SOM 122 MIDTERM ACCURATE STUDY GUIDE
Business Profit - Answers - the money a business makes after paid expenses
External Environment (Global or Macro too) - Answers - Businesses must look at the
following: domestic business, technological, political-legal, sociocultural, and economic
environments
Domestic Business Environment - Answers - The environment of the country that the
business operates in
Global Business Environment - Answers - The international forces that affect a
business. i.e. international trade agreements and political unrest
Political-Legal Environment - Answers - the relationship between business and
government usually from government regulation of business
Economic Environment - Answers - Relevant conditions that exist in the economic
system in which a company operates
Sociocultural Environment - Answers - The customs, morals, values, and demographic
characteristics of the society in which the business operates
Technological Environment - Answers - All human knowledge, work methods, physical
equipment, and electronics that are used to perform business activities.
PEST Analysis - Answers - Analysis of an industries:
Politcal/Legal trends
Economic trends
Sociocultural trends
Technological trends
Outsourcing - Answers - Paying suppliers and distributors to perform certain business
processes or to provide needed materials, usually to go international
Offshoring - Answers - Outsourcing to foreign countries
Global Strategy - Answers - High efficient
low responsive/flex
Multidomesitc Strategy - Answers - high responsive/flex
low efficient
, Transnational Strategy - Answers - both high efficient
high responsive/flex
Exporting - Answers - Making products and shipping them abroad for sale
Licensing - Answers - A contract where one firm allows another to use its brand name,
operational procedures, or proprietary technology
*least risk
Strategic Alliances - Answers - A company finds a partner in the country they want to do
business in. They become partners
Acquisitions - Answers - a company buys most, if not all, of another firm's ownership
stakes to assume control of it. i.e. Amazon acquired Whole Foods
*Enable most rapid expansion, but costly
Foreign Direct Investment - Answers - buying tangible assets in another country i.e.
Coca-cola building plants in other countries
*most costly
*greatest control
Factors of Production - Answers - What every business needs for production:
Labor
Capital
Entrepreneurs
Physical Resources
Labor/Human Resources - Answers - The people that work for the business
Capital - Answers - Financial resources needed to operate a business
Entrepreneurs - Answers - The person who accepts the risks and opportunities in
creating and operating a new business
Physical Resources - Answers - raw materials and facilities that businesses need
Information Resources - Answers - Market forecasts, specialized knowledge of people,
and economic data that businesses use
Economic System - Answers - A nation's system for allocating its resources among its
citizens, both individuals and organizations
Planned Economy - Answers - All done by government, no incentive to be efficient
- Vietnam, North Korea, Cuba
Business Profit - Answers - the money a business makes after paid expenses
External Environment (Global or Macro too) - Answers - Businesses must look at the
following: domestic business, technological, political-legal, sociocultural, and economic
environments
Domestic Business Environment - Answers - The environment of the country that the
business operates in
Global Business Environment - Answers - The international forces that affect a
business. i.e. international trade agreements and political unrest
Political-Legal Environment - Answers - the relationship between business and
government usually from government regulation of business
Economic Environment - Answers - Relevant conditions that exist in the economic
system in which a company operates
Sociocultural Environment - Answers - The customs, morals, values, and demographic
characteristics of the society in which the business operates
Technological Environment - Answers - All human knowledge, work methods, physical
equipment, and electronics that are used to perform business activities.
PEST Analysis - Answers - Analysis of an industries:
Politcal/Legal trends
Economic trends
Sociocultural trends
Technological trends
Outsourcing - Answers - Paying suppliers and distributors to perform certain business
processes or to provide needed materials, usually to go international
Offshoring - Answers - Outsourcing to foreign countries
Global Strategy - Answers - High efficient
low responsive/flex
Multidomesitc Strategy - Answers - high responsive/flex
low efficient
, Transnational Strategy - Answers - both high efficient
high responsive/flex
Exporting - Answers - Making products and shipping them abroad for sale
Licensing - Answers - A contract where one firm allows another to use its brand name,
operational procedures, or proprietary technology
*least risk
Strategic Alliances - Answers - A company finds a partner in the country they want to do
business in. They become partners
Acquisitions - Answers - a company buys most, if not all, of another firm's ownership
stakes to assume control of it. i.e. Amazon acquired Whole Foods
*Enable most rapid expansion, but costly
Foreign Direct Investment - Answers - buying tangible assets in another country i.e.
Coca-cola building plants in other countries
*most costly
*greatest control
Factors of Production - Answers - What every business needs for production:
Labor
Capital
Entrepreneurs
Physical Resources
Labor/Human Resources - Answers - The people that work for the business
Capital - Answers - Financial resources needed to operate a business
Entrepreneurs - Answers - The person who accepts the risks and opportunities in
creating and operating a new business
Physical Resources - Answers - raw materials and facilities that businesses need
Information Resources - Answers - Market forecasts, specialized knowledge of people,
and economic data that businesses use
Economic System - Answers - A nation's system for allocating its resources among its
citizens, both individuals and organizations
Planned Economy - Answers - All done by government, no incentive to be efficient
- Vietnam, North Korea, Cuba
