Economic Systems and Business
The study of how a society uses scarce resources to produce and distribute goods and services.
Economics
A set of moral standards for judging whether something is right or wrong.
Ethics
Goods and services produced in one country and sold to other countries.
Exports
A business that is established, owned, operated, and often financed by one person.
Sole Proprietorship
People with vision, drive, and creativity who are willing to take the risk of starting and managing a business to make a profit, or greatly changing the scope and direction of an existing firm.
Entrepreneurs
The process of guiding and motivating others toward the achievement of organizational goals.
Leadership
The line of authority that extends from one level of an organization’s hierarchy to the next, from top to bottom, and makes clear who reports to whom.
Chain of Command
The process of hiring, developing, motivating, and evaluating employees to achieve organizational goals.
Human Resource (HR) Management
The money a company receives by providing services or selling goods to customers.
Revenue
What is considered fair according to the prevailing standards of society; an equitable distribution of the burdens and rewards that society has to offer.
Justice
The policy of permitting the people and businesses of a country to buy and sell where they please without restrictions.
Free Trade
An association of two or more individuals who agree to operate a business together for profit.
Partnership
Individual investors or groups of experienced investors who provide financing for start-up businesses by investing their own funds.
Angel Investors
The process of guiding the development, maintenance, and allocation of resources to attain organizational goals.
Management
A visual representation of the structured relationships among tasks and the people given the authority to do those tasks.
Organization Chart
An organization that represents workers in dealing with management.
Labor Union
The resources used to create goods and services.
Factors of Production
Individuals or groups to whom a business has a responsibility; include employees, customers, the general public, and investors.
Stakeholders
Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located.
Multinational Corporations
A legal entity with an existence and life separate from its owners, who are not personally liable for the entity’s debts. The entity is chartered by the state in which it is formed and can own property, enter into contracts, sue and be sued, and engage in business operations under the terms of its charter.
Corporation
A form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period.
Debt
The process of giving employees increased autonomy and discretion to make decisions, as well as control over the resources needed to implement those decisions.
Empowerment
An organizational structure that is characterized by a relatively high degree of job specialization, rigid departmentalization, many layers of management, narrow spans of control, centralized decision-making, and a long chain of command.
Mechanistic Organization
The tasks and responsibilities of a job.
Job Description
The money left over after all costs are paid.
Profit
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.
Code of Ethics
The policy of protecting home industries from outside competition by establishing artificial barriers such as tariffs and quotas.
Protectionism
The combination of two or more firms to form one new company.
Merger
A business with under 500 employees that is independently managed, is owned by an individual or a small group of investors, is based locally, and is not a dominant company in its industry.
Small Business
Power that is derived from an individual’s ability to threaten negative outcomes.
Coercive Power
An organizational structure that is characterized by a relatively low degree of job specialization, loose departmentalization, few levels of management, wide spans of control, decentralized decision-making, and a short chain of command.
Organic Organization
A comparison of actual performance with expected performance to assess an employee’s contributions to the organization.
Performance Appraisal
An economic system based on competition in the marketplace and private ownership of the factors of production (resources); also known as the private enterprise system.
Capitalism
The concern of businesses for the welfare of society as a whole; consists of obligations beyond those required by law or contracts.
Corporate Social Responsibility
The concept that each country should specialize in the products that it can produce most readily and cheaply and trade those products for those that other countries can produce more readily and cheaply.
Principle of Comparative Advantage
The owners of a corporation who hold shares of stock that carry certain rights.
Stockholders (or Shareholders)
A formal written statement that describes in detail the idea for a new business and how it will be carried out; includes a general description of the company, the qualifications of the owner(s), a description of the product or service, an analysis of the market, and a financial plan.
Business Plan
The process of creating long-range (one to five years), broad goals for the organization and determining what resources will be needed to accomplish those goals.
Strategic Planning
The number of employees a manager directly supervises; also called span of management.
Span of Control
The monetary pay and benefits an employee recieves from an employer in exchange for the employees labor.
Compensation (or Total Compensation)