Glossary BA: Introduction

 

Key Term

Definition

business administration

The study of how businesses are managed.

procurement

The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for goods and services.

production

The creation of finished goods and services using the factors of production: land, labour, capital, entrepreneurship, and knowledge.

marketing

The process of determining customer wants and needs and then providing customers with goods and services that meet or exceed their expectations.

finance

The function in a business that acquires funds for the firm and manages funds within the firm.

economic system

A description of how a particular society distributes its resources to produce goods and services.

communism

An economic system in which all nonhuman productive assets are owned by the state in the name of the people, and in which the government decides what is produced, how it is done, and how the output is distributed.

socialism

An economic system in which the government owns and operates basic industries, but individuals own most businesses.

capitalism

An economic system in which all or most of the factors of production and distribution are privately owned and operated for profit.

free enterprise

An economic system in which individuals own and operate the majority of businesses that provide goods and services.

mixed economies

Economic systems in which some allocation of resources is made by the market and some is made by the government.

property

Something that is capable of being owned. A right or interest associated with something that gives the owner the ability to exercise dominion over it.

competition

The rivalry among businesses for consumers' dollars.

pure competition

A market situation where many firms sell nearly identical products and no one firm can raise its price without losing most of its customers.

monopolistic competition

The market situation in which there are a large number of sellers that produce similar products, but the products are perceived by buyers as different.

oligopoly

A situation where a few firms, with or without differentiated products, dominate the market.

monopoly

The market structure that exists when there is only one business providing a product in a given market.

profit

The difference between total revenues and total costs. Often profit is a fundamental objective of a manufacturing or service business.

supply

The quantity of products that manufacturers or owners are willing to sell at different prices at a specific time.

demand

The quantity of products that people are willing to buy at different prices at a specific time.

equilibrium

A situation in which supply and demand have been brought into balance.

price

A value placed on an object exchanged between a buyer and a seller.

equilibrium quantity

The quantity supplied and the quantity demanded when the price has adjusted to balance supply and demand

managers

Those individuals in organisations who make decisions about the use of resources and who are concerned with planning, organising, leading, and controlling the organisation's activities to reach its objectives.

management

The process used to accomplish organisational goals through planning, organising, leading, and controlling people and other organisational resources.

business

Individuals or organisations that try to earn a profit by providing products that satisfy people's needs.

product

Any physical good, service, or idea that satisfies a want or need.

economic cycle

A somewhat regular pattern of ups and downs in aggregate production, as measured by the fluctuations in real GDP.

gross domestic product (GDP)

The market value of all final goods and services produced within a country in a given period of time

real GDP

GDP adjusted for inflation. Real GDP provides the value of GDP in constant dollars, which is used as an indicator of the volume of the nation's final output.

nominal GDP

The production of goods and services valued at current prices

recession

A period of declining real incomes and rising unemployment

expansion

Occurs when an economy is growing and people are spending more money; their purchases stimulate the production of goods and services, which in turn stimulates employment.

boom

The top point of an economic cycle: low unemployment and a tendency to rising prices and wages.

contraction

A slowdown of the economy characterised by a decline in spending and during which businesses cut back on production and lay off workers.

depression

A condition of the economy in which unemployment is very high, consumer spending is low, and business output is sharply reduced.

inflation

A continuously rising general price level, resulting in a loss of the purchasing power of money.

deflation

A situation where prices are actually declining.

industrial revolution

Dramatic technological and social changes that occurred in the nineteenth century that altered economies, began the process of mass production and led to the modern industrial age.

entrepreneur

An individual who risks his or her wealth, time, and effort to develop for profit an innovative product or way of doing something.

government

The state that regulates and controls the economy.