MCE test #1
demography
The scientific study of population characteristics ex: race, gender, income, etc
franchisor
a company that develops a product concepts and sells others the rights to make and sell the products
monopolistic competition
large # of sellers produce similar products that buyers perceive as different can change product with no contingency
cons of free market
leads to inequality: business managers/owners typically make more than employees does not respond to needs of poor, elderly, disabled, etc greed overlooked environment
Corporation
legal entity separate & distinct from owners (highest percentage of total receipts)
Partnerhship
legal form of business with 2 or more owners
pros of LLC
limited liability Choice of taxation Flexible ownership rules Flexible distribution of profit/losses Operating flexibility Can choose how taxed but not double taxed
perfect competition
many sellers but none large enough to dictate price of product & no differentiation
Free Market Capitalism
market controls decisions on production mostly private owned & operated for profit
structural unemployment
mismatch between skills and jobs available responds by programs
double taxation
must file and pay taxes on corporate level and individual level
what happens as a result of population shift
new opportunities/threats are created
limits of S corporation
no more than 100 shareholders must be US citizen or permanent resident
nonprofit source capital
tax deductible charitable contributions from individuals/foundations/corporations/grants
conglomerate merger
the joining of firms in completely unrelated industries
vertical merger
the joining of two companies involved in different stages of related business
brain drain
the loss of the best and brightest people to other countries
stakeholders
the people whose interests are affected by an organization's activities
equilibrium point
the point at which QS=QD
Economics
the study of how society manages its scarce resources
cost of goods sold
the total cost of merchandise sold during the period
what is the goal of a business
to provide goods/services while maxing profit
revenue
total amount business takes in by selling goods/services
seasonal unemployment
unemployment caused by seasonal changes in the demand for certain kinds of labor
cons of partnership
unlimited liability division of profits disagreements among partners difficulty of termination
Cons of Sole Proprietorship (7)
unlimited liability limited resources management difficulties time commitment limited growth limited lifespan few fringe benefits
frictional unemployment
voluntary choice not to work
loss
when a business's expenses are more than its revenues (rev. -expenses = negative)
Globalization
world trade growth as result of technological innovation
Accounting accounts for
Daily expenses, sales, and profits Inventory control, customer records, and payroll
Pros of Communism
all resources distributed equally and protects vulnerable members of society (in theory)
mixed economy
an economic system combining private and public enterprise (some government control some market)
operating costs
cost involved with operating the organization
personal price index (PPI)
cost of things sold to producers to make for personal consumption (b2b market)
limitation of C Corporation
double taxation
profit
earns more than spends (TR minus TC)
what must you do to be an entrepreneur
employ others, earn $ for themselves, pay taxes & high standard of living
who runs smaller businesses in socialism
entrepreneurs
unemployment rate
% of civilians at least 16 years or older who are unemployed and tried to find a job within prior 4 weeks
how many people worldwide does a CO-OP serve and how
1 billion world wide Democratically controlled (vote) by members who elect board of directors that hires direct management
recession
2 or more consecutive quarters of decline in GDP
inflation
A general and progressive increase in prices (want some just not too high)
GO (gross output)
A measure of total sales volume at all stages of production
franchisee
A person who buys a franchise
C Corporation
A state-chartered legal entity with authority to act and have liability separate from its owners unlimited owners
what do all organizations need
Capital Good ideas Planning Budgeting Information management Accounting Marketing Good employee relations Overall material know-how
2 types of price indexes
Consumer Price Index (CPI) Producer price index (PPI)
demand
Consumer willingness and ability to buy products
Human resources jobs
Deciding labor needs Recruiting and selecting the right people Training and development growth Regards and culture for retention Motivation for performance
Pros of Sole Proprietorship (5)
Easy start/end your own boss legacy no special taxes retention of profits
Types of Gross Domestic Product
GDP & GO
cons of corporation
Initial cost Extensive paperwork Double taxation Two tax returns Size Difficult for termination Possible conflict w shareholders/board of directors
Supply chain considerations
Inventory and inventory control methods Location of plants & distributors Transportation costs
cons of franchise
Large start-up cost Shared profits Management regulations Coattail effects Restrictions on selling Fraudulent franchisers
Limited Liability Company (LLC)
Like S Corp. w/o special liability requirements owner(s) can be person, partnership, or corporation Pay self-employed tax Owners not personally liable Pay personal/ corporation taxes LLC ownership is nontransferable (no stock)
Pros of Corporation
Limited liability Ability to raise $ for investment Size perpetual life Ease of ownership change Ease of attracting talented employees Separation of ownership from management Reduce risk./biases
pros of franchise
Management and marketing assistance Personal ownership Nationally recognized name Financial advice/assistance Lower failure rate
planning an organization involves
Mission, vision, and value Strategic & financial objections
pros of partnership
More financial resources Shared management/skills/knowledge Longer survival No special taxes
Stagflation
Prices rise but other economic indicators say economy is going bad (very problematic)
Who declares a recession?
National Bureau of Economic Research
cons of LLC
No stock ownership is nontransferable Fewer incentives Taxes Paperwork
Manufacturing plan accounts for
Plant size Machinery required Production capacity
Macroeconomics
The study of the economy as a whole
Gross Domestic Product (GDP)
The sum total of the value of all the goods and services produced in a nation
Small Business Administration (SBA)
US government agency that advises and assists small businesses by providing management, financial advice, and loans
S corporation
Unique government creation that looks like a corporation but is taxed like sole proprietors and partnerships
recovery
When economy stabilized and starts to grow leads to economic boom
deflation
a decrease in the general level of prices (bad)
Entrepenuer
a person/team who risks his money to begin a business
disinflation
a reduction in the rate of inflation (price rise is slowing down)
pure risk
a risk that presents the chance of loss but no opportunity for gain ex: fire
Benefits of S Corporation
avoids double taxation Flow through entity not taxed on corporate level
socialism
basic businesses should be owned by government so profits can be evenly distributed citizens highly taxed
Microeconomics
behavior of people and organizations in particular markets
economic boom
business is booming
cooperative (co-op)
business owned and operated by those who use it Producers, consumers, or workers w similar needs who pool their resources mutual gain
franchise agreement
business sells the rights to use the business name and sell a product or service to others in a given territory
free market falls under which type of competition
capitalism
risk
chance of loss, degree of probability of loss, amount of possible loss
horozontal merger
combination of firms producing the same kind of product (Same industry)
how are profits distributed in a business
distributed/reinvested back to the owners/shareholders
crowdfunding
donation based or debt-investment (peer-to-peer lending)
cons of socialism
few incentives for risk brain drain less innovation slower job growth
Oligopoly
few sellers dominate market sellers set price and control supply/demand
limited liability
financial responsibility of business owners only for what they invested in a business
4 types of unemployment
frictional, structural, cyclical, seasonal
price indexes
gauges health of economy by measuring levels of disinflation, inflation, deflation, and stagflation
globalization most important issues
global competition international economic conditions negotiation of trade agreements among nations
communism
government takes almost all economic decisions and almost all factors of production ex: north korea
what is the role of board of directors in a corporation
hires and fires top officers set salary for officers hire to max business profit
resource development
how to increase resources and create conditions to better use resources ex: solar panels
flow-through entity
income is passed straight to its shareholders or owners
venture capitalists
individuals or companies that invest in new business in exchange for partial ownership of those businesses
what is the role of an owner in a corporation
influence by electing board of directors
acquisition
one company's purchase of the property/obligations of another company
limited partnership
one or more general partners and one or more limited partners
monopoly
one seller controls total supply of product/service and sets price
pros of a free market
open competition, provides opportunities for the poor to work way out of poverty, increased motivation to produce
productivity
output per unit of input measure of effectiveness for new tech/machinery/equipment
Sole Proprietorship
owned by 1 person owner manages all aspects most common/highest percentage form of business
corporations must have what 3 things
owners, officers, and board of directors
limited partner
partner that invests money but does NOT have liability beyond investment
General Partnership
partners share equally in both responsibility and liability
Consumer price index (CPI)
people buying for personal consumption (cost)
Consumer Market
people with unsatisfied wants and needs who have both the resources and willingness to buy
to finance your business you need
potential sources of capital: lenders (banks) SBA angels crowdfunding venture capitalists
Angels
private individuals who invest their own money in potentially hot new companies before they go public
what is a businesses source capital
private investors
2 types of organizations
profit and non-profit
What are 3 main components of an organization
purpose/goal, multiple people, structure
supply
quantity owners are willing to provide at different prices
how are profits distributed in non-profits
reinvested back into organization
speculative risk
result in either profit or loss, ex: buying new machinery
merger
result of 2 firms joining to 1
Cyclinal unemployment
result of business cycle low amount of available jobs
Franchise
right to use a specific business name and sell its products/services in any given territory
rights under free market capitalism
right to: own property own business & own all profits freedom of competition freedom of choice
what is the role of officers in a corporation
select managers/employees with help of HR
what is a non-profits goal
serve need to society
depression
severe recession usually accompanied by deflation
Cons of Communism
shortages (prices dont reflect demand) economic depression risk of abuse of power
Pros of Socialism
social equity free education free healthcare free childcare, longer vacations short work week generous sick leave
command economy falls under which type of competition
socialism and communism