GEB1101:M1-C1.2.3.4: Environment of Business & Business Ownership

Fair Credit Reporting Act (1971)

Required credit bureaus to provide credit reports to consumers regarding their own credit files; also provided for correction of incorrect information

Truth in Lending Act (1968)

Required lenders and credit merchants to disclose the full cost of finance charges in both dollars and annual percentage rates

Cigarette Labeling Act (1965)

Required manufacturers to place standard warning labels on all cigarette packages and advertising

Discuss international trade agreements and international economic organizations working to foster trade.

The General Agreement on Tariffs and Trade (GATT) was formed to dismantle trade barriers and provide an environment in which international business can grow. Today, the World Trade Organization (WTO) and various economic communities carry on this mission. These world economic communities include the European Union, the NAFTA, the CAFTA, the Association of Southeast Asian Nations, the Pacific Rim, the Commonwealth of Independent States, the Caribbean Basin Initiative, the Common Market of the Southern Cone, the Organization of Petroleum Exporting Countries, and the Organization for Economic Cooperation and Development.

Gross Domestic Product (GDP)

The Total dollar value of all goods and services produced by all people within the boundaries of a country during a one-year period.

National Income

The total income earned by various segments of the population, including employees, self-employed individuals, corporations, and other types of income

New Housing Starts

The total number of new homes started during a specific time period

National debt

The total of all federal deficits

Balance of Trade

The total value of a nation's exports minus the total value of its imports over a specific period of time

Gross Domestic Product (GDP)

The total value of all goods and services produced by all people within the boundaries of a country during a one-year period. (EI)

Despite the global recession, economic growth in Asia remained strong in 2011 and 2012. a. True b. False

True

Fairness is considered an important ethical concern in business.

True

Generally, the business cycle consists of four phases: the peak, recession, the trough, and recovery. True or False

True

In a socialist economy, the distribution of goods and services - who gets what - is controlled by the government however some smaller businesses may be privately owned. True or False

True

Information is the resource that managers use to effectively combine human, financial, and material resources.

True

Loans by the IMF are primarily provided to fund international trade. a. True b. False

True

Material resources include sand, water, wood, dump trucks and computers. True or False

True

Misleading advertising in print or television is illegal as well as unethical.

True

Most businesses incorporate in the states where they do most of their business. a. True b. False

True

Noise pollution might be addressed by workers being required to wear earplugs to guard against hearing damage.

True

One risk of licensing is the possibility that licensees may not adhere to quality standards required and expected by the licensing company. a. True b. False

True

People do not simply buy goods and services to just own them; they buy goods and services to satisfy a specific need.

True

Protecting new or weak national industries is a reason to institute trade restrictions. True False

True

Saudi Arabia and Siberia enjoy an absolute advantage in the production of crude oil and petroleum products. True False

True

Since we assume producers are rational people, we would expect them to offer more of a product at a higher price than to offer the product at a lower price.

True

Small businesses generally only issue common stock. a. True b. False

True

The "Invisible Hand" was a term coined by Adam Smith. True or False

True

The EEOC has the power to investigate complaints of employment discrimination and can sue firms that practice discrimination.

True

The EPA is a federal agency charged with enforcing laws intended to protect the environment

True

The Inter-American Development Bank focuses on helping developing countries grow. a. True b. False

True

The Interstate Commerce Act was the first federal act to regulate business practices. True False

True

The NAFTA agreement includes the United States, Canada, and Mexico.

True

The courts of the U.S. have ruled that quotas in affirmative action programs are unconstitutional. True False

True

Trade associations often do provide ethical guidelines for their members.

True

When a firm is lacking financing, inventory, or time, it is dealing with issues of scarcity. True or False

True

When an economy is at its highest point and unemployment is low, the economy is in a peak period.

True

not-for-profit corporation

a corporation organized to provide a social, educational, religious, or other service rather than to earn a profit

S-corporation

a corporation that is taxed as though it were a partnership

open corporation

a corporation whose stock can be bought and sold by any individual

closed corporation

a corporation whose stock is owned by relatively few people and is not sold to the general public

dividend

a distribution of earnings to the stockholders of a corporation

limited liability

a feature of corporate ownership that limits each owner's financial liability to the amount of money that he or she has paid for the corporation's stock

multinational enterprise

a firm that operates on a worldwide scale without ties to any specific nation or region

limited-liability company (LLC)

a form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership

Most corporations grow by expanding their own present operations. a. True b. False

a. True

One or more members of a board of directors are required for a corporation. a. True b. False

a. True

Shares of ownership of a corporation are called stock. a. True b. False

a. True

Airplanes manufactured by Boeing, cars manufactured by Nissan, and Kellogg's cereal are all examples of

oligopolies

World Trade Organization (WTO)

powerful successor to GATT that incorporates trade in goods, services, and ideas

trading company

provides a link between buyers and sellers in different countries

Sarbanes-Oxley Act of 2002

provides sweeping new legal protection for employees who report corporate misconduct. The law deals with corporate responsibility, conflicts of interest, and corporate accountability.

importing

purchasing raw materials or products in other nations and bringing them into one's own country

E-Business

the organized effort of individuals to produce and sell through the Internet, for a profit, products and services that satisfy society's needs--became an accepted method of conducting business

merger

the purchase of one corporation by another

social media

the online interaction that allows people and businesses to communicate and share ideas, personal information, and information about products or services

Social Responsibility

the recognition that business activities have an impact on society and the consideration of that impact in business decision making

currency devaluation

the reduction of the value of a nation's currency relative to the currencies of other countries

stock

the shares of ownership of a corporation

Ethics

the study of right and wrong and of the morality of the choices individuals make

board of directors

the top governing body of a corporation, the members of which are elected by the stockholders

balance of payments

the total flow of money into a country minus the total flow of money out of that country over some period of time.

balance of trade

the total value of a nation's exports minus the total value of its imports over some period of time

economic model of social responsibility

the view that society will benefit most when business is left alone to produce and market profitable products that society needs. Managers who adopts this attitude, social responsibility is someone else's job. Social Responsibility becomes the problem of the government, various environmental groups, charitable foundations, and similar organizations.

That the consumer was entitled to a "bill of rights" was instituted by President A- Nixon B- Clinton C- George W. Bush D- Kennedy E- Ford

D- Kennedy

The ________ Act provides sweeping legislation for reporters of corporate misconduct. A- Consumer Product Safety Commission B- Federal Trade Commission C- Accountability and Transparency in Rating Agencies D- Sarbanes-Oxley E- American Recovery and Reinvestment

D- Sarbanes-Oxley

For more than fifty years, women's salaries have consistently been only about ___ for each dollar earned compared to men's. A. 84 B. 82 C. 91 D. 77 E. 62

D. 77

A joint venture can occur with a minimum of three groups or partners. a. True b. False

False

A major disadvantage of sole proprietorships is that profits earned by a sole proprietorship are subject to the special state and federal income taxes that corporations pay. a. True b. False

False

A multinational enterprise may operate in multiple countries but the business is based in one specific country. a. True b. False

False

A responsibility audit is a comprehensive report of what an organization is going to do in regard to social issues.

False

A sole proprietorship is usually operated by more than one person. a. True b. False

False

A syndicate is a long-term, permanent association of individuals or firms. a. True b. False

False

A system of business where the key industries are owned and controlled by the government with private ownership of some business is known as capitalism. True or False

False.

Monetary Policies

Federal Reserve decisions that determine the size of the supply of money in the nation and the level of interest rates

All banks are required to be national banks; it is against international regulations for banks to cross country borders. a. True b. False

False

Approximately 45% of small businesses fail within the first seven years. True or False

False

Banks are more open to lending money to sole proprietorship than to any other type of business. a. True b. False

False

Business ethics is the application of legal and regulatory standards to business situations. True False

False

Exporting is considered simpler than licensing. a. True b. False

False

Exporting is selling and shipping raw materials or products to other states. True False

False

GATT is headquartered in Washington D.C. a. True b. False

False

If a company's sales are higher than its expenses, the company has earned what is known as revenue. True or False

False

In a recent survey, the majority of employees surveyed assumed that their use of technology in the workplace is not monitored.

False

It can be said that the United States has an absolute advantage in research and development as well as high-technology. a. True b. False

False

Legally the sole proprietor of a business is the business. True False

False

MDB stands for Monetarily-Developed Bank.

False

Manufacturers in the auto industry operate in a monopoly setting.

False

Microeconomics is the study of the economy of an entire nation as well as the global economy

False

Regulations and laws were much stricter in the first quarter of the twentieth century than they are now. True False

False

Relationships with customers are not known to cause ethical problems for businesses. True False

False

The Wall Street Reform and Consumer Protection Act was passed in 2009.

False

The ability to deal effectively with individual employees as well as other managers and people outside the organization are known as conceptual skills

False

The balance of trade includes imports, exports, investments, money spent by foreign tourists, and aid to foreign governments. True False

False

Monetary Policies

Federal Reserve's decisions that determine the size of the supply of money in the nation and the level of interest rate.

The _____________ investigates illegal trade practices

Federal Trade Commission

Which of the following government agencies issues guidelines on the use of labeling that advertisers have an obligation to follow? A. Fair Packaging and Labeling Act B. Clayton Antitrust Act C. Sherman Antitrust Act D. Federal Trade Commission E. Pure Food and Drug Act

Federal Trade Commission

Interstate Commerce Act (1887)

First federal act to regulate business practices; provided regulation of railroads and shipping rates

The health of a nation's economy is actually quite unrelated to the amount of interest consumers pay for homes, automobiles, and credit card purchases. True or False

False

The only current example of a command economy is capitalism

False

The vast majority of economists and financial analysts agree that mergers are good for the U.S. economy. a. True b. False

False

Trade restrictions are applied to products exported to other countries more often than to imports. a. True b. False

False

Magnuson-Moss Warranty-Federal Trade Commission Act (1975)

Provided for minimum disclosure standards for written consumer-product warranties for products that cost more than $15

Credit Card Accountability, Responsibility, and Disclosure Act (2009)

Provided the most sweeping changes in credit card protections since the Truth in Lending Act of 1968

Economy

The system through which a society creates and distributes wealth.

sustainability

creating and maintaining the conditions under which humans and nature can exist in productive harmony while fulfilling the social, economic, and other requirements of present and future generations

The Basis for International Business

+Some countries are better equipped than others to produce particular goods or services --Absolute advantage --Comparative advantage +Goods and services are produced more efficiently when each country specializes in the products for which it has a comparative advantage +Countries trade when they each have a surplus of the product they specialize in and want a product the other country specializes in --Exporting --Importing +Balance of Trade +Trade Deficit +Balance of Payments

Methods of Entering International Business: Countertrade

--An international barter transaction --Avoids restrictions on converting domestic currency to foreign currency

Methods of Entering International Business: Trading companies

--Firms that provide a link between buyers and sellers in different countries --Takes title to products and perform all the activities necessary to move the products from one country to another

Identify the steps a business must take to implement a program of social responsibility.

1-A program to implement social responsibility in a business begins with total commitment by top management. 2-The program should be planned carefully, and a capable director should be appointed to implement it. 3-Social audits should be prepared periodically as a means of evaluating and revising the program. 4-Programs may be funded through price increases, reduction of profit, or federal incentives. 1. Commitment of Top Executives 2. Planning 3. Appointment of a Director 4. The Social Audit

Arguments for increased social responsibility

1-Because business is a part of our society, it cannot ignore social issues. 2-Business has the technical, financial, and managerial resources needed to tackle today's complex social issues. 3-By helping resolve social issues, business can create a more stable environment for long-term profitability. 4-Socially responsible decision making by firms can prevent increased government intervention, which would force businesses to do what they fail to do voluntarily.

Arguments against social responsibility

1-Business managers are responsible primarily to stockholders, so management must be concerned with providing a return on owners' investments. 2-Corporate time, money, and talent should be used to maximize profits, not to solve society's problems. 3-Social problems affect society in general, so individual businesses should not be expected to solve these problems. 4-Social issues are the responsibility of government officials who are elected for that purpose and who are accountable to the voters for their decisions.

Two Views of Social Responsibility

1-The basic premise of the economic model of social responsibility is that society benefits most when business is left alone to produce profitable goods and services. 2-According to the socioeconomic model, business has as much responsibility to society as it has to its owners. Most managers adopt a viewpoint somewhere between these two extremes.

Oligopoly

1. A market situation (or industry) in which there are few sellers (Ex. automobile manufacturers, car rental agencies, and farm implement industries) a) Sizable investments are required to enter into the market b). Each seller has considerable control over price c). The market actions of one seller can have a strong effect on competitors

Common Measures Used to Evaluate a Nation's Economic Health

1. Balance of Trade 2. Bank Credit 3. Corporate Profits 4. Inflation Rate 5. National Income 6. New Housing Starts 7. Prime Interest Rates

Early business development

1. Barter System 2. Domestic System 3. Factory System 4. Specialization

10 Aspects of Business that May Require Legal Help

1. Choosing either the sole proprietorship, partnership, corporate or some special form of ownership. 2. Constructing a partnership agreement. 3. Incorporating a business 4. Registering a corporation's stock 5. Obtaining a trademark, patent, or copyright 6. Filling for licenses or permits at the local, state, and federal levels. 7. Purchasing an existing business or real estate 8. Creating valid contracts 9. Hiring employees and independent contractors 10. Extending credit and collecting debts.

World Trade Organization (WTO)

1. Created in the Uruguay Round of GATT negotiation as a successor to GATT 2. WTO oversees GATT provisions, has judicial powers to meditate trade disputes arising from GATT rules and exerts more binding authority than GATT

Command Economies

1. Economic systems in which the government decides what will be produced, how it will be produced, who gets what is produced, and who owns and controls the major factors of production 2. Socialism --Key industries (e.g., transportation, utilities, and banking) are owned and controlled by the government --Small-scale private businesses may be permitted and workers may choose their own occupations --Production is based on national goals, and distribution is controlled by the state --Intent is the equitable distribution of income, elimination of poverty, social services to all who need them, elimination of the economic waste of capitalistic competition 3. Communism --All factors of production are owned and controlled by the government as proxy for ownership by all citizens --Production is based on centralized state planning to meet the needs of the state and not necessarily the needs of its citizens --The state dictates occupational choices and sets prices and wages --Intent is to create Karl Marx's concept of a classless society where all contribute according to their ability and receive benefits according to their needs.

Types of Economic Systems

1. Economics 2. Microeconomics 3. Macroeconomics 4. Economy

Discuss the factors that led to the consumer movement and list some of its results.

1. Environmental Protection 2. Product Performance 3. Safety

Why study business?

1. For help in choosing a career 2. To be a successful employee 3. To improve your management skills 4. To start your own business 5. To become a better informed consumer and investor

Economic Indicators (EI)

1. Gross Domestic Product (GDP) 2. Inflation 3. Deflation 4. Unemployment Rate 5.Consumer Price Index (CPI) 6. Producer Price Index (PPI)

Discuss what you must do to be successful in the world of business.

1. Have a dream—know what you want 2. Adapt to changes in the environment—work hard to turn your dreams into reality

General Agreement of Tariffs and Trade (GATT)

1. International organization of 153 nations dedicated to reducing or eliminating tariffs and other trade barriers 2. Most-favored-nation status (MFN)—Each member of GATT was to be treated equally by all other members 3. Kennedy Round, Tokyo Round, Uruguay Round, Doha Round

Guidelines for Making Ethical Decisions

1. Listen and learn 2. Identify the ethical issues. 3. Create and analyze options 4. Identify the best option from your point of view. 5. Explain your decision and resolve any differences that arise.

Capitalism in the U.S.

1. Mixed economy with elements of capitalism and socialism 2. Households -- Consumers of goods and services -- Resource owners of some factors of production 3. Businesses -- Produce goods and services to exchange for revenues (money) -- Use revenues to purchase factors of production 4. Governments -- In exchange for taxes, governments provide public services that would not be provided by business or would be produced only for those who could afford them

Types of Competition

1. Perfect (or pure) competition 2. Monopolistic competition 3. Oligopoly 4. Monopoly

Identify the ways to measure economic performance.

1. Productivity 2. Economic Indicators

Business Development in the 1900s

1. Rapid growth of large industries (automobiles, steel, oil, chemical) and the mass production of consumer goods 2. The Roaring Twenties ended with the 1929 stock market crash 3. Government intervention became necessary to get the economy moving again 4. In the last part of the 1900s, a large number of business failures and declining stock values suggested larger economic problems to come

Examine the different phases in the typical business cycle.

1. Recession 2. Depression 3. Monetary Policies

Six Basic Rights to Consumers

1. Right to Safety 2. Right to be Informed 3. Right to Choose 4. Right to Be Heard 5. Right to Consumer Education 6. Right to Courteous Service

A New Century: 2000 and Beyond

1. Technology becomes affordable 2. Growth of service businesses (Service Economy) 3. Although many economic indicators are strong, there is a feeling of pessimism, a large number of business failures, high unemployment, and terrorist threats

Major events that shaped the nation's economy between 1940 and 2000 include:

1. WWII, the Korean War, and the Viet Nam War 2. Rapid economic growth and higher standard of living during the 1950s and 1960s 3. The social responsibility movement during the 1960s 4. A shortage of crude oil and higher prices for most goods in the mid-1970s 5. High inflation, high interest rates, and reduced business profits during the early 1980s 6. Sustained economic growth in the 1990s

The Clean Air Amendments, the Water Pollution Control Act Amendment, and the National Environmental Policy Act were all instituted in the A. 1990s B. 1980s C. 1960s D. 1970s

1970s

sole proprietorship

A business that is owned (and usually operated) by one person The simplest form of business ownership and the easiest to start Many large businesses began as a small struggling sole proprietor ships The most popular form of business ownership

Define the methods by which a firm can organize for and enter into international markets.

A firm can enter international markets in several ways. It may license a foreign firm to produce and market its products. It may export its products and sell them through foreign intermediaries or its own sales organization abroad, or it may sell its exports outright to an export-import merchant. It may enter into a joint venture with a foreign firm. It may establish its own foreign subsidiaries, or it may develop into a multinational enterprise. Generally, each of these methods represents an increasingly deeper level of involvement in international business, with licensing being the simplest and the development of a multinational corporation the most involved.

Methods of Entering International Business: Multi-national Enterprise

A firm that operates on a worldwide scale without ties to any specific nation or region

Deflation

A general decrease in the level of prices

Deflation

A general decrease in the level of prices (EI)

Inflation

A general rise in the level of prices (EI)

Standard of living

A loose, subjective measure of how well off an individual or a society is mainly in terms of want satisfaction through goods and services

Monopolistic competition

A market situation where there are many buyers along with a relatively larger number of sellers who differentiate their products from the products of competitors

Domestic system

A method of manufacturing in which an entrepreneur distributes raw materials to various homes, where families process them into finished goods to be offered for sale by the merchant entrepreneur

Legal monopoly (limited monopoly)

A monopoly created when a government entity issues a franchise, license, copyright, patent, or trademark protecting the owners of written materials, ideas, or product brands from unauthorized use by competitors

Consumer Price Index (CPI)

A monthly index that measures the changes in prices of a fixed basket of goods purchased by a typical consumer in an urban area

Methods of Entering International Business: Joint Ventures

A partnership formed to achieve a specific goal or to operate for a specific period of time Advantages -Immediate market knowledge and access -Reduced risk -Control over the product attributes Disadvantages -Complexity of establishing agreements across national borders -High level of commitment required of all parties involved

Entreprenuer

A person who risks time, effort, and money to start and operate a business

Depression

A severe recession that lasts longer than a recession

Federal deficit

A shortfall created when the federal government spends more in a fiscal year than it receives

Bank Credit

A statistic that measures the lending activity of commercial financial institutions

Barter system

A system of exchange in which goods or services are traded directly for other goods and/or services without using money

Factory system

A system of manufacturing in which all the materials, machinery, and workers required to manufacture a product are assembled in one place

Import Duty (Tariff)

A tax levied on a particular foreign product entering a country Revenue tariffs are imposed to generate income for the government Protective tariffsare imposed to protect a domestic industry from competition by keeping the prices of imports at or above the price of domestic products

Which of the following is true about absolute advantages? a. No country has an absolute advantage. b. Absolute advantage is the ability to produce more of one product than any other country. c. Every country has an absolute advantage in some product. d. Absolute advantage is the ability to produce a particular product more efficiently than any other country.

Absolute advantage is the ability to produce a particular product more efficiently than any other country.

Describe the advantages and disadvantages of partnerships.

Advantages - 1. Ease of start-up 2. Availability of capital and credit 3. Personal interest 4. Combined business skills and knowledge 5. Retention of profits 6. No special taxes Disadvantages - 1. Unlimited liability 2. Management disagreements 3. Lack of continuity 4. Frozen investment

Describe the advantages and disadvantages of sole proprietorships.

Advantages - 1. Ease of start-up 2. Pride of ownership 3. Retention of all profits 4. No special taxes 5. Flexibility of being your own boss Disadvantages - 1. Unlimited liability 2. Lack of continuity 3. Lack of money 4. Limited management skills 5. Difficulty in hiring employees

The Extent of International Business

Although the worldwide recessions of 1991 and 2001-2002 slowed the rate of growth, and 2008-2009 global economic crisis caused the sharpest decline in more than 70 years, globalization is a reality of our time In the U.S., international trade accounts for over ¼ of GDP Trade barriers are decreasing, new competitors are entering the global marketplace, creating more choices for consumers and new job opportunities International business will grow with the expansion of commercial use of the Internet

Fair Credit Billing Act (1974)

Amended the Truth in Lending Act to enable consumers to challenge billing errors

Corporations

An artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts Unlike a real person, however, a corporation exists only on paper There are approximately 6 million corporations in the U.S. They comprise about 19 percent of all businesses, but they account for 83 percent of sales revenues

Inflation Rate

An economic statistic that tracks the increase in prices of goods and services over a period of time; usually calculated on a monthly or annual basis

Capitalism

An economic system in which individuals own and operate the majority of businesses that provide goods and services Derived from Adam Smith's laissez-faire capitalism

Service Economy

An economy in which more effort is devoted to the production of services than tot he production of goods.

Financing International Business: The Export-Import Bank of the United States (Eximbank)

An independent agency of the U.S. government whose function it is to assist in financing the exports of American firms

Producer Price Index (PPI)

An index that measures prices that producers receive for their finished goods

Natural monopoly

An industry requiring huge investments in capital and within which duplication of facilities would be wasteful and thus not in the public interest

Financing International Business: The International Monetary Fund (IMF)

An international bank with 186 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits

Financing International Business: Multilateral Development Bank (MDB)

An internationally supported bank that provides loans to developing countries to help them grow World Bank, Inter-American Development Bank (IDB), Asian Development Bank (ADB), African Development Bank (AFDB), European Bank for Reconstruction and Development (EBRD)

The Partnership Agreement

Articles of partnership - An agreement listing and explaining the terms of the partnership; written is preferable to oral Agreement should state 1. Who will make final decisions 2. What each partner's duties will be 3. How much each partner will invest 4. How much profit or loss each partner receives or is responsible for 5. How the partnership can be dissolved

Which of the following acts involving protecting the environment in some way is the most recent? A - Oil Pollution Act B - American Recovery & Reinvestment Act C - Food Quality Protection Act D - Resource Conservation & Recovery Act E - Clean Air Amendment

B - American Recovery & Reinvestment Act

Association of Southeast Asian Nations (ASEAN)

Brunei Myanmar Cambodia Indonesia Laos Malaysia Philippines Singapore Thailand Vietnam

Which of the following is false about business and social responsibility in the first quarter of the twentieth century? A- No minimum wage laws existed B- Industrial accents were commonplace and nearly expected C- The average work week was approx 40 hours D- Working conditions where were considered deplorable by today's standards. E- Work areas were often crowded and unsafe.

C- The average work week was approx 40 hours

All of the following are arguments for increased social responsibility except: A. socially responsible decision making by firms can prevent increased government intervention, which would force businesses to do what they fail to do voluntarily. B. by helping resolve social issues, business can create a more stable environment for long-term profitability C. social problems affect society in general, so individuals businesses should not be expected to solve these problems. D. business is a part of our society and therefore cannot ignore social issues. E. business has the technical, financial, and managerial resources needed to tackle today's complex social issues.

C. social problems affect society in general, so individuals businesses should not be expected to solve these problems.

All of the following are rights of the consumer bill of rights except A. The right to choose B. The right to be informed C. the right to personalized service D. the right to courteous service

C. the right to personalized service

Fair Packaging and Labeling Act (1966)

Called for all products sold across state lines to be labeled with net weight, ingredients, and manufacturer's name and address

Which of the following examples is least likely to be covered by federal legislation passed in the 1960s? a. Collection agencies with harsh and abusive collection practices b. Boxes of cereal with net weight and manufacturer contact information c. Bathroom cleaners with warning labels d. A list of ingredients for your favorite ice cream e. Cigarette magazine advertising that offers health warnings

Collection agencies with harsh and abusive collection practices

Sandra, a purchasing agent for Friday Farms, has just secured a new vendor for tractors, plows, and harrows. The new vendor offers Sandra some small, extra pieces of equipment—rakes, shovels, and hand trowels—knowing that the hand tools are always useful as well. The new vendor also is anxious to secure future bids. Sandra needs a few hand tools for her own garden and decides that doing business with this new vendor is in everyone's best interest. From an ethical standpoint, Sandra needs to be very aware of

Conflict of Interest

Federal Trade Commission Act (1914)

Created the Federal Trade Commission to investigate illegal trade practices

Sustainability

Creating and maintaining the conditions under which humans and nature can exist in productive harmony while fulfilling the social, economic, and other requirements of present and future generations.

What is Social Responsibility good for business?

Customers eventually find put which firms act responsibly and which do not.

Discuss the restrictions nations place on international trade, the objectives of these restrictions, and their results.

Despite the benefits of world trade, nations tend to use tariffs and non-tariff barriers (import quotas, embargoes, and other restrictions) to limit trade. These restrictions typically are justified as being needed to protect a nation's economy, industries, citizens, or security. They can result in the loss of jobs, higher prices, fewer choices in the marketplace, and the misallocation of resources.

Do Not Call Implementation Act (2003)

Directed the FCC and the FTC to coordinate so that their rules are consistent regarding telemarketing call practices including the Do Not Call Registry and other lists, as well as call abandonment

A local bank just completed its social audit for the past year. Which statement indicates a valid attempt at responding to social responsibility by the bank? a. One white female was promoted to CEO. b. A reward system encourages all employees to market the bank's products and services. c. Each employee completed at least 200 hours of service to community functions. d. This year marked an increase of 100 percent in the number of depositors. e. The loan department expanded services to small businesses.

Each employee completed at least 200 hours of service to community functions.

sole proprietorship - advantages

Ease of start-up Pride of ownership Retention of all profits No special taxes Flexibility of being your own boss

The World Economic Outlook for Trade

Economic performance among nations is not equal; growth in advanced countries slowed and then stopped in 2009, while emerging and developing economies continue to grow rapidly International experts expected global economic growth in 2010 and 2011, despite the high oil prices Canada and Western Europe --Canada is projected to show growth in 2010 and 2011 --Euro area is expected to grow in 2011 --U.K. and smaller European countries are expected to experience a recession Mexico and Latin America --Mexico is expected to show growth in 2010 and 2011 --Latin America and Caribbean economies are recovering at a robust pace Japan --Projected to show growth in 2010 and 2011 Other Asian Countries --Lead by China emerging as a global economic power, growth is strong --Key emerging economies is Asia are leading the global recovery Emerging Europe --Growth has been faster than in western Europe and continued growth is expected in 2010 and 2010 Commonwealth of Independent States --Projected to show growth in 2010 and 2011 --With the collapse of communism, trade between the U.S. and central and Eastern Europe expanded substantially Exports and the U.S. Economy --In 2008, exports as a percentage of GDP reached its highest level since 1916 --In the past 50 years, exports have become increasingly important to the U.S. economy

Central American Free Trade Agreement -Dominican Republic(CAFTA-DR)

El Salvador Guatemala Honduras Nicaragua Dominican Republic Costa Rica

Clayton Anti-Trust Act (1914)

Eliminated many forms of price discrimination that gave large businesses a competitive advantage over smaller firms

Consumer Product Safety Commission Act (1972)

Established an abbreviated procedure for registering certain generic drugs

Pure Food and Drug Act (1906)

Established limited supervision of interstate sales of food and drugs

Motor Vehicle Safety Act (1966)

Established standards for safer cars

Kefauver-Harris Drug Amendments (1962)

Established testing practices for drugs and required manufacturers to label drugs with generic names in addition to trade names

Identify the types of ethical concerns that arise in the business world.

Ethical issues arise often in business situations out of relationships with investors, customers, employees, creditors, or competitors. Businesspeople should make every effort to be fair, to consider the welfare of customers and others within the firm, to avoid conflicts of interest, and to communicate honestly. 1. Fairness & Honesty 2. Organizational Relationships 3. Conflict of Interests 4. Communications

Understand what is meant by business ethics.

Ethics is the study of right and wrong and of the morality of choices. Business ethics is the application of moral standards to business situation

Sales Revenue

Expenses + Profit

Which of the following federal laws was not passed between 1887 and 1914 as were the others?

Fair Packaging and Labeling Act

Explain the different types of partners and the importance of partnership agreements.

General Partnerships Limited Partnerships

Types of Partners: General Partners

General partner - A person who assumes full or shared responsibility for operating a business General partnership - A business co-owned by two or more general partners who are liable for everything the business does

Consumer Products

Goods and Services purchased by individuals for personal consumption.

Fiscal Policy

Government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending

Explain how ethical decision making can be encouraged.

Governments, trade associations, and individual firms can establish guidelines for defining ethical behavior. 1- Governments can pass stricter regulations. 2- Trade associations provide ethical guidelines for their members. 3-Companies provide codes of ethics—written guides to acceptable and ethical behavior as defined by an organization—and create an atmosphere in which ethical behavior is encouraged. 4-An ethical employee working in an unethical environment may resort to whistle-blowing to bring a questionable practice to light.

Differences of Economic Systems

How they answer the four basic economic questions -What goods and services will be produced? -How will they be produced? -For whom will they be produced? -Who owns and controls the major factors of production?

Types of Trade Restrictions

Import Duty (Tariff) Dumping Non-Tariff Barriers

Describe how our current views on the social responsibility of business have evolved

In a socially responsible business, management realizes that its activities have an impact on society and considers that impact in the decision-making process. Before the 1930s, workers, consumers, and government had very little influence on business activities; as a result, business leaders gave little thought to social responsibility. All this changed with the Great Depression. Government regulations, employee demands, and consumer awareness combined to create a demand that businesses act in socially responsible ways.

Which of the following is not considered a step in developing and implementing a social responsibility program in a company? A - Planning the Program B - Preparing a social audit C - Incorporating "buy-in" from all employees D - Appointing a director E - Securing the commitment of top executives

Incorporating "buy-in" from all employees

Forming a Corporation

Incorporation - the process of forming a corporation Most experts recommend consulting a lawyer.

Factors Affecting Ethical Behavior

Individual Social Opportunity

Discuss the factors that affect the level of ethical behavior in organizations.

Individual, social, and opportunity factors all affect the level of ethical behavior in an organization. 1-Individual factors include knowledge level, moral values and attitudes, and personal goals. 2-Social factors include cultural norms and the actions and values of co-workers and significant others. 3-Opportunity factors refer to the amount of leeway that exists in an organization for employees to behave unethically if they choose to do so.

Free Enterprise

Individuals are free to decide what to produce, how to produce it, and at what price to sell it

Explain the economic basis for international business.

International business encompasses all business activities that involve exchanges across national boundaries. International trade is based on specialization, whereby each country produces the goods and services that it can produce more efficiently than any other goods and services. A nation is said to have a comparative advantage relative to these goods. International trade develops when each nation trades its surplus products for those in short supply. A nation's balance of trade is the difference between the value of its exports and the value of its imports. Its balance of payments is the difference between the flow of money into and out of the nation. Generally, a negative balance of trade is considered unfavorable.

Analyze how present employment practices are being used to counteract past abuses.

Legislation and public demand have prompted some businesses to correct past abuses in employment practices—mainly with regard to minority groups. Affirmative action and training of the hard-core unemployed are two types of programs that have been used successfully.

Methods of Entering International Business: Licensing

Licensing A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation Advantage -It allows expansion into foreign markets with little or no direct investment Disadvantages -The product image may be damaged if standards are not upheld -The original producer does not gain foreign marketing experience

Types of Partners: Limited Partners

Limited Partners - A person who contributes capital to a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership Limited partnership - A business co-owned by one or more general partners who manage the business and limited partners who invest money in it Master limited partnership (MLP) - A business partnership that is owned and managed like a corporation but taxed like a partnership

Credit Card Liability Act (1970)

Limited credit-card holder's liability to per card and stopped credit-card companies from issuing unsolicited cards

Equal Credit Opportunity Act (1974)

Provided equal credit opportunities for males and females and for married and single individuals

Describe the various sources of export assistance.

Many government and international agencies provide export assistance to U.S. and foreign firms. Sources of export assistance include U.S. Export Assistance Centers, the International Trade Administration, U.S. and Foreign Commercial Services, Export Legal Assistance Network, Advocacy Center, National Trade Data Bank, and other government and international agencies.

Methods of Entering International Business: Exporting

May use an export/import merchant who assumes the risks of ownership, distribution, and sale Letter of credit -Issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary Bill of lading -Issued by a transport carrier to an exporter to prove merchandise has been shipped Draft -Issued by the exporter's bank, ordering the importer's bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer's bank May use an export/import agent who arranges sale for a commission or fee; the exporter retains title to products until they are sold May establish own sales offices or branches in foreign countries

________ is our second largest export customer. a. Mexico b. Canada c. England d. Germany e. France

Mexico

Major Environmental Laws

National Environmental Policy Act (1970) Clean Air Amendment (1970) Water Quality Improvement Act (1970) Resource Recovery Act (1970) Water Pollution Control Act Amendment (1972) Noise Control Act (1972) Clean Air Act Amendment (1977) Resource Conservation and Recovery Act (1984) Clean Air Act Amendment (1987) Oil Pollution Act (1990) Clean Air Act Amendments (1990) Food Quality Protection Act (1996) American Recovery and Reinvestment Act (2009)

Sources of Export Assistance

National Export Strategy (NES) Trade Promotion Coordinating Committee (TPCC) -Assists U.S. firms in developing export-promotion programs -Help American firms compete in foreign markets and create new jobs in the U.S.

International Economic Organizations Working to Foster Trade

North American Free Trade Agreement (NAFTA) Central American Free Trade Agreement -Dominican Republic(CAFTA-DR) Association of Southeast Asian Nations (ASEAN) European Economic Area (EEA) Pacific Rim Commonwealth of Independent States (CIS) Caribbean Basin Initiative (CBI) Common Market of the Southern Cone (MERCOSUR) Organization of Petroleum Exporting Countries (OPEC) Organization for Economic Cooperation and Development (OECD)

Meat Inspection Act (1906)

Provided for limited supervision of interstate sales of meat and meat products

Fair Debt Collection Practices Act (1977)

Outlawed abusive collection practices by third parties

Methods of Entering International Business: Strategic Alliances

Partnerships formed to create competitive advantage on a worldwide basis

Unemployment Rate

Percentage of a nation's labor force unemployed at any time (EI)

Consumer Credit Reporting Reform Act (1997)

Placed more responsibility for accurate credit data on credit issuers; required creditors to verify that disputed data are accurate and to notify a consumer before reinstating the data

Children's Online Privacy Protection Act (2000)

Placed parents in control over what information is collected online from their children younger than 13 years; required commercial website operators to maintain the confidentiality, security, and integrity of personal information collected from children

Amendments to the Equal Credit Opportunity Act (1976, 1994)

Prevented discrimination based on race, creed, color, religion, age, and income when granting credit

Sherman Anti-trust Act (1890)

Prevented monopolies or mergers where competition was endangered

Methods of Entering International Business: Totally Owned Facilities

Production and marketing facilities in one or more foreign nations Advantage -Direct investment provides complete control over operations Disadvantage -Risk is greater than that of a joint venture Two forms -Building new facilities in the foreign country -Purchasing an existing firm in the foreign country

Telephone Consumer Protection Act (1991)

Prohibited the use of automated dialing and prerecorded-voice calling equipment to make calls or deliver messages

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

Promoted the financial stability of the United States by improving accountability and responsibility in the financial system; established a new Consumer Financial Protection Agency to regulate home mortgages, car loans, and credit cards; became Public Law on July 21, 2010

Nutrition Labeling and Education Act (1990)

Required the Food and Drug Administration to review current food labeling and packaging focusing on nutrition label content, label format, ingredient labeling, food descriptors and standards, and health messages

Federal Hazardous Substances Labeling Act (1960)

Required warning labels on household chemicals if they were highly toxic

The ________ enlarged the solid-waste disposal program and provided for enforcement by the EPA.

Resource Recovery Act

Loss (negative profit)

Results when a firm's expenses are greater than its revenues

Competition

Rivalry among businesses for sales to potential customers.

Studies show that the incidence of innovation among small-business workers is ________ than among workers in large businesses.

Significantly Higher

Which of the following types of business ownership is the easiest to start? a. Corporation b. Master limited partnership c. Sole proprietorship d. General partnership e. Limited partnership

Sole proprietorship

Corporate Ownership

Stock - The shares of ownership of a corporation Stockholder - A person who owns a corporation's stock Closed corporation - A corporation whose stock is owned by relatively few people and is not sold to the general public Open corporation - A corporation whose stock is bought and sold on security exchanges and can be purchased by any individual

Productivity

The average level of output per worker per hour

Current Business Environment

The competitive, global, technological, and economic environments affect business today

Nobel laureate Milton Friedman refers to social responsibility programs as "hypocritical window-dressing". His belief supports which social responsibility philosophy?

The economic model

Identify the institutions that help firms and nations finance international business.

The financing of international trade is more complex than that of domestic trade. Institutions such as the Ex-Im Bank and the International Monetary Fund have been established to provide financing and ultimately to increase world trade for American and international firms

Corporate Profits

The total amount of profits made by corporations over selected time periods

Cultural norms can play a part in a person's ethical or unethical behavior in the workplace. True False

True

Prime Interest Rate

The lowest interest rate that banks charge their most creditworthy customers

Perfect (or Pure) competition

The market situation in which there are many buyers and sellers of a product and no single buyer or seller is powerful enough to affect the price of that product.

Perfect (or pure) competition

The market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product a) Supply b) Demand c) Market Price (Equilibrium)

Business

The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society's needs

Unemployment Rate

The percentage of a nation's labor force unemployed at any time.

Market Price (Equilibrium)

The price at which the quantity demanded is exactly equal to the quantity supplied

Product Differentiation

The process of developing and promoting differences between one's products and all similar products

Demand

The quantity of a product that BUYERS are willing to PURCHASE at each of various prices

Supply

The quantity of a product that PRODUCERS are willing to SELL at each of various prices

Restrictions to International Business

The reasons for restricting trade range from internal political and economic pressures to mistrust of other nations. Nations are generally eager to export their products to provide markets for their industries and develop a favorable balance of trade. Most trade restrictions are applied to imports from other nations.

Business Cycle

The recurrence of periods of growth and recession in a nation's economic activity.

Specialization

The separation of a manufacturing process into distinct tasks and the assignment of the different tasks to different individuals

Economics

The study of how wealth (anything of value) is created and distributed

Microeconomics

The study of the decisions made by individuals and businesses

Macroeconomics

The study of the national economy and the global economy.

A Latin phrase, caveat emptor, summarizes the vulnerable position that consumers were in the early 1900s

True

A grocery chain that directly purchases a portion of its products from outside the country rather than using an American distributor is engaging in international business. a. True b. False

True

A reason against trade restrictions is the higher prices that consumers have to pay. True False

True

A trading company provides a link between buyers from one country and sellers in another country. a. True b. False

True

A vertical merger occurs between firms that operate at different but related levels of production and marketing. a. True b. False

True

Approximately 70% of U.S. production consists of goods and services purchased by individuals for personal or household consumption True or False

True

At least one general partner must be responsible for the debts of the limited partnership. a. True b. False

True

Best Buy, an electronics retailer, could be considered a marketing intermediary.

True

Bushels of corn, wheat, or barley that have no unique characteristics are part of a perfect competition market.

True

Recession

Two or more consecutive three-month periods of decline in a country's gross domestic product

North American Free Trade Agreement (NAFTA)

United States Canada Mexico Chile is expected to become the 4th member

sole proprietorship - disadvantages

Unlimited liability Lack of continuity Lack of money Limited management skills Difficulty in hiring employees

Describe the major types of pollution, their causes, and their cures.

Water, Air, Land and Noise Industry has contributed to noise pollution and pollution of our land and water through the dumping of wastes, and to air pollution through vehicle and smokestack emissions. This contamination can be cleaned up and controlled, but the big question is: Who will pay? Present cleanup efforts are funded partly by government tax revenues, partly by business, and in the long run by consumers.

Profit

What remains after all business expenses have been deducted from sales revenue.

foreign corporation

a corporation in any state in which it does business except the one in which it is incorporated

domestic corporation

a corporation in the state in which it is incorporated

Outline the extent of international business and the world economic outlook for trade.

World trade is generally increasing. Trade between the United States and other nations is increasing in dollar value but decreasing in terms of our share of the world market. Exports as a percentage of U.S. GDP have increased steadily since 1985, except in the 2001 and 2008 recessions.

Caveat Emptor

a Latin phrase meaning "let the buyer beware". In other words, "what you see, is what you get."

general partnership

a business co-owned by two or more general partners who are liable for everything the business does

Social Audit

a comprehensive report of what an organization has done and is doing with regard to social issues that affect it

licensing

a contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation

alien corporation

a corporation chartered by a foreign government and conducting business in the United States

Equal Employment Opportunity Commission (EEOC)

a government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it

code of ethics

a guide to acceptable and ethical behavior as defined by the organization

unlimited liability

a legal concept that holds a business owner personally responsible for all the debts of the business

proxy

a legal form listing issues to be decided at a stockholders' meeting and enabling stockholders to transfer their voting rights to some other individual or individuals

import quota

a limit on the amount of a particular good that may be imported into a country during a given period of time

Monopoly

a market (or industry) with only one seller, and there are barriers to keep other firms from entering the industry

trade deficit

a negative balance of trade

nontariff barrier

a non-tax measure imposed by a government to favor domestic over foreign suppliers Other Non-Tariff Barriers: *import quota *embargo *foreign exchange control *currency devaluation *bureaucratic red tape *cultural attitudes

strategic alliance

a partnership formed to create competitive advantage on a worldwide basis

general partner

a person who assumes full or shared responsibility for operating a business

limited partner

a person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership

stockholder

a person who owns a corporation's stock

affirmative action program

a plan designed to increase the number of minority employees at all levels within an organization

minority

a racial, religious, political, national, or other group regarded as different from the larger group of which it is a part and that is often singled out for unfavorable treatment

foreign-exchange control

a restriction on the amount of a particular foreign currency that can be purchased or sold

hostile takeover

a situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger

Adam Smith's laissez-faire capitalism

a society's best interests are served by individuals pursuing their own self-interest a) Creation of wealth is the concern of private individuals b) Resources used to create wealth must be privately owned c) Economic freedom ensures the existence of a free market economy. Businesses and individuals decide what to produce and buy; the market determines quantities sold and prices d) Limited role of government

proxy fight

a technique used to gather enough stockholder votes to control a targeted company

syndicate

a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital

invisible hand

a term created by Adam Smith to describe how an individual's personal gain benefits others and a nation's economy

partnership

a voluntary association of two or more persons to act as co-owners of a business for profit Less common form of ownership than sole proprietorship or corporation No legal limit on the maximum number of partners; most have only two Large accounting, law, and advertising partnerships have multiple partners Partnerships are usually a pooling of special talents or the result of a sole proprietor taking on a partner

Corporations make up about ________ percent of all business and account for ________ of all sales revenues. a. 19; 82 b. 32; 40 c. 8; 50 d. 5; 92 e. 10; 90

a. 19; 82

There are approximately ________ partnerships in the United States. a. 3 million b. 3.8 million c. 750,000 d. 975,000 e. 2 million

a. 3 million

Which of the following is not a qualification for S-corporation status? a. No more than 12 stockholders b. Only one class of stock c. Individuals, estates, or certain trusts as stockholders. d. Decision agreed to by all stockholders. e. Must be a domestic corporation

a. No more than 12 stockholders

Why are revenue tariffs levied? a. To generate income for the government b. To protect consumers of the product that the taxes are levied on c. To generate revenue for the importing company d. To generate revenue for the companies receiving the imported products e. To protect the importing company

a. To generate income for the government

A way for a firm to grow is through the takeover of another firm. a. True b. False

a. True

A way for the firm to grow is through the takeover of another firm. a. True b. False

a. True

Corporate officers are appointed by the board of directors. a. True b. False

a. True

Double taxation is a drawback of corporation business ownership. a. True b. False

a. True

In the eyes of the law, the owner of a sole proprietorship and the business are one and the same. a. True b. False

a. True

Which form of business has unlimited liability for all owners? a. sole proprietorship b. master limited partnership c. C-corporation d. closed corporation e. limited partnership

a. sole proprietorship

consumerism

all activities undertaken to protect the rights of consumers

International business

all business activities that involve exchanges across national boundaries

stakeholders

all the different people or groups of people who are affected by an organization's policies, decisions, and activities

joint venture

an agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time

corporation

an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts

Market Economy

an economic system in which businesses and individuals decide what to produce and buy, and the market determines quantities sold and prices

Mixed Economy

an economy that exhibits elements of both capitalism and socialism

Export-Import Bank of the United States

an independent agency of the U.S. government whose function is to assist in financing the exports of American firms

International Monetary Fund (IMF)

an international bank with 188 member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits

countertrade

an international barter transaction

General Agreement on Tariffs and Trade (GATT)

an international organization of 158 nations dedicated to reducing or eliminating tariffs and other barriers to world trade

multilateral development bank (MDB)

an internationally supported bank that provides loans to developing countries to help them grow

tender offer

an offer to purchase the stock of a firm targeted for acquisition at a price just high enough to tempt stockholders to sell their shares

economic community

an organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies.

A partnership can have a legal limit of no more than 12 partners. a. True b. False

b. False

Limited partners participate in day-to-day business activities and operations. a. True b. False

b. False

Non-profit laws are only federal and thus, the same laws exist in all fifty states. a. True b. False

b. False

Once a not-for-profit corporation is approved it must meet guidelines of the ______ to obtain tax-exempt status. a. registered state. b. Internal Revenue Service. c. Small Business Association. d. registered county. e. Small Business Development Center.

b. Internal Revenue Service

Which of the following is least likely to be an economic consequence of trade restrictions? a. Restrictions in consumers' choices b. Higher prices for consumers c. Loss of jobs d. Misallocation of international resources e. Protection of the health of citizens

c. Loss of jobs

A country's ________ is the total flow of money into a country minus the total flow of money out of the country over a period of time. a. favorable balance of trade b. balance of trade c. balance of payments d. comparative advantage e. trade deficit

balance of payments

When Maytag provides customers with a booklet describing how to use a washing machine, the company is satisfying the consumer bill of rights to

be informed

There are approximately ________ million nonfarm sole proprietorships in the United States. a. 32 b. 40 c. 23 d. 55 e. 12

c. 23

Which of the following is not a right of corporations? a. The right to buy property b. The right to start a business c. The right to all profits d. The right to sue e. The right to enter into a contract

c. The right to all profits

If you earn 90 cents for each stock share that you own in XYZ corporation, you have earned a a. tender offer. b. cooperative. c. dividend. d. proxy. e. stock share.

c. dividend.

By ensuring that products are safe and reliable, the Food and Drug Administration and the Consumer Product Safety Commission are taking part in a movement known as a. protectionism. b. product activism. c. socialism. d. product liability management. e. consumerism.

consumerism

The ____ for a particular product is the quantity that buyers are willing to purchase at each varying price. a. competition b. market price c. supply d. demand e. equilibrium

d. Demand

Which of the following is not a disadvantage of a corporation? a. Expense of formation b. Conflict within the corporation c. Increased paperwork d. Raising money e. Difficulty of formation

d. Raising money

cultural (or workplace) diversity

differences among people in a workforce owing to race, ethnicity, and gender

bill of lading

document issued by a transport carrier to an exporter to prove that merchandise has been shipped

The traditional concept that businesses are responsible to their investors and that social responsibility is someone else's job is the core of the a. corporate code of ethics. b. economic model of social responsibility. c. socioeconomic model of social responsibility. d. corporate model of social responsibility. e. doctrine of caveat emptor.

economic model of social responsibility.

dumping

exportation of large quantities of a product at a price lower than that of the same product in the home market.

If only 100,000 tons of beef is allowed to enter the U.S. borders, the U.S. government has instituted a(n) a. trade embargo. b. import quota. c. devaluation. d. balance of trade. e. foreign-exchange control.

import quota.

whistle-blowing

informing the press or government officials about unethical practices within one's organization

letter of credit

issued by a bank on request of an importer stating that the bank will pay an amount of money to a stated beneficiary

draft

issued by the exporter's bank, ordering the importer's bank to pay for the merchandise, thus guaranteeing payment once accepted by the importer's bank

Factors of Production

resources used to produce goods and services 1. Land and natural resources 2. Labor 3. Capital 4. Entrepreneurship

exporting

selling and shipping raw materials or products to other nations

common stock

stock owned by individuals or firms who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others

preferred stock

stock owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common-stock owners

absolute advantage

the ability to produce a specific product more efficiently than any other nation

comparative advantage

the ability to produce a specific product more efficiently than any other product

business ethics

the application of moral standards to business situations

corporate officers

the chairman of the board, president, executive vice presidents, corporate secretary, treasurer, and any other top executive appointed by the board of directors

Socioeconomic model of social responsibility

the concept that business should emphasize not only profits but also the impact of its decisions on society 1. Business is dominated by the corporate form of ownership and the corporation is a creation of society. If a corp doesn't perform as a good citizen, society can and will demand changes. 2. Many firms have begun to take pride in their social responsibility records, among them Starbucks Coffee, HP, Colgate/Palmolive, Coca Cola. 3. Many business people believe that it is in their best interest to take the initiatives in this area. The alternative may be legal action brought against the firm by some special interest group; in such a situation the firm may lose control of its activities.

pollution

the contamination of water, air, or land through the actions of people in an industrialized society

If the tiny country of Antigua & Barbuda imported $900 million worth of goods and services and exported $800 million worth, it would have a a. trade deficit of $100 million. b. balance of trade. c. trade surplus of $100 million. d. balance of payments of $100 million. e. favorable balance of trade

trade deficit of $100 million.

hard-core unemployed

workers with little education or vocational training and a long history of unemployment

Tips for Studying Business

① Prepare before you go to class. ② Read the chapter. ③ Underline or highlight important concepts. ④ Take notes. ⑤ Apply the concepts. ⑥ Practice critical thinking. ⑦ Prepare for exams.