Chapter One Review

  1. Distinguish between business and not-for-profit organizations.
    Business consists of all profit seeking activities that provide goods and services necessary to an economic system. Not-for-profit organizations are business-like establishments whose primary objectives involve social, political, governmental, educational, or similar functions - instead of profit.
  2. What activity lies at the heart of every buiness endeavor?
    At the heart of every business endeavor is an exchange between a buyer and a seller
  3. What are the primary objectives of a not-for-profit organization?
    Not-for-profit organizations place public service above profits, although they need to raise money in order to operate and achieve their social goals.
  4. Identify and describe the factors of production
    The factors of production consist of four basic inputs: Natural resources, capital, human resources, entrepreneurship.

    Natural Resources include allproductive inputs that are useful in their natural states.

    Capital includes technology, tools, information, and physical facilities.

    Human Resources include anyone who works for the firm or themselves.

    Entrepreneurship is the willingness to take risks to create and operate a business.
  5. Identify the four basic inputs to an economic system
    Natural resources, capital, human resources, entrepreneurship
  6. List four types of capital
    Technology, tools, information, and physical facilities
  7. Describe the private enterprise system, include the basic rights and entrepreneurship
    Private enterprise system is an economic system that rewards firms for their ab ility to perceive and serve the needs and demands of consumers. Competition in the private enterprise system ensures success for firms that satisfy consumer dmands. Citizens in a private enterprise system enjoy the rights to private property, profits, freedom of choice and competition. Entrepreneurship drives economic growth.
  8. What is an alternative term for private enterprise system?
  9. What are the four most basic freedoms under the private enterprise system
    Right to property, profit, freedom of choice and competition.
  10. What is the -most- basic freedom under the private enterprise system?
    Right to private property
  11. What is an entrepreneur?
    A risk taker who is willing to start, own, and operate a business.
  12. Identify the 6 eras of business and explain how the relationship era - including alliances and technology - influence contemporary business.
    • Colonial period
    • Industrial Revolution
    • Industrial Entrepreneurs
    • Production Era
    • Marketing Era
    • Relationship Era

    Colonial Era - Businesses were small and rural, emphasizing agricultural production.

    Industrial Revolution - Brought factories and mass production to business

    Industrial Entrepreneurs - Built on the Industrial Revolution through expansion in size and number of firms

    Production Era - Focused on the growth of factory operations through assembly lines and other efficient internal processes.

    Marketing Era - During and following the Great Depression, businesses concentrated on finding markets through advertising and selling

    Relationship Era - The focus in on developing and sustaining long term relationships with customers and other businessess.

    Technology promotes innovation and comunication while alliances create a competitive advantage through partnerships.
  13. What was the Industrial Revolution?
    Began around 1750 in England and moved emphasis from independent, skilled workers to a factory system that mass produced.
  14. During which era was the idea of branding developed?
    Marketing Era
  15. What is the difference between transaction management and relationship management?
    Transaction management is an approach that focuses on building, promoting, and selling enough products to cover costs and earn profits.

    Relationship management is the collection of activities that build and maintain ongoing ties with customers and other parties.
  16. Explain how today's business workforce is changing
    Changing in several significant ways:

    • 1) It's aging
    • 2) Labor pool is shrinking
    • 3) Becoming increasingly diverse
  17. How does the aging workforce affect business?
    This requires businessess to hire workers at both extreme ends of the working -age spectrum.
  18. How can businesses benefit from a diverse workforce?
    It can enrich a company's chances of success because diverse groups tend to perform taks more effectively and develop better solutions and foster greater innovation.
  19. Describe how the nature of work itself is changing.
    It has shifted toward services and a focus on information. More firms now rely on outsourcing, offshoring, and nearshoring to produce goods or fulfill services and functions that were previously handled in-house or in-country. Also, new employer-employee relationships are being forged.
  20. Define Outsourcing, Offshoring, and nearshoring.
    Outsourcing: Involves using outside vendors to produce goods and service that were once handled in-house/in-country.

    Offshoring: Is relocation of business processes to lower cost locations overseas.

    Nearshoring: Outsourcing of production or services to locations near a firm's home base.
  21. Describe the new employer-employee partnership
    Encourages creative thinking, problem solving and innovation. Managers are trained to listen to and respect employees. Companies also now routinely share financial data and reward employees with certain financial benefits.
  22. Identify the skills and attributes the managers need to lead business in the 21st Century.
    Managers need vision, the ability to perceive marketplace needs and how their firm can satisfy them.

    Critical thinking skills and creativity allow managers to pinpoint problems and opportunities and plan novel solutions.

    Finally managers are dealing with rapid change and need skills to help steer their organization through shifts in external and internal conditions.
  23. Why is vision an important mangerial quality?
    It allows a firm to innocate and adapt to meet changes in the market place
  24. What is the difference between critical thinking and creativity?
    Critical thinking is the ability to analyze and assess information to pinpoint problems or opportunities.

    Creativity is the capacity to develop novel solutions to perceived organizational problems.
  25. Outline the characteristics that make a company admired by the business community.
    A company is usually admired for solid profits, stable growth, a safe and challenging working environment, high quality goods and services and business ethics and social responsibility.
  26. Define Business Ethics and Social Responsibility.
    Business Ethics: Standards of conduct and moral values involving decisions made in the work environment

    Social responsibility: A management philosphy that includes contributing resources to the community, preserving the natural environment, and developing or participating in the nonprofit programs designed to promote the well-being of the genral pubic.
  27. Identify 3 criteria used to judge whether a company might be considered admirable.
    Criteria include solid profits, stable growth, a safe and challenging work environment, high quality goods and services, and business ethics and social responsibility.
  28. Why is business so important to a country's economy?
    It provides the means through which it's citizens' lives improve.
Card Set
Chapter One Review
A review of Chapter One of Contemporary Business used by Penn Foster College