SWUFE-Understanding Business 9th Edition-Review for Mid-Term Chapter 1-5

free trade
The movement of goods and services among nations without political or economic barriers.
exporting
Selling products to another country.
devaluation
Lowering the value of a nation’s currency relative to other currencies.
trade deficit
An unfavorable balance of trade; occurs when the value of a country’s imports exceeds that of its exports.
trade surplus
A favorable balance of trade; occurs when the value of a country’s exports exceeds that of its imports.
licensing
A global strategy in which a firm (the licensor) allows a foreign company (the licensee) to produce its product in exchange for a fee (a royalty).
importing
Buying products from another country.
trade protectionism
The use of government regulations to limit the import of goods and services.
balance of trade
The total value of a nation’s exports compared to its imports over a particular period.
comparative advantage theory
Theory that states that a country should sell to other countries those products that it produces most effectively and efficiently, and buy from other countries those products that it cannot produce as effectively or efficiently.
strategic alliance
A long-term partnership between two or more companies established to help each company build competitive market advantages.
absolute advantage
The advantage that exists when a country has a monopoly on producing a specific product or is able to produce it more efficiently than all other countries.
tariff
A tax imposed on imports.
import quota
A limit on the number of products in certain categories that a nation can import.
countertrading
A complex form of bartering in which several countries may be involved, each trading goods for goods or services for services.
contract manufacturing
A foreign country’s production of private-label goods to which a domestic company then attaches its brand name or trademark; part of the broad category of outsourcing.
sovereign wealth funds (SWFs)
Investment funds controlled by governments holding large stakes in foreign companies.
embargo
A complete ban on the import or export of a certain product, or the stopping of all trade with a particular country.
World Trade Organization (WTO)
The international organization that replaced the General Agreement on Tariffs and Trade (GATT), and was assigned the duty to mediate trade disputes among nations.
common market
A regional group of countries that have a common external tariff, no internal tariffs, and a coordination of laws to facilitate exchange; also called a trading bloc. An example is the European Union.
Productivity
The amount of output you generate given the amount of input (ex: hours you work)
exchange rate
The value of one nation’s currency relative to the currencies of other countries.
Goods
Tangible products such as computers, food, clothing, cars, and appliances
Services
Intangible products (i.e., products that can’t be held in your hand) such as education, healthcare, insurance, recreation and travel and tourism.
joint venture
A partnership in which two or more companies (often from different countries) join to undertake a major project.
Entrepreneur
A person who risks time and money to start and manage a business
North American Free Trade Agreement (NAFTA)
Agreement that created a free-trade area among the United States, Canada, and Mexico.
Mixed Economies
Economic systems in which some allocation of resources is made by the market and some by the government
foreign direct investment (FDI)
The buying of permanent property and businesses in foreign nations.
Revenue
The total amount of money a business takes in during a given period by selling goods and services
Profit
The amount of money a business earns above and beyond what it spends for salaries and other expenses
Loss
When a business’s expenses are more than its revenues
Outsourcing
Contracting with other companies (often in other countries) to do some or all of the functions of a firm, like its production or accounting tasks.
Nonprofit Organization
An organization whose goals are for the betterment of the community, not financial gains.
dumping
Selling products in a foreign country at lower prices than those charged in the producing country.
Risk
The chance an entrepreneur takes of losing time and money on a business that may not prove profitable
Standard of Living
The amount of goods and services people can buy with the money they have.
Quality of life
The general well-being of a society in terms of its natural environment, education, healthcare, safety, amount of leisure and rewards that add to the satisfaction and joy that other goods and services provide.
Business
Any activity that seeks to provide goods and services to others while operating at a profit
Identity theft
The obtaining of individuals’ personal information, such as Social Security and credit card numbers, for illegal purposes
Partnership
A legal form of business with two or more owners.
Technology
Everything from phones and copiers to computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more effective, efficient, and productive.
Greening
The trend toward saving energy and producing products that cause less harm to the environment
Stakeholders
All the people who stand to gain or lose by the policies and activities of a business and whose concerns the business need to address
General Agreement on Tariffs and Trade (GATT)
A1948 agreement that established an international forum for negotiating mutual reductions in trade restrictions.
Resource Development
The study of how to increase resources and to create the conditions that will make better use of those resources.
Factors of production
The resources used to create wealth: land, labor, capital, entrepreneurship, and knowledge.
Perfect Competition
The degree of competition in which there are many sellers in a market and none is large enough to dictate the price of a product
Economics
The study of how society chooses to employ resources to produce goods and services and distribute them for consumption among various competing groups and individuals
Business Environment
The surrounding factors that either help of hinder the development of businesses.
E-Commerce
The buying and selling of goods on the internet
Supply
The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time
Cooperatives
Businesses owned and controlled by the people who use it – producers, consumers, or workers with similar needs who pool their resources for mutual gain.
Empowerment
Giving front-line workers the responsibility, authority, freedom, training, and equipment they need to respond quickly to customer requests
Demography
The statistical study of the human population with regard to its size, density and characteristics like age, race, gender and income.
Climate Change
The movement of the temperature of the planet up or down over time
Macroeconomics
The part of economics study that looks at the operation of a nation’s economy as a whole
Microeconomics
The part of economics study that looks at the behavior of people and organizations in particular markets
Invisible Hand Theory
A phrase coined by Adam Smith to describe the process that turns self-directed gain into social and economic benefits for all
Fiscal Policy
The federal government’s efforts to keep the economy stable by increasing or decreasing taxes or government spending
foreign subsidiary
A company owned in a foreign country by another company, called the parent company.
Market Price
The price determined by supply and demand
Monopolistic Competition
The degree of competition in which a large number of sellers produce very similar products that buyers nevertheless perceive as different
Database
An electronic storage file for information.
balance of payments
The difference between money coming into a country (from exports) and money leaving the country (for imports) plus money flows from other factors such as tourism, foreign aid, military expenditures, and foreign investment.
Oligopoly
A degree of competition in which just a few sellers dominate the market
Monopoly
A degree of competition in which only one seller controls the total supply of a product or service, and sets the price
Free-Market Economies
Economic system in which the market largely determines what goods and services get produced, who gets them, and how the economy grows
Inflation
A general rise in the prices of goods and services over time
Demand
The quantity of products that people are willing to buy at different prices at a specific time
Deflation
A situation in which prices are declining
Gross Domestic Product (GDP)
The total value of final goods and services produced in a country in a given year
Unemployment Rate
Number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks
Disinflation
A situation in which price increases are slowing (the inflation rate is declining)
Consumer Price Index (CPI)
Monthly statistics that measure the pace of inflation or deflation
Business Cycles
The periodic rises and falls that occur in economies over time
Recession
Two or more consecutive quarters of decline in the GDP
Limited Liability
The responsibility of a business’s owners for losses only up to the amount they invest; limited partners and shareholders have limited liability.
Command Economies
Economic system in which the government largely decides what goods and services will be produced, who will get them, and how the economy will grow
Corporation
A legal entity with authority to act and have liability apart from its owners.
Franchise Agreement
An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory.
Producer Price Index (PPI)
An index that measures prices at the wholesale level
National Debt
The sum of government deficits over time
Keynesian Economic Theory
The theory that a government policy of increasing spending and cutting taxes could stimulate the economy in a recession.
Master Limited Partnership (MLP)
A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.
Monetary Policy
The management of the money supply and interest rates by the Federal Reserve Bank
Sole Proprietorship
A business that is owned, and usually managed, by one person.
Franchise
The right to use a specific business’s name and sell its products or services in a given territory.
Depression
A severe recession, usually accompanied by deflation
multinational corporation
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management.
Stagflation
A situation when the economy is slowing but prices are going up anyhow
General Partner
An owner (partner) who has unlimited liability and is active in managing the firm.
S Corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorship and partnerships.
General Partnership
A partnership in which all owners share in operating the business and in assuming liability for the business’s debts.
Limited Liability Partnership (LLP)
A partnership that limits partners’ risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
Limited Partner
An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.
Limited Partnership
A partnership with one or more general partners and one or more limited partners.
Horizontal Merger
The joining of two firms in the same industry
Acquisition
One company’s purchase of the property and obligations of another company.
Franchisee
A person who buys a franchise.
Unlimited Liability
The responsibility of business owners for all of the debts of a business.
Conventional (C) Corporation
A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).
Franchisor
A company that develops a product concept and sells others the rights to make and sell the products.
Limited Liability Company (LLC)
A company similar to an S corporation but without the special eligibility requirements.
Merger
The result of two firms joining to form one company.
Vertical Merger
The joining of two companies involved in different stages of related business.
Conglomerate Merger
The joining of firms in completely unrelated industries.
Leveraged Buyout (LBO)
An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.