Risky Business
The possibility of loss (failure) or gain (success) inherent in conducting business
Business risk
Rivalry between or among businesses that offer similar types of goods or services
Direct competition
Money left after the cost-of-goods expense is subtracted from total income (income from sales - cost of goods = gross profit)
Gross profit
The type of market, or environment, in which businesses operate
Market structure
A risk-response strategy that involves choosing not to do something that is considered risky
Avoidance
The possibility of loss or failure that occurs as a result of the economy
Economic risks
Rivalry between or among businesses that offer dissimilar goods or services
Indirect competition
Money left after the cost-of-goods expense and the operating expense are each subtracted from the total income (gross profit - operating expense = net profit)
Net profit
A type of market structure in which a market is controlled by one supplier, and there are no substitute goods or services readily available
Monopoly
DAILY DOUBLE!
A sudden shift in customer preferences, technological advancements, or changes in government regulations can all be examples of this type of business risk.
Market Risk
The possibility of loss or failure from human error
Human risks
A type of rivalry between or among businesses that involves factors other than price
Nonprice competition
Monetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid (income – expense = profit)
Profit
A market structure in which there are relatively few sellers, and industry leaders usually determine prices
Oligopoly
A risk-response strategy that involves trying to reduce the chance of loss or severity of loss
Reduction
The possibility of loss or failure from nature
Natural risks
A market structure in which there are many businesses selling a lot of identical products for about the same price to many buyers; also known as pure competition
Perfect competition
The desire to make a profit, which moves people to invest in business
Profit motive
Monopolies that the government allows to exist legally under controlled conditions
Regulated monopolies
A risk-response strategy that involves assuming responsibility for the risk rather than transferring it
Retention
Chances of loss that carry with them the possibility of loss or no loss
Pure risks
A type of rivalry between or among businesses that focuses on the use of price to attract scarce customer dollars
Price competition
The money received by resource owners and by producers for supplying goods and services to customers
Income
Vladimir Putin promotes this type of Market Structure.
Mixed market economy.
(Russia operates with a mix of free market elements (where buyers and sellers determine prices and production) and command economy elements (where the government directly controls the economy).
A risk-response strategy that involves moving the impact of a risk to someone or something else
Transfer