Business Essentials - CHAPTER 2 - The Environment of Business

deflation:

A period of generally falling prices.

technology:

All the ways firms create value for their constituents.

process:

Any activity that adds value to some input, transforming it into an output for a customer (whether external or internal).

business process management:

Approach by which firms move away from department-oriented organization and toward process-oriented team structures that cut across old departmental boundaries.

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 the same rate.

socio-cultural environment:

Conditions including the customs, values, attitudes, and demographic characteristics of the society in which an organization functions.

economic environment:

Conditions of the economic system in which an organization operates.

political-legal environment:

Conditions reflecting the relationship between business and government, usually in the form of government regulation.

external environment:

Everything outside an organization's boundaries that might affect it.

applied R&D:

Focusing specifically on how a technological innovation can be put to use in the making of a product or service that can be sold in the marketplace.

real GDP:

GDP calculated to account for changes in currency values and price changes.

nominal GDP:

GDP measured in current dollars or with all components valued at current prices.

basic (or pure) R&D:

Improving knowledge in an area without a primary focus on whether any discoveries that might occur are immediately marketable.

unemployment:

Level of joblessness among people actively seeking work in an economic system.

productivity:

Measure of economic growth that compares how much a system produces with the resources needed to produce it.

consumer price index (CPI):

Measure of the prices of typical products purchased by consumers living in urban areas.

inflation:

Occurrence of widespread price increases throughout an economic system.

depression:

Particularly severe and long-lasting recession.

business cycle:

Pattern of short-term ups and downs (expansions and contractions) in an economy.

fiscal policies:

Policies by means of which governments collect and spend revenues.

monetary policies:

Policies by means of which the government controls the size of the nation's money supply.

purchasing power parity:

Principle that exchange rates are set so that the prices of similar products in different countries are about the same.

R&D intensity:

R&D spending as a percentage of a company's sales revenue.

core competency:

Skills and resources with which an organization competes best and creates the most value for owners.

vertical integration:

Strategy of owning the means by which an organization produces goods or services.

outsourcing:

Strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services.

viral marketing:

Strategy of using the internet and word-of-mouth marketing to spread product information.

organizational boundary:

That which separates the organization from its environment.

technology transfer:

The process of getting a new technology out of the lab and into the marketplace.

budget deficit:

The result of the government spending more in one year than it takes in during that year.

national debt:

The total amount of money that Canada owes its creditors.

balance of trade:

The total of a country's exports (sales to other countries) minus its imports (purchases from other countries).

research and development (R&D):

Those activities that are necessary to provide new products, services, and processes.

standard of living:

Total quantity and quality of goods and services that a country's citizens can purchase with the currency used in their economic system.

aggregate output:

Total quantity of goods and services produced by an economic system during a given period.

gross national product (GNP):

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.

gross domestic product (GDP):

Total value of all goods and services produced within a given period by a national economy through domestic factors of production.