Instructional Area: Economics (EC)
Explain the role of business in society (EC:070) (CS)
- supplying goods, services that consumers cannot obtain themselves - creating jobs in the economy; investing in technologies and human resource skills, helping expand the skill set and abilities of people, through investment and training - contributing back to the community
Determine the impact of business cycles on business activities (EC:018) (SP)
A business cycle is a series of recurring changes in economic activity. Four phases make up a business cycle: expansion, recession, trough, and recovery. During expansion, the economy is flourishing. It is a good time for businesses to start up or expands due to the increased output of goods and services. A recession is a time of economic slowdown lasting at least two quarters. Companies reduce their output during a recession, and consumers have less money to spend on goods and services. A prolonged recession is called depression. A trough is a low point in a business cycle. It marks the beginning of the transition from recession/depression to recovery when signs of economic growth are near. In the recovery phase, demand increases, and businesses respond by hiring more workers and supplying more goods.
Explain the nature of global trade (EC:016) (SP)
the exchange of goods and services across international borders. Affected by industrialization, globalization, and outsourcing. Causes new competition to arise and innovations to be made
Explain the concept of organized labor and business (EC:015) (SP)
A labor union is a group of workers who have joined together for the common purpose of improving the terms and conditions under which they work. Unions are formed to obtain higher wages, better benefits, and improved working conditions. When laborers organize, they are able to increase their bargaining power with business management. Two main types of unions exist today—industrial unions, made up of workers employed in the same industry, and craft/trade unions, which are groups of workers with similar skills. The AFL-CIO is the federation for nearly all labor unions, although some very large unions are independent of the federation. Labor union contracts are created through a negotiation process called collective bargaining, involving union officials and company representatives. If an agreement cannot be reached, pressure strategies may be imposed by either side, including strikes, picketing, and boycotts by union members or lockouts, injunctions, and strikebreakers by management. Several advantages and disadvantages exist for both sides in organized labor. Advantages: Workers gain individual dignity, fair treatment, protection, and fringe benefits. Disadvantages: However, they must pay union dues, support union decisions, and face hardships during strikes. Businesses benefit by having security regarding wages, benefits, and working conditions as well as having the union assist in recruiting and training employees. Businesses, though, face increased costs in wages and benefits, have limited control in personnel matters, and loss of production in the event of a strike.
Explain the concept of economic resources (EC:003) (CS)
A resource is any item that can be used to produce goods and services. Natural resources include anything that comes from nature. Human resources are people, the work they do, and the skills they possess. Capital resources include materials used in the production of goods and services. All of these economic resources are limited. The basic economic problem is how to meet unlimited wants with limited resources. This gap is a condition called scarcity.
Describe the determinants of exchange rates and their effects on the domestic economy (EC:100) (SP)
An exchange rate is the value of one currency in terms of another, and they are established on the foreign exchange market. This is a series of interconnected entities that exchange currencies, including businesses, banks, and governments. The exchange rate for a country's currency is determined by the supply and demand for that currency. This is impacted by foreign trade. The difference in the value of a country's imports and exports affects supply and demand, which affects exchange rates.
Discuss the impact of bribery and foreign monetary payments on the business (EC:140) (SP)
Bribery wastes money (estimated 5% of GDP) and decreases efficiency while increasing inequality
Explain the nature of business ethics (EC:106) (SP)
Business ethics include employees balancing their personal and professional responsibilities, as well as companies serving the interests of both their consumers and stakeholders
Determine the relationship between government and business (EC:008) (CS)
Business influences the government by political decision-makers (Choosing whether or not they will back certain politicians, and therefore, certain ideas) - Forming trade unions - By making political action committees affect government policies with their large investments) Governments influence businesses by making laws and regulations that determine what can be sold, who can buy it, etc.- - Having government agencies that help workers, small businesses, and people who are trying to get jobs.
Explain cultural considerations that impact global business relations (EC:110) (SP)
Businesses should not offend people of any culture. When marketing, businesses should tailor their promotional strategies to fit the area's culture, in ways such as using models of that race or using a certain language in ads. Marketing strategies should be appropriate to the cultural and social norms of an area, such as making area-specific products that people are more likely to purchase
Explain the impact of geography on world trade (EC:114) (SP)
Complex terrain can make distribution of products to these areas difficult, forcing businesses to decide whether it is worth expending resources to distribute products to these areas.
Discuss the measure of consumer spending as an economic indicator (EC:081) (SP)
Consumer spending is also called consumption, and it includes all spending by households on durable goods, nondurable goods, and services. Consumer spending is one variable used to calculate Gross Domestic Product, along with investment, government spending, and net exports. The amount of money actually available for consumer spending is called disposable personal income. Consumer spending, then, is one measure of the overall health of an economy.
Describe the concepts of economics and economic activities (EC:001) (CS)
Economics deals with the production, distribution and consumption of goods and services. Specifically, economic systems deal with the way a country provides for the needs and wants of its citizens. Economic systems help countries to make decisions about how to use its resources. Economic activities include: manufacturing, buying, selling, transporting and investing. The resources of a nation will help determine which economic activities should be pursued.
Describe the impact of electronic communication tools (e.g., Internet, video- and computer conferencing, webcasts, email) on global business activities (EC:111) (SP)
Electronic communication, such as email and social media can allow businesses to market their products to a global audience and negotiate partnerships with foreign companies
Explain the concept of Gross Domestic Product (GDP) (EC:017) (SP)
Gross Domestic Product (GDP) is the output of goods and services produced by labor and property located within a country. GDP is one measure of a nation's productivity, or the output of workers in a given period of time. GDP is made up of several elements: private investment, government spending, personal spending, net exports of goods, and change in business inventories. Two types of GDP are nominal GDP and real GDP. Nominal GDP is stated in the price levels in which the GDP was measured; real GDP is the nominal GDP adjusted for changes in prices. Calculate GDP as follows: add private business spending, government spending, and personal spending. Then either add a trade surplus or subtract a trade deficit, and either add expanding inventories or subtract shrinking inventories. A similar measure to GDP is Gross National Product. GNP is the total dollar value of goods and services produced by a nation, including those produced outside of its own territory by its own citizens.
Determine factors affecting business risk (EC:011) (CS)
Human Risk: possibility of loss caused by humans Economic Risk: unfavorable market conditions Natural Risk: natural disasters
Describe the impact of a country's history on world trade (EC:115) (SP)
If a nation is an opponent of another, inhabitants of that nation may be reluctant to purchase from vendors of those opposing nations
Explain the principles of supply and demand (EC:005) (CS)
In a market-oriented economy like in the United States, supply and demand determine the prices and quantities of goods and services produced. Supply is the amount of goods and services producers are willing to make and sell. Demand is the willingness and ability of consumers to buy goods and services. Supply and demand interact in the marketplace resulting in a state of equilibrium, surplus, or shortage. The law of supply states that price and quantity supplied move in the same direction (a direct relationship). Thus, as price increases, the amount of goods and services supplied increases. Conversely, the law of demand states that as price increases, the amount desired by consumers will decrease (an inverse relationship). When the amount of a product/service being supplied equals the amount being demanded, equilibrium exists in the marketplace at that price. If, however, there is more supply than demand for a product a surplus exists, potentially leading to lower prices. A shortage exists when demand exceeds supply, a condition that can lead to rising prices.
Distinguish between economic goods and services (EC:002) (CS)
In economic terms, goods are tangible items that have monetary value and satisfy your needs and wants (such as cars and clothing). Services are intangible items (meaning you cannot physically touch them) that have monetary value and satisfy your needs and wants. Services involve a task, such as cooking food or repairing a computer.
Describe the economic impact of inflation on business (EC:083) (SP)
Inflation refers to rising prices; it is an indicator of the stability of an economy. A low level of inflation (between 1 and 5 percent per year) is considered good because it indicates a stable economy. Higher levels of inflation are harmful to businesses. Rising prices cause consumers to spend less, slowing the overall economy. Inflation also leads to higher wages. A high level of inflation may cause wages to increase beyond what businesses can afford to pay, which can lead to layoffs and downsizing. Interest rates rise in periods of inflation. Rising interest rates mean that borrowing money becomes more expensive. Businesses are, thus, less likely to borrow money to expand their operations. With inflation, the value of a dollar decreases so businesses and individuals cannot buy as much with the same dollar as they could before. Inflation can be helpful to individuals and businesses who are borrowers. Those who borrow at a fixed rate of interest can repay the debt with dollars that are worthless, which makes their repayments smaller than they would have been without inflation.
Describe the impact of the political environment on world trade (EC:113) (SP)
Political standpoints and biases can lead proponents and opponents to be persuaded or dissuaded from purchasing a company' product
Explain the economic impact of interest-rate fluctuations (EC:084) (SP)
Interest rates are determined by supply and demand. As saving and investing increase the money supply, interest rates tend to decrease. Likewise, more borrowing is likely to raise interest rates. Interest rate fluctuations can have an impact on stock purchases because as the cost of money changes, company profits can increase or decrease.
Describe factors that affect the business environment (EC:105) (SP)
Internal Factors: Core Competencies strengths/weaknesses Goals/Objectives - envisioned accomplishments Values/Philosophy - beliefs on how to do business External Factors: Macro Trends - various environmental, geopolitical, and social trends Economic Dynamics - changes in economic principles of industry competition
Explain the concept of competition (EC:012) (CS)
It's the various types of stores providing similar goods or services. It gives consumers a choice on which one they prefer depending on the quality and price.
Discuss the impact of cultural and social environments on global trade (EC:045) (SP)
Marketing strategies should be appropriate to the cultural and social norms of an area, such as making area-specific products that people are more likely to purchase
Discuss the impact of globalization on business (EC:109) (SP)
Multinational business is not without difficulties to overcome. Businesses must consider language and cultural differences. Also, there are differences in the stability of the government that might result in political risks. Different economic philosophies may lead to more or less government influence on business in a particular country. In addition, businesses have to deal with different monetary systems with fluctuating values among global currencies. Doing business in other countries often means taking a different approach to business relationships and management practices, and even different ethical beliefs.
Discuss the global environment in which businesses operate (EC:104) (SP)
Social Forces - approval of brand among society Technological Forces - adaptation to new technologies Economical Forces - business cycles Geopolitical Forces - legislation, international relations
Explain the organizational design of businesses (EC:103) (SP)
Organizational design is a step-by-step methodology which identifies dysfunctional aspects of workflow, procedures, structures, and systems realigns them to fit current business realities/goals and then develops plans to implement the new changes.
Explain how organizations adapt to today's markets (EC:107) (SP)
Organizations have market-research specialists and economic analysts to analyze trends in the ever-changing market and make recommendations to the marketing and finance teams based on their findings.
Identify requirements for international business travel (e.g., passport, visa, proof of citizenship, immunizations, and sponsorship letters) (EC:141) (SP)
Passport, reliable translator, aware of cultural differences
Describe the functions of prices in markets (EC:006) (CS)
Price is the value in money placed on a good or service. One function of price is that it can affect the value that a customer places on an item. Price helps establish a company's or product's image—many customers use price as a gauge to make judgments about products and companies. Another function of price is that it can give a competitive edge. Thirdly, the price of an item is part of the business' end goal of making a profit.
Explain the concept of productivity (EC:013) (CS)
Productivity is defined as the output per worker hour that is measured over a set period of time, such as a week, month or year. Higher productivity increases profits. Businesses can increase their productivity by investing in new equipment, technology or facilities, providing additional training to staff or increasing the responsibilities of workers.
Analyze the impact of specialization/division of labor on productivity (EC:014) (SP)
Productivity is the measure of worker output over a given period of time. Specialization and division of labor are important elements to increasing productivity. The theory behind this is that work can be completed faster and more efficiently when workers specialize in a certain area of production. An assembly line is an example of specialization and division of labor. Automation is the use of machines to do the work of people. It can cut production time, reduce errors, and simplify procedures, leading to the greater overall productivity of the business.
Describe types of business models (EC:138) (SP)
Subscription model- model in which a customer must pay a recurring price at regular intervals for access to a product Franchise- is a method of distributing products or services involving a franchisor, who establishes the brand's trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system Freemuim - a business model in which a company offers basic or limited features to users at no cost and then charges a premium for supplemental or advanced features Direct- sales of products or services generate revenue through a network of salespeople, who sell directly to customers
Identify factors affecting a business's profit (EC:010) (CS)
Supply/Demand, Competition, Global Environment, Expansion into new markets (vertical integration) and into various brands (horizontal integration)
Describe the nature of taxes (EC:072) (SP)
Tax policy is regulated by the Internal Revenue Service (IRS) government agency. The funds are used to improve public services such as transportation, education, and infrastructure. Donations are often tax-deductible. (income tax, payroll tax, sales tax, property tax)
Explain the impact of the law of diminishing returns (EC:023) (SP)
The change in total product output that results from hiring one more worker is called the marginal product. Diminishing returns are experienced when the number of workers being utilized causes output to increase at a decreasing rate. In other words, utilizing too many workers may actually cause production to decrease.
Describe types of business activities (EC:071) (CS)
There are six general business activities. 1) Generating ideas is an important activity in that businesses must remain competitive with other firms. 2)raise capital to finance their operations. 3)employing and training human resources. 4) buy and sell goods and services. 5) Marketing: provide and distribute the goods and services wanted and needed by a business' customers. 6) Maintain records to track performance and make decisions.
Discuss the impact of a nation's unemployment rates (EC:082) (SP)
There are three main impacts of lingering unemployment on an economy: efficiency, inequality, and discouraged workers. Unemployment is inefficient in that it wastes human resources. It leads to inequality because those with the least experience tend to lose their jobs first, which are usually minorities and the young. Lastly, unemployed people tend to get b, and may give up their search for work. Unemployment is an important indicator of the overall strength of an economy. The higher the unemployment rate, the greater the chances of an economic slowdown.Likewise, the lower the unemployment rate, the greater the chances of an economic recovery. When more people are working, more people are spending money and paying taxes to help the economy grow.
Explain the impact of a country's economic development on world trade (EC:116) (SP)
They create job opportunities and new wealth within the economy
Identify the impact of small business/entrepreneurship on market economies (EC:065) (CS)
They create job opportunities and new wealth within the economy
Explain the types of economic systems (EC:007) (CS)
Traditional: unregulated perfect competition Command: goverment in charge minimal competition Market: unregulated, various forms of competition Mixed: regulated, various forms of competition
Determine economic utilities created by business activities (EC:004) (CS)
Utility refers to the added value of a product. There are five types of utility. Form Utility: This type of utility involves using raw materials to make a finished product. Place Utility: This type of utility involves having the product where the customer wishes to buy the product. Time Utility: This type of utility involves having the product available when the customer wishes to buy the product. Possession Utility: The exchange of a product for money is known as possession utility. Information Utility: Information utility involves communicating with the customer.
Explain the impact of major trade alliances on business activities (EC:112) (SP)
When trade alliances, or treaties governing commerce between multiple countries, are enacted, businesses should adapt their operations, marketing, and production to fit the new terms.
Explain the concept of private enterprise (EC:009) (CS)
business or industry that is managed by independent companies or private individuals rather than by the state
