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BUS 102, Test 1 study guide, chs 1-5

by: Ashley Notetaker

BUS 102, Test 1 study guide, chs 1-5 BUS 102

Marketplace > University of Alabama at Birmingham > Business > BUS 102 > BUS 102 Test 1 study guide chs 1 5
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About this Document

This study guide was made from the outline that Professor Turnbull emailed us. I filled in the definitions and answered all of the questions.
Business Foundation
Elizabeth J Turnbull
Study Guide
Business Foundations
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This 7 page Study Guide was uploaded by Ashley Notetaker on Thursday February 18, 2016. The Study Guide belongs to BUS 102 at University of Alabama at Birmingham taught by Elizabeth J Turnbull in Spring 2016. Since its upload, it has received 75 views. For similar materials see Business Foundation in Business at University of Alabama at Birmingham.

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Date Created: 02/18/16
TEST 1 REVIEW SHEET The test will consist of 50 multiple choice questions from Chapters 1-5. Please come to class with a pencil and I will provide the Scantron. If you have any questions please do not hesitate to ask. Chapter 1 Value: the relationship between the price of a with the fundamental goal of contributing to the good or service and the benefits it offers to community rather than generating financial gain customers Factors of Production: four fundamental Business: any organization or activity that elements- natural resources, capital, human provides goods and services in an effort to earn resources, and entrepreneurship- that a profit businesses need to achieve their objectives Profit: the money that a business earns in sales Business Environment: the setting in which (for revenue) minus expenses and the cost of business operations. 5 key components are: salaries economic, competitive, technological, social, Loss: when a business incurs expenses that are and global environments greater than its revenues Business Technology: any tools- especially Entrepreneurs: people who risk their time, computers, telecommunications, and other money, and other resources to start and digital products- that businesses can use to manage a business becomes more efficient and effective Standard of Living: the quality and quantity of E-commerce: business transactions conducted goods and services available to a population online, typically via the Internet Quality of Life: the overall sense of well being Demographics: the measurable characteristics experienced by either an individual or a group of a population including population size and Non-profits: business-like establishments that density, as well as specific traits such as age, employ people and produce goods and services gender, and race What is the role of business in the economy? Business drives up the standard of living for all people, contributing to a higher quality of life. Businesses provide products and services and also jobs that people need. It raises the standard of living through taxes as well as the innovative contributions. How has business evolved? Business can be divided into 5 distinct eras: the industrial revolution (rapid industrialization and mass production), the entrepreneurship era (business empires, enormous wealth created), the production era (assembly line, focus on efficiency), the marketing era (brands, power shifts to consumers), and the relationship era (technology is key, long-term relationship with customers is desire) What is the role of nonprofits in the economy? Nonprofits focus on areas such as health, human services, education, art, religion, and culture. The main goal of nonprofits is to do good for people. What are the core factors of production? The core factors of production are 1) natural resources, which offer value in their natural state 2) capital, which is synthetic resources 3) human resources (physical, intellectual, and creative contributions) and 4) entrepreneurship, which is when people take risk and launch their own business What are the elements of the environment affecting business? The elements that effect business are the economic, the competitive, the technological, the social, and the global environments. The economic environment has to do with the government and the laws that they create to help regulate business. The competitive environment’s goal is to develop long-term, mutually beneficial relationships with customers and create unsurpassed value. The technological environment makes it crucial for businesses to stay technologically updated. The social environment includes values, customs, attitudes, beliefs, and demographics. Finally, the global environment has changed in recent years due to technology and free trade. How are business trends impacting careers? Business trends are impacting careers because people must stay technologically advanced in order to keep up. Nowadays, creativity, communication, and caring are all important traits. Chapter 2 Economy: a financial and social system of howDemand: the quantity of products that resources flow through society, from production,consumers are willing to buy at different market to distribution, to consumption prices Economics: the study of choices that people,Socialism: an economic system based on the companies, and governments make in allocatingprinciple that the government should own and society’s recourses operate key enterprises that directly affect Macroeconomics: the study of a country’spublic welfare overall economic dynamics, such as theCommunism: an economic and political system employment rate, the gross domestic product,that calls for public ownership of virtually all and taxation policies enterprises, under the direction of a strong Microeconomics: the study of smaller economiccentral government units such as individual consumers, families, &Mixed Economies: economies that embody individuals elements of both planned and market-based Economic System: a structure for allocatingeconomic systems limited resources Consumer Price Index (CPI): a measure of Capitalism: an economic system- also known asinflation that evaluates the change in the the private enterprise or free market- based onweighted-average price of goods and services private ownership, economic freedom, and fairthat the average consumer buys each month competition Producer Price Index (PPI): a measure of inflation Supply: the quantity of products that producersthat evaluates the change over time in the are willing to offer for sale at different marketweighted-average wholesale prices prices What is economics? Economics is the study of the choices that people, companies, and governments make in allocating society’s resources. The field of economics falls into the two categories of microeconomics and macroeconomics. Both of these categories play a role in the global economic crisis. What is the free market system and the supply and demand relationship? An economic system is a structure for allocating limited resources. The economic system of the U.S. is the free market system, also known as capitalism. It is based on private ownership, economic freedom, and fair competition. A key component of the free market system is the importance of individuals, innovation, and hard work. The relationship between supply and price is a direct relationship, while the relationship between demand and price is inverse. What tools are used to evaluate economic performance? The tools used to evaluate economic performance are gross domestic product, employment level, the business cycle, inflation rate, and productivity. Gross domestic product (GDP) is the total value of all final goods and services produced within a nation’s physical boundaries over a given period of time. GDP is a vital measure of economic health. The employment level is key because when people have jobs, they have money, which allows them to spend and invest, which fuels economic growth. The unemployment rate is the percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment. The business cycle is the periodic contraction and expansion that occur over time in virtually every economy. The two key phases of the business cycle are contraction and expansion, but the cycle is not predictable. Inflation is a period of rising average prices across the economy. A low level of inflation isn’t all that bad because it means the economy is healthy. Productivity refers to the relationship between the goods and services that an economy produces and the resources needed to produce them. Chapter 3 Balance of Trade: a basic measure of theStrategic Alliance: an agreement between two difference in value between a nation’s exportsor more firms to jointly pursue a specific and imports, including both goods and services opportunity without actually merging their Trade Surplus: overage that occurs when thebusinesses total value of a nation’s exports is higher thanSociocultural Differences: differences among the total value of its imports cultures in language, attitudes, and values Trade Deficit: shortfall that occurs when theInfrastructure: a country’s physical facilities that total value of a nation’s imports is higher thansupport economic activity the total value of its exports Protectionism: national policies designed to Balance of Payments: a measure of the totalrestrict international trade, usually with the goal flow of money into or out of a country of protecting domestic business Exchange rates: a measurement of the value ofTariffs: taxes levies against imports one nation’s currency relative to the currency ofQuotas: limitations on the amount of specific other nations products that may be imported from certain Countertrade: international trade that involvescountries during a given time period the barter of products for products rather thanEmbargo: a complete ban on international trade for currency of a certain item, or a total halt in trade with a Foreign Outsourcing: contracting with foreignparticular nation suppliers to produce products, usually at aFree Trade: the unrestricted movement of goods fraction of the cost of domestic production and services across international borders Importing: buying products domestically thatGeneral Agreement on Tariffs and Trade (GATT): have been produced or grown in foreign nations an international trade treaty designed to Exporting: selling products in foreign nationsencourage worldwide trade among its members that have been produced or grown domestically World Trade Organization (WTO): a permanent Foreign Licensing: authority granted by aglobal institution to promote international trade domestic firm to a foreign firm for the rights toand to settle international trade disputes produce and market its product or to use itsWorld Bank: an international cooperative of 188 trademark/patent rights in a definedmember countries working together to reduce geographical area poverty in the developing world Foreign Franchising: a specialized type of foreignInternational Monetary Fund (IMF): an licensing in which a firm expands by offeringinternational organization of 188 member businesses in other countries the right tonations that promotes international economic produce and market its products according tocooperation and stable growth specific operating requirements North American Free Trade Agreement (NAFTA): Direct investment: when firms either acquirethe treaty among the United States, Mexico and foreign firms or develop new facilities from theCanada that eliminate trade barriers and ground up in foreign countries investment restrictions over a fifteen-year Joint Ventures: when two or more companiesperiod join forces- sharing resources, risks, and profits,European Union (EU) but not actually merging companies- to pursue: The world’s largest common market, composed specific opportunities of 28 European nations Partnership: a voluntary agreement under which two or more people act as co-owners of a business for profit Why do nations trade? There are three main benefits to international trade: access to factors of production, reduced risk, and an inflow of new ideas. Having access to factors of production in different countries means that individual firms can capitalize on those factors that aren’t available to them at the right time or right price. Global trade reduces dependence on one economy, which means that there is less economic risk for multinational firms. Inflow of innovation is good because it allows companies many sources for new ideas. These three reasons combine to make international trade advantageous. How do we measure trade? Trade is measure by balance of trade, balance of payments, exchange rates, and countertrade. All of these are defined in the above definitions. How do companies reach global markets? One way for companies to reach global markets is by foreign outsourcing and importing. Foreign outsourcing lowers the costs of production, but it also involves risk from quality control and social responsibility. Importing doesn’t carry the brand name of the supplier, but it involves less risk. Exporting is another way to reach global markets. Exporting is the most basic level of international market development, and it provides a good opportunity for smaller companies. Foreign licensing and foreign franchising are also ways in which companies seek global markets. Foreign licensing allows firms to expand into foreign markets with little investment, but maintaining control of licenses can be difficult. The key difference between franchising and licensing is that franchisees assume the identity of the franchise rather than just carry their products. The last element for reaching global markets is direct investment. Direct investment includes joint ventures, partnerships, and strategic alliances. What are the barriers to international trade? Most barriers of international trade fall into the following categories: sociocultural differences, economic differences, and legal/political differences. A lot of the time, the countries with the highest barriers have the least amount of competition. Sociocultural differences include differences of language, attitudes, and values. Understanding and responding to these differences are vital for a company. It’s important for a company to understand the local economic conditions of the area in which they want to trade. Key factors include population, per capita incomes, economic growth rate, and stage of economic development. Infrastructure is also important for a company to be aware of. Lastly, political and legal differences have to do with the laws and regulations of an area. International businesses must comply with international legal standards, the laws of their own countries, and the laws of the foreign country, which is a challenge for companies because of small changes to the law that are not made public. Bribery and corruption are also major issues that are often accepted as standard. The political climate of a country and international trade restrictions must be studied by businesses. What are the benefits and criticisms of the free trade movement? Regional trading blocks, common markets, and international trade agreements have moved the economy much closer to the goal of complete free trade in the past years. The WTO works to control piracy of intellectual property for developing countries, which is important for free trade. The World Bank works to reduce poverty all over the world and influences the economy by providing financial and technological advice to developing countries. Trading blocs and common markets work to further allow the free flow of goods among certain nations. Advocates for less- developed nations are concerned that free trade clears the path for major multinational corporations to push local businesses into economic failure. Another worry is that free trade encourages developing countries to fight against the laws set in place to protect their environment and working rights because they don’t want to lose the low-cost advantage that they have on the market. Chapter 4 Ethics: a set of beliefs about right and wrong, Whistle Blowers: employees who report their good and bad employer’s illegal or unethical behavior to either Universal Ethical Standards: ethical norms that the authorities or the media apply to all people across a broad spectrum of Social Responsibility: the obligation of a situations business to contribute to a society Business Ethics: the application of right and Stakeholders: any groups that have a stake- or a wrong, good and bad, in a business setting personal interest- in the performance and Ethical Dilemma: a decision that involves a actions of an organization conflict of values; every potential course of Consumerism: a social movement that focuses action has some significant negative on 4 key consumer rights: 1) the right to be safe consequences 2) the right to be informed 3) the right to choose Code of Ethics: a formal, written document that 4) the right to be heard defines the ethical standards of organization Corporate Philanthropy: all business donations and gives employees the information they need to nonprofit groups, including money, products, to make ethical decisions across a range of and employee time situations Cause Related Marketing: marketing Sustainable Development: doing business to partnerships between businesses and nonprofit meet the needs of current generation, without organizations, designed to spike sales for the harming the ability of future generations to company and raise money for the nonprofit meet their needs Corporate Responsibility: business contributions Social Audit: a systematic evaluation of how well to the community through the actions of a firm is meeting its ethics and social business itself rather than donations of money responsibility goals and time What is ethics? What are the universal ethics standards? Ethics is a set of beliefs about right and wrong, good and bad. It’s hard to specify ethics for the U.S. because of the large diversity of people in the country. The problem is amplified when considering the economy on a global standard. It’s helpful to look at a country’s legal system to learn more about their ethical standards. Universal ethical standards apply to everyone across a broad spectrum of situations. Theses standards are trustworthiness, respect, responsibility, fairness, caring, and citizenship. How does ethics relate to the individual and the organization? On an individual level, one’s needs, family, culture, and religion all influence a person’s value system. Personality traits also play a significant role relating to a person’s ethics. An organization’s ethics can influence a person’s actions in a large way. Actions speak louder than words and they deeply affect an organization’s ethics. It is important to create and maintain a good ethical environment. What is social responsibility and how does it impact stakeholder groups? Social responsibility is the obligation of a business to contribute to society. Stakeholders are any groups that have a stake in the performance and actions of an organization. The goal for a business is to balance their needs and priorities as effectively as possible with an eye towards building their business over the long term. The core stakeholder groups for most businesses are employees, customers, investors, and the broader community. For employees, it’s important for an employer to meet legal standards, but also to create a safe and respectable work environment. A business’s responsibility to the customers is to deliver consumer value with quality products at fair prices. Honesty and communication are important to this. The primary responsibility of a business to investors is to make money, spend the money wisely, and create ongoing profit. This sometimes means to trade short-term profits for long-term success. The role of a business to the community is not only to create a better standard of living for everyone but also to contribute to society by philanthropy and responsibility (defined above). The responsibility to the environment is to protect it. What is the role of social responsibility in the global arena? The role of social responsibility in the global arena is to have good ethics. Bribery and corruption are big issues for companies involved in international business. Another issue in the global arena is a business’s responsibility to workers abroad. The most socially responsible companies establish codes of conduct for their vendors, setting clear policies for human rights, wages, safety, and environmental impact. How do companies evaluate their efforts to be socially responsible? Many firms are monitoring themselves by a process called a social audit (defined above). The starting point is setting goals and then determining how to measure the achievement of those goals, which can be tricky. Chapter 5 Communication: the transmission of information physical, language, body language, cultural, between sender and a recipient perceptual, and organizational barriers Noise: any interference that causes the Intercultural Communication: communication message you send to be different from the among people with differing cultural message your audience understands backgrounds Communication Barriers: obstacles to effective Nonverbal Communication: communication that communication, typically defined in terms of does not use words. Common forms of nonverbal communication include gestures, posture, facial expressions, tone of voice, and Active Voice: sentence construction in which the eye contact subject performs the action expressed by the Active Listening: attentive listening that occurs verb. The active voice works better for the vast when the listener focuses his or her complete majority of business communication attention on the speaker Passive Voice: sentence construction in which Communication Channels: the various ways in the subject does not do the action expressed by which a message can be sent, ranging from one-the verb; rather the subject is acted upon. The on-one in person meetings to Internet message passive voice tends to be less effective for boards business communication Bias: a preconception about members of a Dynamic Delivery: vibrant, compelling particular group. Common forms of a bias presentation delivery style that grabs and holds include gender, age, race, ethnicity, or the attention of the audience nationality bias Why is excellent business communication important? Effective communication only happens when a person transmits relevant meaning to their audience. Communication must be dynamic, fluid, and two-way. Excellent communicators are influential, well-liked, efficient, and effective. It boosts a person’s chance for success. What are the key elements of nonverbal communication? The key elements of nonverbal communication are eye contact, tone of voice, facial expressions, and gesture and posture. What are the different communication channels and what makes them effective? The first communication channel is memos/reports, which are effective when the content is uncontroversial, a large number of people need to be reached, and the information is lengthy or detailed. Emails are the next communication channel and are effective when the information is uncontroversial and a large number of people need to receive the same information. Texting is the next channel and these are also used when the info is uncontroversial. Another reason to use texting is when you want a quick response and you know the audience won’t be annoyed by it. Memos, emails, and texts all have low channel richness. Next is voice mail, which is to be used when the content is uncontroversial and when you don’t need a record of your message. This has low channel richness because the audience can hear you, but not see your body language. A telephone conversation is the next communication channel. This is effective when you need to deliver a message or get a response quickly, when the content is more personal or controversial, and when you need a spontaneous, dynamic dialogue with the recipient. Phone calls have moderate channel richness. Videoconferencing is the next channel, and it is effective when you need to reach multiple people with high priority information and when you need or want a spontaneous dialogue with an audience unavailable in person. In-person presentation is effective when you need to reach a large audience with an important message and when you need/want to experience their immediate response. Videoconferencing and in-person presentations have high levels of channel richness. The last channel of communication is a face-to-face meeting. This is effective when your message is personal, emotional, complex, or high priority and when you need/want instant feedback. Face-to-face meetings have the highest level of channel richness. How do you choose the right words for effective communication? Factors that play into choosing the right words for effective communication are analyzing your audience (expectations, education, and profession), being concise, avoiding slang, avoiding bias (gender, age, race, ethnicity, and nationality bias), and using the active voice whenever possible. How do you compose effective business memos, letters and emails? The first step in composing effective business memos, letters, and emails is to analyze the anticipated audience response. The next important elements are to strike the right tone, don’t make simple grammar mistakes, use block paragraphs, and use headings and bulleted lists wherever appropriate. How do you deliver successful verbal presentations? The first step in delivering successful verbal presentations is to have a good opening. Some suggestions for creating a good hook are to have an interesting or startling statistic, audience involvement, a compelling story or anecdote, a relevant simile or metaphor, and engaging questions. The next step in a presentation is the body. It’s important to not include too many key ideas. The ideal number of key points in the body of a presentation is three. The close of a presentation will summarize the key points and circle back to the introduction. If you want to receive questions, brainstorm ahead of time some possible questions and their answers. Visual aids and Google presentations are also helpful for presentations. Make sure to control your nerves, be able to handle hostility by staying calm, incorporate humor, and have good delivery by preparing before the presentation.


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