Business terms

five stages of corporate responsibility

1. Defensive 2. Compliant 3. Managerial 4. Strategic 5. Civil

Steps to face an ethical dilemma

1. define the problem 2. Identify feasible options 3. Assess the effect of each option on stakeholders 4. Establish criteria for determining the most appropriate action 5. Select the best option based on the established criteria.

multinational corporation (MNC)

A company that operates in many countries

fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

monetary policy

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

trade surplus

If a country sells more products than it buys, it has a favorable balance

trade deficit

If it buys more than it sells, it has an unfavorable balance

Product Development`

Responsible for activities that a company undertakes to innovate and introduce new products and services. Consists of everything that a company does to identify customer needs and designs products to meet those needs. Develops the benefits and features of products, including price and quality.

Finance

Responsible for managing a company's funds, maintaining a general ledger, paying bills, billing customers, and cost accounting. Provides accurate, relevant, timely financial information to help users, both inside and outside the organization, assess the financial strength of the company.

Human Resources

Responsible for managing the employee life cycle (i.e., recruiting, hiring, onboarding, training, and firing employees), administering employee benefits, and creating a framework to assess employee performance. Ensures that company culture is established and reinforced. Supports management in developing a strategic plan and in setting goals, objectives and KPIs (Key Performance Indicators).

Legal

Responsible for matters such as litigation, investigations, compliance, mergers, and acquisitions. Handles issues that may come up in the course of business, ranging from drafting waiver forms for employees to handling lawsuits from angry customers.

Sales

Responsible for selling products or services to generate revenue, increase profitability and to build and maintain relationships with customers to encourage repeat purchases and brand loyalty.

Information Technology

Responsible for the company's systems, networks, data, and applications all connect, function properly, and are secure. Ensures that each department has all the technical tools to accelerate the business and drive efficiency.

Marketing

Responsible for the planning and execution of the distribution and promotion of products and services to customers as well as the company brand. Responsible for lead generation and customer management through the phases of awareness, consideration, conversion, loyalty, and advocacy.

Operations

Responsible for the planning, designing, and controlling the process of production to convert resources (labor, materials, money, information, etc.) into products or services. Ensures that the production process is completed from start to finish with maximum efficiency.

economic indicators

Statistics that provide information about the performance of the economy and its position in the business cycle.

tarrifs

Taxes on imported goods

subsidies

The government payments that you give to the farmers to help offset some of their costs of production

international contract manufacturing / outsourcing

U.S. companies manufacture their products in countries where labor costs are lower. A U.S. company might contract with a local company in a foreign country to manufacture one of its products. It will, however, retain control of product design and development and put its own label on the finished product.

leading economic indicators

Variables that predict, or lead to, a recession or recovery; examples include consumer confidence, stock market prices, business investment, and big-ticket purchases, such as automobiles and homes

International franchise agreement

a company (the franchiser) grants a foreign company (the franchisee) the right to use its brand name and to sell its products or services. The franchisee is responsible for all operations but agrees to operate according to a business model established by the franchiser

code of conduct

a document describing the principles and guidelines that all employees must follow in the course of all job-related activities.

business plan

a document that identifies the goals of your proposed business and explains how these goals will be achieved

franchise

a franchiser (the company that sells the franchise) grants the franchisee (the buyer—you) the right to use a brand name and to sell its goods or services

Small Business Administration (SBA)

a government agency that provides assistance to small businesses

European Union

a group of twenty-seven countries that have eliminated trade barriers among themselves

ethical dilemma

a morally problematic situation

executive summary

a one- to three-page overview of the business plan

joint ventures

alliances in which the partners fund a separate entity (perhaps a partnership or a corporation) to manage their joint operation.

international licensing agreement

allows a foreign company (the licensee) to sell the products of a producer (the licensor) or to use its intellectual property (such as patents, trademarks, copyrights) in exchange for royalty fees

North American Free Trade Agreement (NAFTA)

an agreement among the governments of the United States, Canada, and Mexico to open their borders to unrestricted trade.

strategic alliance

an agreement between two companies (or a company and a nation) to pool resources in order to achieve business goals that benefit both partners.

World Bank

an important source of economic assistance for poor and developing countries.

foreign subsidiary

an independent company owned by a foreign firm (called the parent)

whistle blower

an individual who exposes illegal or unethical behavior in an organization.

Business

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

Stakeholders

anyone who, like owners, employees, customers, and the communities in which it does business, has a "stake" or interest in it

Small Business Development Centers (SBDC)

assists current and prospective small business owners with business problems and provides free training and technical information on all aspects of small business management

embargo

bans the import or export of certain goods to or from a specific country

Corporate Social Responsibility

deals with actions that affect a variety of parties in a company's environment

mission statement

describes the purpose or mission of your organization—its reason for existence.

Balance of trade

determined by subtracting the value of its imports from the value of its exports

General Agreement on Tariffs and Trade (GATT)

encourages free trade by regulating and reducing tariffs and by providing a forum for resolving disputes

World Trade Organization (WTO)

encourages global commerce and lower trade barriers, enforces international rules of trade, and provides a forum for resolving disputes

ethical decision

entails a "right-versus-wrong" decision—one in which there is a right (ethical) choice and a wrong (unethical or illegal) choice

exporting

entails selling products to foreign customers.

Comparative Advantage

exists when a country can produce a product at a lower opportunity cost than other nations

Oligopoly

few sellers

core values

fundamental beliefs about what's important and what is (and isn't) appropriate in conducting company activities

trading bloc

groups of countries that have joined together to allow goods and services to flow without restrictions across their mutual borders.

quota

imposes limits on the quantity of a good that can be imported over a period of time

goods-producing sector

includes all businesses that produce tangible goods

service-producing sector

includes all businesses that provide services but don't make tangible goods

importing

involves purchasing products from other countries and reselling them in one's own.

The Service Core of Retired Executives (SCORE)

is a group of retired business owners and managers who provide help to small business owners.

Absolute Advantage

it's the only source of a particular product or can make more of a product with the same amount of or fewer resources than other countries

International Monetary Fund (IMF)

loans money to countries with troubled economies

Consumer Price Index (CPI)

measures the rate of inflation by determining price changes of a hypothetical basket of goods, such as food, housing, clothing, medical care, appliances, automobiles, and so forth, bought by a typical household.

conflict of interest

occur when individuals must choose between taking actions that promote their personal interests over the interests of others or taking actions that don't

Offshoring

occurs when the facilities set up in the foreign country replace U.S. manufacturing facilities and are used to produce goods that will be sent back to the United States for sale

Small Business

one that is independently owned and operated, exerts little influence in its industry, and (with a few exceptions) has fewer than five hundred employees

low-context culture

personal and work relationships are more compartmentalized: you don't necessarily need to know much about the personal context of a person's life to deal with him or her in the business arena

trade controls

policies that restrict free trade

Fiduciary Responsibility

responsible for safeguarding the company's assets and handling its funds in a trustworthy manner.

operations manager

someone who designs and oversees the transformation of resources into goods or services

Entrepreneur

someone who identifies a business opportunity and assumes the risk of creating and running a business to take advantage of it

exchange rate

tells you how much one currency is worth relative to another currency

Business Ethics

the application of ethical behavior in a business context

balance of payments

the difference, over a period of time, between the total flow coming into a country and the total flow going out

Foreign Direct Investment (FDI)

the formal establishment of business operations on foreign soil

resources

the inputs used to produce outputs

Gross Domestic Product (GDP)

the market value of all final goods and services produced within a country in a given period of time

high-context culture

the numerous interlocking (and often unstated) personal and family connections that hold people together have an effect on almost all interactions

dumping

the practice of selling exported goods below the price that producers would normally charge in their home markets (and often below the cost of producing the goods)

susatinability

the principle of providing products today that don't compromise the ability of future generations to meet their needs

management

the process used to accomplish organizational goals through planning, organizing, leading, and controlling people and other organizational resources

economics

the study of the production, distribution, and consumption of goods and services.

culture

the system of shared beliefs, values, customs, and behaviors that govern the interactions of members of a society.

protectionism

the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports.

Lagging Economic Indicators

variables that follow, or trail, changes in overall economic activity; examples include the interest rate and the average duration of unemployment

legal monopoly

when a company receives a patent giving it exclusive use of an invented product or process