LHR 427 Exam 1 2025

Demand - -how many products are consumers willing to purchase at different prices at a specific time? Supply - -how many products are businesses willing to sell at different prices at a specific time? 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 beyond what it spends for salaries and other expenses. Loss - -when a business's expenses are more than its revenues. For-profit organizations - -¤aim at maximization of profits for their shareholders Nonprofit organizations - -¤have a social mission ¤do not aim at creating profit for their owners ¤typically receive governmental funds, donations, and grants Social enterprises - -¤have a dual mission: social and commercial ¤profits generated are used to support their social mission ¤e.g., toms shoes How do we identify the equilibrium price and the equilibrium quantity? - -the price at which: number of products businesses are willing to supply = the number of products consumers are willing to purchase at a specific time What is required to make profit? - -adapting to change Acting ethically Abiding by the law Marketing expertise Management skills Financial resources Who is an entrepreneur? - -someone who assumes the risk of starting a business What is the risk associated with entrepreneurship? - -the chance an entrepreneur takes of losing time and money on a business that may not prove profitable. What are some advantages of being an entrepreneur? - -¤freedom to succeed LHR 427 LHR 427 ¤make your own decisions ¤possible wealth ¤sense of self-actualization What are some disadvantages of being an entrepreneur? - -¤freedom to fail ¤no paid vacations ¤no health insurance ¤responsible for others' welfare ¤ego depletion ¤personal sacrifices 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 political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other goods and services provide. Stakeholders - -¤all the people or, in general, entities who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address. Shareholders - -¤all the people or, in general, entities who own a part pf a publicly traded firm via a share or stock. Who are some of the core stakeholders in a typical u.s. Business? - -stockholders Customers Surrounding community Environmentalists Dealers Employees Government leaders Suppliers Media Bankers What is outsourcing? - -¤contracting with other companies (often in other countries) to do some of the functions of a firm, like production or accounting. Advantages of outsourcing - -access talent Reduce operating costs Focusing on core business/freeing up talent Disadvantages of outsourcing - -disadvantages Reduced control over quality of work or even the working conditions Substandard work à more expensive to fix LHR 427 LHR 427 Disconnect among employees/department Lack of coherent culture What are the five elements of the business environment? - -economic and legal Technological Competitive Social Global Economic and legal - -freedom of ownership, contract laws, elimination of corruption, tradable currency, minimum taxes and regulation Technological - -¨information technology ¤assists in decision making ¨databases ¤storing information ¤the issue of big data ¨bar codes ¤easier tracking of products and their information ¨internet ¤communication and collaboration ¤virtual teams and telecommuting ¤e-commerce - buying and selling over the internet (b2b and b2c) Social - -¨diversity ¤recruitment, selection, management, adjusting practices and policies ¨demographic changes ¤e.g., aging population à why is this important? Aging workforce (different needs) Consumers Pensions ¨family structure changes ¤e.g., increase in the number of single-parent families and dual-earning families Competitive - -¨customer service ¨stakeholder recognition ¤ensuring that stakeholders are satisfied (at least to some extent) ¨employee service ¤empowering employees ¨concern for the environment Global environment - -¨globalization ¨wars and terrorism ¤changing workforce ¤allocation of taxes ¤changes in global competition (global customer market shares) LHR 427 LHR 427 ¨ecological environment ¤climate change ¤greening à saving energy and more environmental-friendly production and products What are the 3 important issues economic systems address? - - goods and services, and how much of each, will satisfy consumers' needs? will goods and services be produced, who will produce them, and with what resources will they be produced? are the goods and services to be distributed to consumers? Capitalism - -¤an economic system in which individuals own and operate the majority of businesses that provide goods and services ¤pure capitalism or free-market system happens when all economic decisions are made without government intervention; also called laissez-faire capitalism ¤modified capitalism differs from pure capitalism in that the government intervenes and regulates business to some extent Communism - -¤first described by karl marx as a society in which the people, without regard to class, own all the nation's resources Socialism - -¤an economic system in which the government owns and operates basic industries, but individuals own most businesses How can the government promote entrepreneurship? - -¨allowing private ownership of businesses ¨keeping taxes and regulations to a minimum ¨having contract laws- having enforceable contracts ¤regulating contracts and warranties ¤what about non-compete agreements? ¨tradable currency ¤ability to sell/purchase internationally ¨minimizing corruption ¤why? Pure competition - -¤the market structure that exists when there are many small businesses selling one standardized product Monopolistic competition - -¤fewer businesses than in a pure competition environment and the differences among the goods they sell are sm