Business Concepts and Economic Principles Quiz

Introduction to Business 2024 - Lecture 1

• The course is titled "Taking Risks and Making Profits within the Dynamic Business Environment"
• The lecture was given by Hajnalka Madai
• Attendance at lectures is required (more than 50%)
• Seminar attendance is required (more than 80%)
• Extra points are sometimes available for tasks in seminars
• Students must register for the exam in the Neptun system by 12:00 the day before the exam
• Tests must be completed using e-learning, in person
• The exam is 50 minutes long
• 50 questions are required to be answered during the exam
• The test is graded on a 5-point scale, with 1 being insufficient, 2 sufficient, 3 average, 4 good, and 5 excellent
• The learning goal is to understand the relationship between business operations, profit, and risk, and how both businesses and non-profit organizations can raise the standard of living.
• Enterprise is a human activity whose purpose is to satisfy consumer demand by making a profit.
• Consumer demand is the need for a product or service that actively appears on the market.
• Business (enterprise) means a long-term economic activity that is organizationally separate, formally independent, and profit-oriented using its own or rented assets and labor for profit.
• Enterprises are grouped by sectors (primary, secondary, tertiary), ownership (private, state-owned, mixed, municipal, other community-owned), organizational form (sole proprietorship, joint ventures, operating agreements, partnerships, corporations, limited liabilities companies, co-operatives), field of activity (industrial, agricultural, trade, financial, transport, other), size (micro, small, medium-sized), independence (autonomous, partner, linked), nature of activity (producer, service provider, mixed), purpose (profit-oriented, non-profit), and taxation (individual enterprises, simplified corporate taxpayers, corporate companies, non-tax, budgetary bodies).

Basic Definitions

• Business is any activity of a person, company, firm, or farm that seeks to provide goods and services to others at a profit.
• Goods are tangible products such as computers, food, clothing, cars, and appliances
• Services are intangible products that cannot be held physically, like education, healthcare, insurance, travel, and tourism

Basic Definitions, continued

• Material services aim to move goods from one place to another, such as delivery services or repair services
• Non-material services focus on human interaction, such as medical care, military services, and entertainment
• Revenue is the total amount of money made by a business during a specific period by selling goods and services
• Profit is the amount of money earned by a business that exceeds its expenses for salaries and other operational costs.
• Loss occurs when the expenses of a business exceed its revenues

What is Risk and Profit?

• Risk is the possibility of an entrepreneur losing both time and money in a business venture
• Profit is the money left over after all business costs are paid
• Profit calculation examples include things like selling hot dogs from a cart.

Matching Risk with Profit

• Different businesses do not make the same amount of profit
• Businesses located in areas with higher risks, like inner cities, often have the potential for higher profits due to less competition
• Businesses located in less risky areas, like suburban areas, have lower profits but less risk

Standard of Living and Quality of Life

• Businesses contribute to the standard of living through tax revenue that funds community facilities, safety and security
• The standard of living is influenced by the quality of services available and the prices to purchase them
• Quality of life is determined based on things like political freedom, the environment, education, healthcare, and safety

Standard of Living (how to measure)

• Standard of living measures wealth, comfort and goods and services available in a geographical area
• Quality of life rating indexes include: purchasing power, safety, healthcare, cost of living, property price-to-income ratio, travel time to work, pollution, and climate
• Ranking of the countries with the highest standard of living (e.g., Norway, Denmark, Finland, Switzerland, and Netherlands) are generally consistent based on the most recent data from various institutions

What do we need to run a Business (Entrepreneurship)

• Factors of production (resources): Land (natural resources), labor (workers), capital (machinery)
• Entrepreneurship, information (contacts, resources, current knowledge) are factors needed to operate a business effectively.

External and (Business) environment

• Businesses operate within a complex network of interconnected elements, including suppliers, competitors, consumers, regulatory agencies, unions, chambers, the legal system, technological advancements, international forces, social/cultural norms, and the natural environment

External Environment (Macro level)

• The global business environment includes the economic, legal, and technological context. This involves things like global competition, trade restrictions, and specific business practices.
• Business management, creation of jobs and competitiveness, the social environment (diversity, demographics, changes in family structure) and the quality imperative (economic impact) all form the competitive and social structures influencing how businesses operate.

The Political, Economic, and Legal environment

• The way governments promote entrepreneurship affects a country's economic development.
• Countries with less government interference in businesses may have better economic conditions.

Legal Environment

• A stable legal environment, including tradeable currencies and low corruption rates, fosters a positive economic environment conducive for businesses to thrive.

Technological Environment

• Technology, ranging from phones to software, aids in streamlining and improving business productivity
• E-commerce involves buying and selling via the internet utilizing business-to-customer (B2C) and business-to-business (B2B) transactions.
• Electronic security and database management are essential considerations in online business operations.

Social Environment

• Demography and diversity represent the statistical and social population characteristics of people, impacting business operations
• Consumer habits and choices are significant factors for the success of a business

The Global Factors of Environment

• Globalization, driven by efficient distribution and communication systems, has increased global competition.
• Climate change (temperature fluctuations) and the trend towards environmental sustainability (green initiatives) are increasingly significant considerations for businesses.
• Various global trends like agriculture, biotechnology, e-mobility, waste management, digitalization, robotics, tourism and gastronomy, and financial innovation are shaping global business and the environment.

Effecting Factors

• Aspects like population growth, urbanization, ageing, economic growth, trade, and climate change shape the global environment. Other issues like natural disasters, poverty, food insecurity, inequality, and health challenges directly affect economies.

Global Challenges of Food Sector

• Feeding the global population challenges the current food sector businesses with growing demands of energy savings, social and environmental performance.

The competitive Environment (Business Environment)

• Firms must empower frontline workers to efficiently address customer needs in highly competitive markets.

Stakeholder

• Stakeholders comprise those individuals and groups that are impacted by or involved in a business's activities, needs, and policies, including customers, employees, shareholders, suppliers, dealers, retailers, bankers, people from surrounding communities, media personnel, environmental conservationists, and political leaders.

Outsourcing

• Outsourcing means contracting with other companies to handle some or all aspects of the business processes within a firm
• Outsourcing can have consequences like job losses in some regions.
• Insourcing is the reverse of outsourcing; creating new jobs and boosting an economy.