Business Chapter 1

  1. What is the relationship of
    businesses' profit to risk assumption?
    • - Profit is money a business earns above and beyond the money that it spends for salaries and other expenses.
    • - Businesspeople make profits by taking risks.
    • - Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable.
    • - A loss occurs when a business's costs and expenses are higher than its revenues.
  2. Who are stakeholders, and which
    stakeholders are most important to a business?
    Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, the media, people in the local community, environmentalists, and elected government leaders.

    The goal of business leaders is to try to recognize and respond to the needs of these stakeholders and still make a profit.
  3. What are the advantages and disadvantages of entrepreneurship?
    - Working for others means getting benefits like paid vacations and health insurance.

    • - Entrepreneurs take more risks and lose those
    • benefits. They gain the freedom to make their own decisions, more opportunity, and possible wealth.
  4. What are the five factors of production?
    - The five factors of production are land, labor, capital, entrepreneurship, and knowledge.

    • - Of these, the most important
    • are entrepreneurship and knowledge.

    • - Entrepreneurs are people who risk time and
    • money to start and manage a business.

    - What makes rich countries rich today is a combination of entrepreneurship and the effective use of knowledge.
  5. What can governments in developing
    countries do to reduce the risk of starting businesses and thus help
    The government may allow private ownership of businesses, pass laws that enable businesspeople to write contracts that are enforceable in court, establish a currency that's tradable in world markets, help to lessen corruption in business and government, and keep taxes and regulations to a minimum.

    • From a business perspective, lower taxes mean lower
    • risks, more growth, and thus more money for workers and the government.
  6. How has technology benefited workers, businesses, and consumers?
    • Technology enables workers to be more effective, efficient, and productive.
    • Effectiveness means doing the right thing in the right way. 
    • Efficiency means producing items using the least amount of resources.

    • Productivity is the amount of output you generate given
    • the amount of input (e.g., hours worked).
  7. What are some ways in which
    businesses meet and beat competition?
    • Some companies have found a competitive edge by focusing on making high-quality products, all the way to zero defects.
    • Companies also aim to exceed customer expectations. Often that means empowering frontline workers by giving them more training and more responsibility and authority.
  8. How have social changes affected
    Diversity efforts now include seniors, disabled people, homosexuals, atheists, extroverts, introverts, married people, singles, and the devout.

    It also means dealing sensitively with workers and cultures around the world. Providing Social Security benefits to senior citizens in the future will draw huge amounts of money from the working population. That is why there is so much discussion about Social Security in the media today.
  9. Which countries are creating the
    greatest challenges?
    • China
    • India
  10. What will be the impacts of future
    wars and terrorism?
    • Some businesses, such as those in the defense industry, may prosper. Others, such as tourism, may suffer.
    • One way to minimize world tensions is to help less developed countries to become more prosperous.
  11. What is the history of our economic
    development in the United States, and what does it tell us about the future?
    Agricultural workers displaced by improved farm technology went to work in factories.

    Improved manufacturing productivity and increased competition from foreign firms contributed to the development of a service economy in the United States.

    The service era is now giving way to an information-based global revolution that will affect all sectors of the economy.

    The secret to long-term success in such an economy is flexibility and continuing education to be prepared for the opportunities that are sure to arise.
Card Set
Business Chapter 1
from review made by Elizabeth Slenker!!!!!