McGraw Hill Business Chapters 1-5

franchising

A form of licensing in which a company—the franchiser—agrees to provide a franchisee a name, logo, methods of operation, advertising, products, and other elements associated with a franchiser's business, in return for a financial commitment and the agreement to conduct business in accordance with the franchiser's standard of operations.

preferred stock

A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.

outsourcing

The transferring of manufacturing or other tasks - such as data processing - to countries where labor and supplies are less expensive

limited partnership

a business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to his or her investment in the business

social responsibility

a business's obligation to maximize its positive impact and minimize its negative impact on society

inflation

a condition characterized by a continuing rise in prices

depression

a condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced

private corporation

a corporation owned by just one or a few people who are closely involved in managing the business

multinational corporation (MNC)

a corporation that operates on a worldwide scale, without significant ties to any one nation or region

public corporation

a corporation whose stock anyone may buy, sell, or trade

recession

a decline in production, employment, and income

economic system

a description of how a particular society distributes its resources to produce goods and services

trading company

a firm that buys goods in one country and sells them to buyers in another country

partnership

a form of business organization defined by the Uniform Partnership Act as "an association of two or more persons who carry on as co-owners of a business for profit"

product

a good or service with tangible and intangible characteristics that provide satisfaction and benefits

cartel

a group of firms or nations that agree to act as a monopoly and not compete with each other, in order to generate a competitive advantage in world markets

board of directors

a group of individuals, elected by the stockholders to oversee the general operation of the corporation, who set the corporation's long-range objectives

corporate charter

a legal document that the state issues to a company based on information the company provides in the articles of incorporation

corporation

a legal entity, created by the state, whose assets and liabilities are separate from its owners

absolute advantage

a monopoly that exists when a country is the only source of an item, the only producer of an item, or the most efficient producer of an item

trade deficit

a nation's negative balance of trade, which exists when that country imports more products than it exports

joint venture

a partnership established for a specific project or for a limited time

strategic alliance

a partnership formed to create competitive advantage on a worldwide basis

general partnership

a partnership that involves a complete sharing in both the management and the liability of the business

multinational strategy

a plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences

embargo

a prohibition on trade in a particular product

quota

a restriction placed on the amount of a product allowed to enter or leave a country

economic contraction

a slowdown of the economy characterized by a decline in spending and during which businesses cut back on production and lay off workers

global strategy (globalization)

a strategy that involves standardizing products (and, as much as possible, their promotion and distribution) for the whole world, as if it were a single entity

import tariff

a tax levied by a nation on goods imported into the country

licensing

a trade agreement in which one company - the licensor - allows another company - the licensee - to use its company name, products, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty

General Agreement on Tariffs and Trade (GATT)

a trade agreement, originally signed by 23 nations in 1947, that provided a forum for tariff negotiations and a place where international trade problems could be discussed and resolved

Association of Southeast Asian Nations (ASEAN)

a trade alliance that promotes trade and economic integration among member nations in Southeast Asia

European Union (EU)

a union of European nations established in 1958 to promote trade among its members; one of the largest single markets today

North American Free Trade Agreement (NAFTA)

agreement that eliminates most tariffs and trade restrictions on agricultural and manufactured products to encourage trade among Canada, the United States, and Mexico

capitalism (free enterprise)

an economic system in which individuals own and operate the majority of businesses that provide goods and services

socialism

an economic system in which the government owns and operates basic industries but individuals own most businesses

ethical issue

an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical

entrepreneur

an individual who risks his or her wealth, time, and effort to develop for profit an innovative product or way of doing something

Asia-Pacific Economic Cooperation (APEC)

an international trade alliance that promotes open trade and economic and technical cooperation among member nations

World Bank

an organization established by the industrialized nations in 1946 to loan money to underdeveloped and developing countries; formally known as the International Bank for Reconstruction and Development

sole proprietorships

businesses owned and operated by one individual; the most common form of business organization in the United States

sustainability

conducting activities in a way that allows for the long-term well-being of the natural environment, including all biological entities

S corporation

corporation taxed as though it were a partnership with restrictions on shareholders

quasi-public corporations

corporations owned and operated by the federal, state, or local government

nonprofit corporations

corporations that focus on providing a service rather than earning a profit but are not owned by a government entity

mixed economies

economies made up of elements from more than one economic system

communism

first described by Karl Marx as a society in which the people, without regard to class, own all the nation's resources

countertrade agreements

foreign trade agreements that involve bartering products for other products instead of for currency

limited liability company (LLC)

form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members

code of ethics

formalized rules and standards that describe what a company expects of its employees

stakeholders

groups that have a stake in the success and outcomes of a business

business

individuals or organizations who try to earn a profit by providing products that satisfy people's needs

World Trade Organization (WTO)

international organization dealing with the rules of trade between nations

natural resources

land, forests, minerals, water, and other tangible assets usable in their natural state

articles of partnership

legal documents that set forth the basic agreement between partners

International Monetary Fund (IMF)

organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation

nonprofit organization

organizations that may provide goods or services but do not have the fundamental purpose of earning profits

bribes

payments, gifts, or special favors intended to influence the outcome of a decision

business ethics

principles and standards that determine acceptable conduct in business

dividends

profits of a corporation that are distributed in the form of cash payments to stockholders

free-market system

pure capitalism, in which all economic decisions are made without government intervention

exchange controls

regulations that restrict the amount of currency that can be bought or sold

initial public offering (IPO)

selling a corporation's stock on public markets for the first time

stock

shares of a corporation that may be bought or sold

common stock

stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends

dumping

the act of a country or business selling products at less than what it costs to produce them

whistleblowing

the act of an employee exposing an employer's wrongdoing to outsiders, such as the media or government regulatory agencies

plagiarism

the act of taking someone else's work and presenting it as your own without mentioning the source

consumerism

the activities that independent individuals, groups, and organizations undertake to protect their rights as consumers

comparative advantage

the benefit a country has in a given industry if it can make products at a lower opportunity cost than other countries

budget deficit

the condition in which a nation spends more than it takes in from taxes

unemployment

the condition in which a percentage of the population wants to work but is unable to find jobs

balance of payments

the difference between the flow of money into and out of a country

profit

the difference between what it costs to make and sell a product and what a customer pays for it

balance of trade

the difference in value between a nation's exports and its imports

corporate citizenship

the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders

financial resources

the funds used to acquire the natural and human resources needed to provide products; also called capital

capital

the funds used to acquire the natural and human resources needed to provide products; also called financial resources

contract manufacturing

the hiring of a foreign company to produce a specified volume of the initiating company's product to specification; the final product carries the domestic firm's name

standard of living

the level of wealth and material comfort that people have available to them

oligopoly

the market structure that exists when there are few businesses selling a product

monopolistic competition

the market structure that exists when there are fewer businesses than in a pure-competition environment and the differences among the goods they sell are small

pure competition

the market structure that exists when there are many small businesses selling one standardized product

monopoly

the market structure that exists when there is only on business providing a product in a given market

supply

the number of products- goods and services- that businesses are willing to sell at different prices at a specific time

direct investment

the ownership of overseas facilities

human resources

the physical and mental abilities that people use to produce goods and services; also called labor

infrastructure

the physical facilities that support a country's economic activities, such as railroads, highways, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems

equilibrium price

the price at which the number of products that businesses are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time

importing

the purchase of goods and services from foreign sources

exchange rate

the ratio at which one nation's currency can be exchanged for another nation's currency

offshoring

the relocation of business processes by a company or subsidiary to another country. Offshoring is different than outsourcing because the company retains control of the offshored processes.

competition

the rivalry among businesses for consumers' dollars

exporting

the sale of goods and services to foreign markets

economic expansion

the situation that occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment

economics

the study of how resources are distributed for the production of goods and services within a social system

gross domestic product (GDP)

the sum of all goods and services produced in a country during a year

international business

tthe buying, selling, and trading of goods and services across national boundaries