Chapter 1
Factors, such as technological or legal conditions, that prevent new firms from competing equally with an existing firm.
What are barriers to entry?
A set of guidelines prepared by a firm to provide its employees with the knowledge of what the firm expects in terms of their responsibilities and behavior toward fellow employees, customers, and suppliers.
What is code of ethics?
The situation when a country can produce and sell a product at a lower cost than any other country or when it is the only country that can provide the product.
What is absolute advantage?
A merger of companies in unrelated businesses; done to reduce risk.
What is a conglomerate merger?
A form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period.
What is debt?
An index of the prices of a “market basket” of goods and services purchased by typical urban consumers.
What is the Consumer Price Index (CPI)?
The practice of limiting investments to securities of companies that behave in accordance with the investor’s beliefs about ethical and social responsibility to encourage businesses to be more socially responsible.
What is social investing?
A summary of a country’s international financial transactions showing the difference between the country’s total payments to and its total receipts from other countries.
What is balance of payments?
A group of people elected by the stockholders to handle the overall management of a corporation, such as setting major corporate goals and policies, hiring corporate officers, and overseeing the firm’s operations and finances.
What is the board of directors?
Individual investors or groups of experienced investors who provide financing for start-up businesses by investing their own funds.
What are angel investors?
An economic system characterized by government ownership of virtually all resources, government control of all markets, and economic decision-making by central government planning.
What is communism?
A philosophy that focuses on the consequences of an action to determine whether it is right or wrong; holds that an action that affects the majority adversely is morally wrong.
What is utilitarianism?
A lowering of the value of a nation’s currency relative to other currencies.
What is devaluation?
The purchase of a target company by another corporation or by an investor group typically negotiated with the target company board of directors.
What is acquisition?
Entrepreneurs who apply their creativity, vision, and risk-taking within a large corporation, rather than starting a company of their own.
What is an intrapreneurs?
The use of monetary policy by the Fed to increase, or loosen, the growth of the money supply.
What is expansionary policy?
Individuals or groups to whom a business has a responsibility; include employees, customers, the general public, and investors.
What are stakeholders?
The practice of charging a lower price for a product in foreign markets than in the firm’s home market.
What is dumping?
In a franchising arrangement, the company that supplies the product or service concept to the franchisee.
What is a franchisor?
A government agency that speaks on behalf of small business; specifically it helps people start and manage small businesses, advises them in the areas of finance and management, and helps them win federal contracts.
What is the Small Business Association (SBA)?
A market structure in which a few firms produce most or all of the output and in which large capital requirements or other factors limit the number of firms.
What is oligopoly?
The concern of businesses for the welfare of society as a whole; consists of obligations beyond those required by law or contracts.
What is corporate social responsibility?
Laws that require a company earning foreign exchange (foreign currency) from its exports to sell the foreign exchange to a control agency, such as a central bank.
What are exchange controls?
A merger of companies at the same stage in the same industry; done to reduce costs, expand product offerings, or reduce competition.
What is a horizontal merger?
Financing obtained from venture capitalists, investment firms that specialize in financing small, high-growth companies and receive an ownership interest and a voice in management in return for their money.
What is venture capital?