Midterm Study Notes for Bus 101 PDF

Chapter 1-4 Midterm Study Notes for Bus 101 Basic Economics, The Global Marketplace, and Corporate Social Responsibility Adding Value Definition: Transforming lower-value inputs into higher-value outputs to satisfy customer needs. Example Chain: Wheat farm → Flour mill → Bakery...

Chapter 1-4 Midterm Study Notes for Bus 101 Basic Economics, The Global Marketplace, and Corporate Social Responsibility Adding Value Definition: Transforming lower-value inputs into higher-value outputs to satisfy customer needs. Example Chain: Wheat farm → Flour mill → Bakery → Grocery store → Consumer. Revenue and Profit: Each step generates revenue and profit. Competition: Arises when multiple companies target the same customers. Competitive Advantage: What makes a product more appealing to customers. Profit Goal: Most businesses aim for profit, except non-profits (museums, universities, charities). Business Types: Goods-producing (tangible) vs. Service businesses (entertainment, insurance). Barrier to Entry: Initial capital needed to start a business. Major Functional Areas Predicting Sales: Challenging; involves data analysis, experience, and luck. Apple iPhone6 Case Study: Demand prediction based on historical data and carrier deals; high demand led to supply backlog. Basic Economics Economy: Sum of all economic activity within a region. Economics: Study of resource use to produce and distribute goods/services. Microeconomics: Focuses on consumers, businesses, and industries. Macroeconomics: Focuses on big-picture economic issues. Economic Systems  Free Market System (Capitalism): Private parties operate businesses; competition determines prices. Socialism: State owns certain resources; aims to minimize class differences. Communism: State owns all major resources; limited entrepreneurship. Government Role: Can nationalize or privatize products/services. Supply and Demand Demand: Quantity of a good/service customers will buy at a certain price. Supply: Quantity of a good/service producers will provide at various prices. Equilibrium Price: Where supply equals demand. Competition Pure Competition: Multiple buyers and sellers coexist. Monopoly: One company dominates the market. Oligopoly: Few suppliers control the market. Government Role: Protects and fosters competition through policies and regulations. Economic Indicators GDP: Measures a country's output in a year. CPI: Measures inflation rate. Unemployment Rate: Percentage of the labor force without employment. The Global Marketplace Reasons for Trade: Efficiency, economies of scale, customer requests, competition. Trade Deficit: Imports exceed exports. Exchange Rate: Rate at which one currency is traded for another. Free Trade vs. Protectionism : Free trade without interference vs. government interventions (tariffs, quotas, embargoes). International Trade Organizations WTO: Negotiates and monitors international trade. IMF: Fosters financial cooperation and stability.  World Bank: Aims to eradicate extreme poverty. Trading Blocks: NAFTA, EU, APEC. Global Business Environment Cultural and Legal Differences: Important in global business. Tax Havens: Countries with favorable tax laws (e.g., Ireland, Monaco). Forms of International Business Activity Strategic Choices: Multidomestic, Global, Transnational. H&M Case Study: Centralized design, decentralized marketing, and franchising. Business Ethics and Corporate Social Responsibility (CSR) Ethics: Principles of moral behavior. CSR: Business obligations beyond profit. o Philanthropy: Donations without direct business benefits. o Strategic CSR: Social contributions aligned with business strategy. Consumer and Employee CSR: Consumerism movement, safety standards, anti- discrimination laws (EEOC, ADA). CSR and Mental Health Mental Health Initiatives: Paid family leave, burnout prevention, The Great Resignation. Corporate Support: Funding mental health programs, normalizing discussions. ESG Investments ESG Criteria: Environmental, Social, and Governance standards. Sustainable Investing: Integrating sustainability into investment processes. Common ESG Metrics: Greenhouse gas emissions, pollution, biodiversity, recycling, water security, energy efficiency. Chapters 5-6 Chapter 5 — Forms of Ownership 1. Sole Proprietorship Definition: Business owned by one person. Taxation: Profits flow through to the owner and are taxed as personal income. Setup: Easy to set up with just a business license. Liability: Owner has unlimited liability. 2. Partnership General Partnership: o Definition: Two or more owners with equal control unless specified otherwise. o Taxation: Profits and losses flow to partners and are taxed at individual rates. o Liability: Unlimited liability for all partners. o Setup: Easy but a partnership agreement is recommended. Limited Partnership: o Definition: Includes at least one general partner with unlimited liability and limited partners with liability up to their investment. o Management: Limited partners do not manage the business. 3. Corporation Definition: Separate legal entity with unlimited shareholders. Taxation: Profits taxed at corporate rates (21%) and again at individual rates when distributed as dividends. Liability: Limited to the amount of investment. Advantages: o Ability to raise capital. o High liquidity of publicly traded stocks. o Longevity due to easy transfer of shares. o Limited liability for shareholders.  Disadvantages: o High cost and complexity of setup. o Extensive reporting requirements. o Double taxation. Special Types of Corporations S Corporation: Combines limited liability with pass-through taxation. LLC: Offers limited liability and pass-through taxation. B Corporation: Profit-seeking with a legal requirement to pursue a nonfinancial goal. Holding Company: Owns other companies for investment purposes with little operational control. Corporate Governance Structure: Shareholders elect a board of directors who select top officers. Board Composition: Balance of insiders and independent directors, with a focus on diversity. Key Officers: CEO, CFO, CIO, CTO, COO, CMO/CBO. Mergers & Acquisitions Merger: Combining two companies into one. Acquisition: One company buys a controlling interest in another. Advantages: Strategic expansion. Disadvantages: Management integration, marketing blend, layoffs, cultural clashes. Alternatives: Strategic alliances and joint ventures. Chapter 6 — Entrepreneurship & Small Businesses Small Businesses Definition: Independently owned, not dominant in its field, fewer than 500 employees.  Role of Entrepreneurs: Risk-takers, innovators, flexible, and big-picture thinkers. Growth Factors: E-commerce, social media, technological advances. Business Plan Components: o Summary o Mission and objectives o Company overview o Products or services o Management and key personnel o Target market o Marketing strategy o Design and development plans o Operations plan o Start-up schedule o Major risk factors o Financial projections and requirements o Exit strategy Financing Options Private Financing: Non-public sources. Bank Loans: Crucial for small businesses. Venture Capitalists: For high-growth potential ventures. Angel Investors: Private individuals investing in start-ups. Credit Cards and Personal Lines of Credit: Personal financing options. SBA Assistance: Various financing options from the Small Business Administration. Public Financing: IPOs for companies with solid growth potential. Crowdfunding: Platforms like Kickstarter and GoFundMe. Additional Notes- Amazon Stock Split: 20-for-1 split in March 2022, making shares more accessible to a broader range of investors.