Notesale: Turn your study into money

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Business 101
Chapter 1: Developing a Business Mindset
Reading Notes
 Business is any profit-seeking organization that provides goods and services
designed to satisfy customers’ need
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 Business Model: a clearly stated outline of how the business intends to generate
revenue
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 Expense: all the costs involved in doing business
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 Not-for-profit organization (Nonprofit organization): organizations that provide
goods and services without having a profit motive
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o Service business: companies that create value by performing activities
that deliver benefit to customers
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 Business mindset: a view of business that considers the myriad decisions that
must be made and the many problems that must be overcome before companies
can deliver the products that satisfy customer needs
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o Human resources specialist
o Information technology manager
o Marketing specialist
o Sales professional
o Accountant
o Financial manager
 Achieving professionalism
o Professionalism is the quality of performing at a high level and conducting
oneself with purpose and pride
o Striving to excel
o Being dependable and accountable
o Being a team player
o Communicating effectively
o Demonstrating etiquette
o Making ethical decisions
o Maintaining a confident, positive outlook
o Element of professionalism: be the best, be dependable, be a team player,
be clear, be respectful, be ethical, be positive
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 Economics: The study of how society uses its scarce resources to produce and
distribute goods and services
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 Macroeconomics: The study of “big-picture” issues in an economy including
competitive behavior among firms, the effect of government policies, and overall
resource allocation issues
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 Human resources: All the people who work in an organization or on its behalf
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 Entrepreneurship: The combination of innovation, initiative, and willingness to
take the risks required to create and operate new businesses
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 Factors of Production:
o Natural Resources
o Human resources
o Capital
o Entrepreneurship
o Knowledge
 Scarcity: A condition of any productive resource that has finite supply
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 Scarcity has two powerful effects:
o It creates competition for resources
o It forces trade-offs on the part of every participant in the economy
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o Free-Market System: economic system in which decisions about what to
produce and in what quantities are decided by the market’s buyers and
sellers
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o Planned System: economic system in which the government controls most
of the factors of production and regulates their allocation
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o Nationalization and Privatization:
 Nationalization: a government’s takeover of selected companies or
industries
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 The forces of demand and supply
 Demand: buyers’ willingness and ability to purchase products at
various price points
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 Demand curve: A graph of the quantities of a product that buyers
will purchase at various prices
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 The Macro View: Understanding How an Economy Operates
o Competition in a free-market system
 Competition: rivalry among business for the same customers
 Pure competition: a situation in which so many buyers and sellers
exist that no single buyer or seller can individually influence market
prices
 Monopoly: a situation in which one company dominates a market to
the degree that it can control prices
 Monopolistic competition: a situation in which many sellers
differentiate their products from those of competitors in at least
some small way

Oligopoly: a market situation in which a very small number of
suppliers, sometimes only two provide a particular good or service
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 Recession: a period during which national income, employment,
and production all fall; defined as at least six months of decline in
the GDP
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deregulation
 Regulation: relying more on laws and policies that on market forces
to govern economic activity
 Deregulation: removing regulations to allow the market to prevent
excesses and correct itself over time
o Protecting stakeholders
o Fostering competition
 Antitrust legislation
 Merger and acquisition approvals
o Encouraging innovation and economic development
o Stabilizing and stimulating the economy
 Monetary policy: Government policy and actions taken by the
Federal Reserve Board to regulate the nation’s money supply
 Fiscal policy: Use of government revenue collection and spending
to influence the business cycle
 Economic measures and monitors
o Economic indicators: statistics that measure that performance of the
economy
o Price indexes


Consumer price index (CPI): a monthly statistic that measures
changes in the prices of a representative collective of consumer
goods and services
 Producer price index (PPI): a statistical measure of price trends at
the producer and wholesaler levels
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