Key Business Concepts: From Intermediaries to Multinational Firms
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1- Intermediaries: Buy products from manufacturers and resell them to consumers.
Revenue: Money a business makes from selling its goods.
Profit: A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
Top line (Sales Revenue): Prices go up. Bottom line: Expenses and Profit.
Stakeholders: Groups of people who are affected by the policies and decisions made by an organization.
Micro: Decisions made by individuals and businesses. Macro: National economy and global economy.
GDP: Total dollar value of all goods and services produced by all people.
CPI: Measures the changes in prices of a fixed basket of goods purchased by a consumer.
Fiscal policy: Government influence on the amount of savings and expenditures (tax rates, money).
Oligopoly: Only a few sellers.
Monopoly: Only one seller, keeping other firms from entering the industry.
Business Ethics and Social Responsibility
2- Ethics: Study of right and wrong and choices individuals make.
Ethical issues: Safe, reliable, and reasonably priced products.
Social responsibility: Business activities have an impact on society, decision-making.
Philanthropic: Good corporate citizen.
Ethical: Obligation to do what is right.
Legal: Obey the law, right and wrong.
Economic: Profitable.
Socioeconomic model: Impact of its decisions on society.
Affinity, authenticity: Connection between two people.
Competence: Skills, results, and capabilities.
Character: Over and over again, reliable, honest, genuine, integrity = credibility.
International Business
3- International business: Changes across national boundaries.
Absolute advantage: Produce a specific product more efficiently than any other nation.
Comparative advantage: Produce a specific product more efficiently than any other product.
Balance of trade: Total value of a nation's exports minus the total value of its imports over some period of time.
Trade deficit: Negative, bringing in more than sending out.
Trade restrictions: Imports from other nations.
Tariff (tax): Put on a specific import (import duty).
Non-tariff barriers: Non-tax actions by a government to favor domestic over foreign suppliers.
Revenue tariff: Create income for the government.
Protective tariff: Protects domestic production from competition by making the price of imports higher than at home.
Quotas: Non-tariff barrier that limits the amount of a specific product that can be imported during a given time.
Indirect exporting: Selling to or through an intermediary, distribution, and sale.
Direct exporting: Selling directly.
Licensing: Agreement where one firm permits another firm to produce and market its products.
Joint venture: A specific goal or to operate for a specific time.
Owned facilities: Production and marketing facilities in one or more countries. Two forms:
- New facilities in a foreign country.
- Purchase of an existing firm in a foreign country.
Disadvantages: Losses are your own.
Advantages: Complete control.
Multinational firm: Company that produces and sells products or services in multiple countries.
Business Structures and Mergers
4- Sole proprietorship: A business owned and operated by one person (e.g., Walmart).
Advantages: Own boss, all profits.
Disadvantages: Unlimited liability, the owner is responsible.
Corporation: A legal person, an artificial person made by law.
Stock: The shares of ownership of a corporation.
Stockholder: A person who owns a corporation's stock.
Stockholders - Direction - Officers - Employees
Different levels of the supply chain: Vertical merger
Unrelated industries: Conglomerate merger