1.1 Intro to Business
1.2 Business Entities
1.2 Business Entities
A hair salon that cuts and dyes hair would be considered which sector of the economy?
Tertiary
What does CSR stand for and how do you define it?
Corporate social responsibility
The consideration of ethical and environmental practices
Who are the main internal stakeholders of a company?
Employees, managers, shareholders (owners)
what is the term for when a business is able to benefit from lower average costs by increasing the size of its operations?
Economies of Scale
True or False, large multinational companies can account for a significant number of job opportunities in the host country
True
This person is an inactive owner who does not get involved in the daily running and management of the organization
Silent or sleeping partner
What is the main difference between a mission statement and a vision statement
Vision statement is looking in the distant future while mission statement defines the purpose and everyday declaration of the organization
What is the primary interest of shareholders?
Maximizing profits and receiving dividends
Name two types of internal economies of scale
technical, financial, managerial specialization, marketing, purchasing, risk-bearing
What do you call the nation that allows a multinational company to set up in its country?
Host Country
What is the main difference between privately held companies and publicly held companies?
Privately held company shares cannot be traded on the public stock exchange.
Higher costs that may reduce short-term profit
What external stakeholders is typically interested in a business following legal and regulatory standards?
The government
Name one reason a business might choose to stay small
cost control - diseconomies of scale in communication / coordination as firm grows
dilution of ownership and control from original owners
Personalized services
Flexibility - more adaptive to change
smaller local market size - local area operation small business support
Name one benefit that multinational companies can have on their host country
job creation
higher national income (GDP)
knowledge and tech transfer
increased competition
What term describes: If the sole proprietorship fails, the sole trader is held responsible for all these debts of the business.
Unlimited liability
Name one of the 4 common business objectives
Growth
Profit
Protecting shareholder value
Ethical Objectives
Name two possible external stakeholders
customers
suppliers
banks/lenders
government
pressure groups
local community
Alaska Airlines purchased a controlling interest in Hawaiian Airlines with permission and agreement from its board of directors this is an example of which external growth method
Acquisition
What is one negative impact of MNCs on host countries?
Job losses
Repatriation of profits
vulnerability
social responsibilities
competitive pressures
Name 3 challenges for starting a business
Lack of finance
Cash flow problems
Unestablished customer base
Marketing problems
Management problems
What is the difference between strategic and tactical objectives?
Strategic objectives are longer-term goals for the whole business
Tactical objectives are shorter-term goals for a specific department
Give an example of possible conflict between different stakeholder interests
employees wages vs shareholder dividends
customers wanting lower prices vs company managers concerned with profit margin
local community vs business/owners
managers/owners vs employees
What is the term for two or more businesses cooperate in a business venture for mutual benefit
Strategic Alliance
name 2 reasons a company may strive to become a multinational company
increased customer base
cheaper production costs
economies of scale
brand development
avoid protectionist policies
spread risks