BUSA Chapter 1

Finance

planning for, obtaining, and managing a company's funds *important b/c new business owners usually need to borrow money to get started

Equilibrium Price

price at which buyers are willing to buy exactly the amount that sellers are willing to sell

Privatization

process of converting gov-owned to private ownerships

Mixed Market Economy

relies on both markets and gov to allocate resources

Factors of Production

resources consisting of land, labor, capital, and entrepreneurial skills combines to produce goods and service

Inflation

rise in the overall price level *deflation: decrease in overall price level

Monopolistic Competition

sellers supply differentiated products (products that differ but serve similar purpose)

Demand Curve

shows the quantity of a product that will be bought at certain prices

Supply Curve

shows the quantity of a product that will be offered at certain prices

Economics

study of how scarce resources are used to produce outputs (goods and services) that are distributed among people

Marketing

the activity for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

National Debt

total amount of money owed by fed gov

Capitalism

an econ system in which businesses are owned/operated by individuals *competition dictates how goods and services will be allocated

Natural Monopolies

b/c of the industry's importance to society, one seller is permitted to supply products w/o competition

Full Employment

condition under which about 95% of those who want to work are employed

Price Stability

conditions under which the prices for products remain fairly constant

Perfect Competition

consumers buy standardized products form numerous small business

Leading Economic Indicators

data that predict the status of the economy three to twelve months in the future *new unemployment claims *Avg weekly manufacturing hours *Building permits

Profit

difference b/t the revenue that a company brings in from selling goods and services and the costs of generating this revenue

Recession

economic slowdown measured by decline in GDP

not-for-profit organizations

established to provide social or educational services *receive funding from private foundations, individuals, and gov

Oligopoly

few sellers supply a large portion of all the products sold in the marketplace (airlines)

Accountants

financial advisor responsible for measuring, summarizing, and communicating financial and managerial information *financial: prepare financial statements *managerial: prepare info such as reports on the cost of materials used in production process (internal)

Pure Socialism

industries that provide essential services, such as utilities, banking, and health care, are often gov owned

Mangement

involves planning for, organizing, staffing, directing, and controlling a company's resources so that it can achieve its goals *plan by setting goals and develop strategies to achieve them *organize activities and resources to ensure company goals are met *staff organization with employees *direct employees to accomplish goals *design controls for assessing the success of plans/decisions and take action when needed

Depression

long-lasting recession

Functional Areas of Business

management, operations, marketing, accounting, finance

Economic System

means by which a society makes decisions about allocating resources to produce and distribute products

GDP

measure of market value of all goods and service produced by a nation's economy in a given year *goes up=growing ; down=contracting

Consumer Confidence Index

measure of optimism that consumers express about the economy as they go about their everyday lives

Consumer Price Index

measures inflation by measuring the prices of goods purchased by typical consumer

Legal Monopoly

one seller supplies a product or technology to which it holds a patent

Monopoly

only one seller supplying products at regulated prices

Unemployment Rate

percentage of total labor force that's currently unemployed and actively seeking work *goes up during recession b/c companies are reluctant to hire when demand is low

Operations manager

person who designs and oversees the process that converts resources into goods/services *responsible for ensuring products are of high quality

3 things to measure econ goals

GDP Unemployment Rate Price Stability

Fiscal Policy

Governmental use of taxation and spending to influence economic conditions

Economic Goals

Growth High Employment Price Stability

Resources

Inputs used to produce outputs *Land *Labor *Capital (buildings and equipment) *Entrepreneurship *Outputs=goods and services

Major Participants of Business

Owners, Consumers, and Employees

Business Cycle

Pattern of expansion and contraction in an economy

for-profit social enterprise

A business that, beyond the profit motive, has a social mission built into its business model. *making world a better place is part of what they do *in between profit and non profit *Ex: TOMS

Communism

A political system featuring the highest level of gov control over allocation and distribution

profit-making business

Activity that provides goods or services to consumers for the purpose of making a profit.

External Force on Business

Economy Gov Consumer Trends Pressure to be good corporate citizen

Monetary Policy

Efforts exerted by the Fed to regulate nation's money supply

Demand

Quantity of a product that buyers are willing to purchase at various prices *products more attractive at lower price cause we buy more b/c income goes further

Supply

Quantity of a product that sellers are willing to sell at various prices *business more willing to sell product when price rise and less when price falls b/c they are set up to make profit

Economic Indicator

Statistic that provides info about trends in the economy

Lagging Economic Indicators

Statistical data that measure economic trends after the overall economy has changed *average length of unemployment