Business Notes

Business: Earn a profit by providing products that satisfy people’s needs.

Products: Tangible and intangible characteristics that provide satisfaction and benefits.

Profit: Primary goal of a business. The difference between what it costs to make and sell a product and what a customer pays for it.

Nonprofit Organization: Organizations that may provide goods or services but do not have the basic purpose of earning profits.

Stakeholders: Groups that have a stake in the success and outcomes of a business.

Economics: The study of how resources are distributed for the production of goods of resources available.

Natural Resources: Land, forests, minerals, water, and other things that are not made by people.

Human Resources: The physical and mental abilities that people use to produce goods and services; also called labor.

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

Economic System: a description of how a particular society distributes its resources to produce goods and services.

Communism: First describes by Karl Marx as a society in which the people, without regard to class, own all the nations resources.

Socialism: An economic system in which the government owns and operates basic industriespostal services, telephone, utilities, transportation, health care, and some manufacturing-but individuals own most businesses.

Capitalism: Also known as free enterprise. An economic system in which individuals own and operate the majority of businesses that provides goods and services.

Free-Market System: Two forms of capitalism; Pure & Modified. Pure capitalism, in which all economic decisions are made without government intervention.

Mixed Economies: Economies made up of elements from more than one economic system.

Demand: The number of goods and services that consumers are willing to buy at different prices at a specific time.

Supply: The number of products that businesses are willing to sell at different prices at a specific time.

Equilibrium Price: The Price at which the number of products that business are willing to supply equals the amount of products that consumers are willing to buy at a specific point in time.

Competition: The rivalry among business for consumers’ dollars is another vital element in free enterprise.

Pure Competition: The market structure that exists when there are many small businesses selling one standardized product. Such as: agricultural commodities like wheat, corn & cotton.

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.

Oligopoly: The market structure that exists when there are very few business selling a product.

Monopoly: The market structure that exists when there is only one business providing a product in a given market.

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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.

Inflation: A condition characterized by a continuing rise in prices.

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.

Recession: A decline in production, Unemployment & Income.

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

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

Gross Domestic Product (GPD): The sum of all goods and services produced in a country during a year.

Budget Deficit: The condition in which a nation spends more than it takes from taxes.

Entrepreneur: An individual who risks his or her wealth, time & effort to develop for profit an innovative product or way of doing something.

Business Ethics: Principles and standards that determine acceptable conduct in business.

Social Responsibility: A businesses obligation to maximize its positive impact and minimize its negative impact on society.

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.

Bribes: Payments, gifts, or special favors intended to influence the outcome of a decision.

Plagiarism: The act of taking someone else’s work and presenting it as your own without mentioning the source.

Code of Ethics: Formalized rules and standards that describe what a company expects of its employees.

Whistle Blowing: The act of an employee exposing an employers wrongdoing to outsiders, such as the media or government regulatory agencies.

Corporate Citizenship: The extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders.

Consumerism: The activities independent individuals, groups, and organizations undertake to protect their rights as consumers.

Sustainability: Conducting activities in a way that allows for the long-term well-being of the natural environment, including al biological entities. Sustainability involves the assessment and improvement of business strategies, economic sectors, work practices, technologies and lifestyles so that they maintain the health of the natural environment.

International Business: The buying, selling, and trading of goods and services across national boundaries.

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.

Comparative Advantage: The basis of most international trade, when a country specializes in products that it can supply more efficiently or at a lower cost than it can produce other items.

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

Exporting: The sale of goods and services to foreign markets.

Importing: The purchase of goods and services from foreign sources.

Balance of Trade: The difference in value between a nation’s exports and its imports.

Trade Deficit: A nations negative balance of trade, which exists when that country imports more products than it exports.

Balance of Payments: The difference between the flow of money into and out of a country.

Infrastructure: The physical facilities that support a country’s economic activities, such as railroads, highway, ports, airfields, utilities and power plants, schools, hospitals, communication systems, and commercial distribution systems.

Exchange Rate: The ratio at which one nation’s currency can be exchanged for another nations currency.

Import Tariff: A tax Levied by a nation on goods imported into the country.

Exchange Controls: Regulations that restrict the amount of currency that can be bought or sold.

Quota: A restriction on the number of units of a particular product that can be imported into a country.

Embargo: A prohibition on trade in a particular product.

Dumping: The act of a country or business selling products at less than what it costs to produce them.

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

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.

World Trade Organization: International organization dealing with the rules of trade between nations.

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.

European Union (EU): A union of European nations established in 1958 to promote trade among its members; one of the largest single markets today.

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 Industrialized nations in 1946 to loan money to underdeveloped and developing countries; formally known as the International Bank for Reconstruction and development.

International Monetary Fund (IMF): Organization established in 1947 to promote trade among member nations by eliminating trade barriers and fostering financial cooperation.

Countertrade Agreements: Foreign trade agreements that involve bartering products for other products instead of for currency.

Trading Company: A firm that buys goods in one country and sells them to buyers in another country.

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Licensing: A trade agreement in which one company-The licensor-allows another company-The licensee-to use its company name, product’s, patents, brands, trademarks, raw materials, and/or production processes in exchange for a fee or royalty.

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 franchisers business, in return for a financial commitment and the agreement to conduct business in accordance with the franchisers standard of operations.

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 firms name.

Off-Shoring: The relocation of business processes by a company or subsidiary to another country. Off-shoring is different than outsourcing because the company retains control of the offshored business.

Joint Venture: The sharing of the costs and operation of a business between a foreign company and a local partner.

Strategic Alliance: A partnership formed to create competitive advantage on a worldwide basis.

Direct Investment: The ownership of overseas facilities.

Multinational Corporation (MNC): A corporation that operates on a worldwide scale, without significant ties to any one nation or region.

Multinational Strategy: A plan, used by international companies, that involves customizing products, promotion, and distribution according to cultural, technological, regional, and national differences.

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.

Sole Proprietorship: Business owned and operated by one individual; the most common form of business organization in the United States.

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.”

General Partnership: a partnership that involves a complete sharing in both the management and the liability of the business.

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.

Articles of Partnership: Legal documents that set forth the basic agreement between partners.

Corporation: A legal Entity, created by the state, whose assets and liabilities are separate form its owners.

Stock: Shares of a corporation that maybe bought or sold.

Dividends: Profits of a corporation that are distributed in the form of cash payments to stockholders.

Corporate Charter: A legal document that the state issues to a company based on information the company provides in the articles of incorporation.

Private Corporation: A corporation owned by just one or a few people who are closely involved in managing the business.

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Public Corporation: A corporation whose stock anyone may buy, sell, or trade.

Initial Public Offering (IPO): Selling a corporations stock on public markets for the first time.

Quasi-Public Corporation: Corporations owned and operated by the federal, state, or local government.

Non Profit Corporation: Corporations that focus on providing a service rather than earning a profit but are not owned by a government entity.

Board of Directors: A group of individuals, elected by the stockholders to oversee the general operation of the corporation, who set the corporations long-range objectives.

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

Common Stock: Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.

Joint Venture: A partnership established for a specific project or for a limited time.

S Corporation: Corporation taxed as though it were a partnership with restrictions on shareholders, Limited Liability Company (LLC): Form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members.

Cooperative or Co-Op: An organization composed of individuals or small business that have banded together to reap the benefits of belonging to a larger organization.

Merger: The combination of two companies(usually Corporations) to form a new company.

Acquisition: The purchase of one company by another, usually by buying its stock.

Leveraged Buyout (LBO): A purchase in which a group of investors borrows money from banks and other institutions to acquire a company (or a division of one), using the assets of the purchased company to guarantee repayment of the loan.

Entrepreneurship: The Process of creating and managing a business to achieve desired objectives.

Small Business: Any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.

Small Business Administration: An independent agency of the federal government that offers managerial and financial assistance to small businesses.

Undercapitalization: The lack of funds to operate a business normally.

Business Plan: A precise statement of the rationale for a business and a step-by-step explanation of it will achieve its goals.

Venture Capitalists: Persons or organizations that agree to provide some funds for a new business in exchange for an ownership interest or stock.

Franchise: A license to sell another’s products or to use another’s name in business, or both.

Franchiser: The company that sells a franchise.

Franchisee: The purchaser of a franchise.

Entrepreneurs: Individuals in large firms who take responsibility for the development of innovations within the organizations.

Management: A process designed to achieve in organizations objectives by using its resources effectively and efficiently in a changing environment.

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Managers: Those individuals in organizations who make decisions About the use of resources who are concerned with planning, Organizing staffing, directing, and controlling the organizations activities to reach its objectives.

Planning: The process of determining the organizations objectives and deciding how to accomplish them; the first function of management.

Mission: The statement of an organizations fundamental purpose and basic philosophy.

Strategic Plans: Those plans that establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission.

Tactical Plans: Short range plans designed to implement the activities and objectives specified in the strategic plan.

Operational Plans: Very short-term plans that specify what actions individuals workgroups or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan.

Crisis Management or Contingency Planning: An element in planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus, or airplane crash.

Organizing: The structure of resources and activities to accomplish the objectives and efficient and effective manner.

Staffing: The hiring of people to carry out the work of the organization.

Downsizing: The elimination of a significant number of employees from an organization.

Directing: Motivating and leading employees to achieve organizational objectives.

Controlling: The process of evaluating and correcting activities to keep the organization on course.

Top Managers: The president and other top executives of a business, such as the Chief Executive Officer (CEO), Chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization.

Middle Managers: Those members of an organization responsible for the tactical planning that implements the general guidelines established by top management.

First-Line Managers: Those who supervise both workers and the daily operations of an organization.

Financial Managers: Those who focus on obtaining needed Funds for the successful operation of an organization and using those funds to further organizational goals.

Production Operations Managers: Those who develop and administer the activity is involved in transforming resources into goods, services, and ideas ready for the marketplace.

Human Resources Managers: Those who handled the staffing function and deal with employees and a formalized manner.

Marketing Managers: Those who are responsible for planning pricing and promoting products and making them available to customers.

Information Technology Managers: Those who are responsible for implementing maintaining and controlling technology applications in business, such as computer networks.

Administrative Managers: Those who manage an entire business or a major segment of a business; They are not specialists but coordinate the activities of specialized managers.

Leadership: The ability to influence employees to work toward organizational goals.

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Technical Expertise: The specialized knowledge and training needed to perform jobs that are related to a particular areas of management.

Conceptual Skills: The ability to think in abstract terms and to see how parts fit together to from the whole.

Analytical Skills: The ability to identify relevant issues, recognize their importance, and understand the relationships between them, and perceive the underlying causes of a situation.

Human Relations Skills: The ability to deal with people, both inside and outside the organization.

Agenda: A calendar, containing both specific and vague items, that covers short-term goals and long-term objectives.

Networking: The building of relationships and sharing of information with colleagues who can help managers achieve the items on their agendas.

Organizational Culture: A friend shared values, beliefs, traditions, philosophies, rules, and role models for behavior.

Structure: The arrangement or relationship of positions within an organization.

Organizational Chart: A visual display of the organizational structure, lines of authority (chain of command), staff relationships, permanent committee arrangements, and lines of communication.

Specialization: The division of labor into small, specific pass and the assignment of employees to do a single task.

Departmentalization: The grouping of jobs into working units usually called departments, units, groups, or divisions.

Functional Departmentalization: The grouping of jobs that performs similar functional activities, such as finance, manufacturing, marketing, and human resources.

Product departmentalization: The organization of jobs in relation to the products of the firm.

Geographical departmentalization: The grouping of jobs are according to geographic location, such as state, region, country, or continent.

Customer Departmentalization: The arrangement of jobs around the needs of serious types of customers.

Delegation of Authority: Giving employees not only tasks, but also the power to make commitments, use resources, and take whatever actions are necessary to carry out those tasks.

Responsibility: The obligation, placed on employees through delegation, to perform assigned tasks satisfactorily and be held accountable for the proper execution of work.

Accountability: The principle that employees who excepting assignment in the authority to carry it out are answerable to superior for the outcome.

Centralized Organization: A structure in which authority is concentrated at the top, and very little decision-making authority is delegated to lower levels.

Decentralized Organization: And organization in which decision-making authority is delegated as far down the chain of command as possible.

Span of Management: The number of subordinates who reports for particular manager.

Organizational layers: The levels of management in an organization.

Line structure: The simplest organizational structure in which direct lines of authority extends from the top manager to the lowest level of the organization.

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Line-and-Staff Structure: A structure and having a traditional line relationship between superiors and subordinates and also specialize managers-called staff managers-who are available to assist line managers.

Multidivisional Structure: A structure that organizes departments into larger groups called divisions.

Matrix Structure: A structure that sets up teams from different departments, thereby creating two or more intersecting lines of authority; also called project-management structure.

Group: To you or more individuals to communicate with one another, Share a common identity, and have a common goal.

Team: A small group whose members have complementary skills; have a common purpose, goals, and approach; and hold themselves mutually accountable.

Committee: A permanent, formal group that performs a specific task.

Task Force: A temporary group of employees responsible for bringing about a particular change.

Project Teams: Group similar to task forces which normally run their operation and have total control of a specific work project.

Product development teams: A specific type of project team form to devise, design, and implement a new product.

Quality assurance teams (or quality circles): Small groups of workers brought together from throughout the organization to solve specific quality, productivity, or service problems.

Self-Directed Work Team (SDWT): A group of employees responsible for an entire work process or segment that delivers a product to an internal or external customer.

Grapevine: an informal channel of communication, separate from managements formal, official communication channels.

Operations Management: The development and the administration of the activities involved in transforming resources into good and services.

Manufacturing: The activities and processes used in making tangible products; also called production.

Production: The activities and processes used in making tangible products also called manufacturing.

Operations: The activities and processes used in making both tangible and intangible products.

Outputs: The goods, services, and ideas that result from the conversion of inputs.

Standardization: The making of identical interchangeable components or products.

Modular Design: The creation of an item in self-contained units, or modules, that can be combined or interchange to create different products.

Customization: Making products to meet a particular customers needs or wants.

Capacity: The maximum load that an organizational unit can carry or operate.

Fixed-position layout: A layout of that brings all resources required to create a product to a central location.

Project Organization: A company using a fixed position layout because it is typically involved in the large, complex projects such as construction or exploration.

Process Layout: A layup and organizes the transformation process into departments that group related processes.

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Intermittent organizations: Organizations that deal with products of a lesser magnitude then do project to organization; their products are not necessarily unique but possess a significant number of differences.

Product Layout: A layout requiring that production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line.

Continuos Manufacturing Organizations: Companies that use continuously running assembly line, creating products with many similar characteristics.

Computer Assisted Design (CAD): The design of components, products, and processes on computers instead of on paper.

Computer Assisted Manufacturing (CAM): Manufacturing that employs specialized computer systems to actually guide and control the transformation processes.

Flexible Manufacturing: The direction of machinery by computers to adapt to different versions of similar operations.

Computer Integrated Manufacturing (CIM): A complete system that designs products, manages machines and materials, and controls the operation function.

Supply Chain Management: Connecting and integrating all parties or members of the distribution systems in order to satisfy customers.

Purchasing: The buying of all the materials needed by the organization; also called procurement.

Inventory: All raw materials, components, completed or partially completed products, and pieces of equipment a firm uses.

Inventory Control: The process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it.

Economic Order Quantity Model (EOQ): A model that identifies the optimum number of items to order to minimize the costs of managing(ordering, storing, and using) them.

Just-In-Time-Management (JIT): A technique using smaller quantities of materials that arrive “just in time� for use in the transformation process and therefore require less storage space and other inventory management expense.

Material Requirements Planning (MRP): A planning systems that schedules the precise quantity of materials needed to make the product.

Routing: The sequence of operations through which the product must pass.

Scheduling: The assignment of required tasks to department or even specific machine, workers, or teams.

Quality Control: The processes an organization uses to maintain its established quality standards.

Total Quality Management (TQM): A philosophy that uniform commitment to quality in all areas of an organization will provide a culture that meets customers perceptions of quality.

Statistical Process Control: A system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system.

ISO 9000: A series of quality assurance standards designed by the international Organization for Standardization (ISO) to ensure consistent product quality under many conditions.

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ISO 14000: A Comprehensive set of environmental standards that encourages companies to conduct business in a cleaner, safer, and less wasteful way. ISO 1400 Provides a uniform set of standards globally.

Human Relations: The study of the behavior of individuals and groups in organizational settings.

Motivation: An inner drive that directs a persons behavior toward goals.

Morale: An employee’s attitude toward his or her job, employer, and colleagues.

Intrinsic Rewards: The personal satisfaction and enjoyment fell after attaining a goal.

Extrinsic Rewards: Benefits and/or recognition received from someone else.

Classical Theory of Motivation: Theory suggesting that money is the sole motivator for workers.

Maslow’s Hierarchy: A theory that arranges the five basic needs of people-Physiological, Security, Social, esteem, and Self-Actualization-into the order in which people strive to satisfy them.

Physiological Needs: The most basic human needs to be satisfied-water food shelter and clothing.

Security needs: the need to protect oneself from physical and economic harm.

Social needs: the need for love, companionship, and friendship-the desire for acceptance by others.

Esteem needs: the need for respect both self-respect and respect from others.

Self-actualization needs: the need to be the best one can be; at the top of Maslow's hierarchy.

Hygiene factors: Aspects of herzbergs theory of motivation that focus on the work setting and not the content of the work; these aspects include adequate wages, comfortable and safe working conditions, fair company policies, and job security.

Motivational factors: aspects of herzberg’s theory of motivation that focus on the content of the work itself; these aspects include achievement, recognition, involvement, responsibility, and it advancement.

Equity theory: an assumption that how much people are willing to contribute to an organization depends on their assessment of the fairness, or equity, of the rewards they will receive in exchange.

Expectancy theory: The assumption that motivation depends not only on how much a person wants something but also on how likely he or she is to get it.

Behavior Modification: changing behavior and encouraging appropriate actions by relating the consequences of behavior to the behavior itself.

Job Rotation: Movement of employees from one job to another in an effort to relieve the boredom often associated with job specialization.

Job Enlargement: The addition of more tasks to a job instead of treating each task as separate.

Job Enrichment: the incorporation of motivational factors, such as opportunity for achievement, recognition, responsibility, and advancement, into a job.

Flextime: A program that allows employees to choose their starting at times, provided that they are at work during a specified core period.

Compressed Workweek: A four-day (or shorter) period during which an employee works 40 hours.

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Job Sharing: Performance of one full-time job by two people on part-time hours.

Human Resources Management: all the activities involved in determining an organizations human resources needs, as well as acquiring, training, and compensating people to fill those needs.

Job Analysis: The determination, through observation and study, other pertinent information about a job-including specific tasks and necessary abilities, knowledge, and skills.

Job description: A formal, written explanation of a specific job, usually including job title,tasks, relationship with other jobs, physical and mental skills required, duties, responsibilities, and working conditions.

Job specification: A description of the qualifications necessary for a specific job, in terms of education, experience, and personal and physical characteristics.

Recruiting: Forming a pool of qualified applicants from which management can select employees.

Selection: The process of collecting information about applicants and using that information to make hiring decisions.

Title VII of the Civil Rights Act: Prohibits discrimination in employment and created the Equal Employment Opportunity Commission.

Orientation: Familiarizing newly hired employees with fellow workers, company procedures, and the physical properties of the company.

Training: Teaching employees to do specific tasks through either classroom development or onthe-job experience.

Development: Training that augments the skills and knowledge of managers and professionals.

Turnover: Occurs employees quit or are fired and must be replaced by new employees.

Promotion: An advancement to a higher-level job with increased authority, responsibility, and pay.

Transfer: A move to another job within the company at essentially the same level and wage.

Separations: Employment changes involving resignation, retirement, termination, or lay off.

Wage/Salary Survey: A study that tells a company how much compensation comparable firms are paying for specific jobs that firms have in common.

Wages: Financial rewards based on the number of hours the employee works or the level of output achieved.

Commission: An incentive system that pays a fixed amount or percentage of employees sales.

Salary: A financial reward calculated on a weekly, monthly, or annual basis.

Bonuses: Monetary rewards offered by companies for exceptional performance as incentives to further increase productivity.

Profit Sharing: A form of compensation whereby a percentage of company profits is distributed to the employees whose work helped to generate them.

Benefits: Non financial forms of compensation provided to employees, such as pension plans, health insurance, paid vacation and holidays, and the like.

Labor unions: Employee organizations formed to deal with employers for achieving better pay, hours, and working conditions.

Collective Bargaining: The negotiation process through which management and unions reach an agreement about compensation, working hours, and working conditions for the bargaining unit.

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Labor Contract: The formal, written document that spells out the relationship between the union and management for a specified period of time-usually two or three years.

Picketing: A public protest against management practices that involves Union members marching and carrying anti-management signs at the employers plant.

Strikes: Employee walkouts; one of the most effective weapons labor has Boycott: An attempt to keep people from purchasing the products of a company.

Lock out: Management version of a strike, wherein a work site is closed so that employees cannot go to work.

Strikebreakers: people hired by management to replace striking employees; called "scabs" by striking union members.

Conciliation: A method of outside resolution of labor and management differences in which a third party is brought in to keep the two sides talking.

Meditation: A method of outside resolution of labor and management differences in which the third party’s role is to suggest or propose a solution to the problem.

Arbitration: Settlement of a labor/management dispute by a third party whose solution is legally binding and enforceable.

Diversity: The participation of different ages, genders, races, ethnicities, nationalities, and abilities in the workplace.

Affirmative Action Programs: legally mandated plans that try to increase job opportunities for minority groups by analyzing the current pool of workers, identifying areas where women and minorities are underrepresented, and establishing specific hiring and promotion goals, with target dates, for addressing the discrepancy.

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