Which of the following BEST describes purchasing power parity the principle that exchange rates are set so that prices of similar products in different countries are about the same What term do economists use for the pattern of short-term expansions and contractions in the economy? business cycle...