Mazeen aljabowbi

Business 101

Q -What is the difference between revenue and profit?

There are many different types of income-net income, comprehensive income, etc... Gross

income is basically revenues and gains minus expenses and losses. Net income is gross

income minus taxes. Comprehensive income includes non-monetary things, such as

increases/decreases in market values of assets. These things are added or subtracted from net

income. Profit is directly related to products and services. For example, sales minus cost of

goods sold (what the business paid) gives you profit.

Revenue can be sales revenue, revenue collected from interest on investments, etc.. It is actual

money earned.

Q-What is the difference between standard of living and quality of life?

Ans: Standard of living is a qualitative measurement of how you fit in based on how much you

earn, where you live, etc. Quality of life, is of course, a qualitative measure...meaning that it is

more of a feeling than a fact. Someone can have a low standard of living because they have a

low paying job, but may have a high quality of life, because they don't require much and are

happy. A wealthy person may have a high standard of living but may have a poor quality of life

because of illness, family problems.

Q-what is risk and how is it related to profit?

The risk is when you start any business and you are taking a risk by putting your money in hope

that it grows and it becomes good investment, but it could not success which will lead you to a

loose.

Q- What do the terms stakeholders and outsourcing means ?

A stakeholder means anyone who is interested in the business and outsourcing when the

company invests out of the states or out its operations.

Pg 10

Q-What are the advantages of working for others?

The advantages are that you are not just taking risk by yourself and you are getting others

experience.

Q-what benefits do you lose by being an entrepreneur and what do you gain?

Ans: owning and managing your business. And the loosing of your money if you don’t success

Q-What are the five factors of production? Which factor are the key to wealth?

Ans:

Q- What are the five factors of production? Which factors are the key of wealth?

- The five factors of production are

1. Land.

2. Labor.

3. Capital.

4. Entrepreneurship.

5. Knowledge

Entrepreneurship and knowledge are the factors which are the key to wealth.

What are four ways the government can foster entrepreneurship?

The ways in which the government can foster entrepreneurship is they can keep taxes and

regulations to a minimum, they can actively promote entrepreneurship is to allow private

ownership businesses, the governments of developing countries can do is to minimize the

interference with the free exchange of goods and services, the government can lessen the risks

of entrepreneurship by passing laws that enable businesspeople to write contracts that are

enforceable in court, the government can also establish a currency that’s tradable in world

markets, they can help minimize corruptions in business and in its own ranks. Thus the

government can foster entrepreneurship.

Q-What is productivity?

Productivity is the amount of output you generate given the amount of input.

Q-what is empowerment?

Giving frontline workers responsibility authority and freedom to respond quickly customer

requests
Q- What are some of the major issues having to do with social security today?

Spending money to unemployment, elders and disabilities

Q-What is the difference between macroeconomics and microeconomics?

ANS .Macroeconomics looks into the economics into whole. Micro economics looks into

segment of economy.

Q-Why was economics known as the dismal science?

Thomas Malthus made this argument in the late 1700s and early 1800. In response to such

views Thomas Carlyle called economics the dismal science.

Q- What does Adam smith’s term invisible hand mean? How does the invisible hand mean?

How does the invisible hand create wealth for a country?

An economic principle, first postulated by Adam Smith, holding that the greatest benefit

to a society is brought about by individuals acting freely in a competitive marketplace in the

pursuit of their own self-interest.

Q-What ware the four basic rights that people have under free market capitalism?

Perfect competition, monopolistic competition, oligopoly, monopoly.

How does business people know what to produce and in what quantity?

Using the supply and demand they can know how many quantities and by studying the

market they can know what people really need.

 Q-How are prices are determined?

They are not determined by sellers they are determined by buyers and seller negotiating

in the market place.

What are some of the limitations of free market?

A regulation to make sure that all of the business stakeholders are protected and that

people who are unable to work get the basic care they need.

What led the emergence of socialism?

Corruption and recession

What are the benefits and drawbacks of socialism?

The major benefit of socialism is supposed to be social equality, and free education and free

health care free child care and longer vacations. And some of the drawbacks are slowing in

economy and not too many opportunities to get a head of people.

What countries still practice communism?

North Korea, Cuba, Venezuela and Russia.

What are the characteristics of a mixed economy?

1. Consumers are given choices about the products they buy.

2. Business owners can sell their products and keep the profits.

3. Government provides services for people in remote areas.

4. Individuals are free to use their money or resources as they choose.

5. Government provides services to people in economic need.

Name the three economic indicators and describe how well the united states in doing according

to each indicator?

First, GDP which stands Gross domestic product, it is very bad lately with the crisis which came

out to be negative for the first time in 27 years.

Second, unemployment rate it refers to the number of civilians at least 16 years or older who

are trying to find jobs, in 2008 the unemployment rate reached to its highest in 20 years which is

7.6% last month alone 600000 jobs were lost.

Third, the price indexes the price indexes to help to measure the health of the economy by

measuring the levels of inflation disinflation deflation and stagflation

What is the difference between recession and depression?

A recession is two or more consecutive quarters of a decline in the GDP. A depression is a

severe recession usually accompanied by deflation.

How does the government manage the economy using fiscal policy?

By increasing or decreasing the taxes or government spending.

What does the term monetary policy mean? What organization is responsible for monetary

policy?

Monetary policy is the management of the money supply and interest rates. The organization

responsible for that is the Federal Reserve System.

How do world population and market statistics support expansion of U.S businesses into global

markets?
With the world population around 6 billion plus or minus a few, that gives the U.S. quite a few

potential customers. Since we are able to practice free trade with many other nations in the

world we are able to sell products to other nations that cannot produce them efficiently giving us

the ability to price them at a premium to our cost of manufacturing this gives us the ability to

purchase things that we cannot produce readily which is a factor in smooth cycles of business.

What is comparative advantage, and what are some examples of this concept in actual global

markets?

Comparative advantage theory states that a country should sell to other countries those

products that it produces most effectively and efficiently and buy from other countries those

products it cannot produce as effectively or efficiently. Some examples would be that the U.S. is

able to computer chips, software and engineering services, while at the same time the U.S.

does not have an advantage over various items like coffee beans or making shoes.

How are a nation’s balance of trade and balance of payments determined?

First the definition of balance of trade would be the ratio of nation’s exports vs. imports. A

favorable balance of trade would ultimately be to export more than you import. An example of

this would be to sell $200 worth of goods and buy $100 worth of goods leaving you with $100 to

spend somewhere else. An unfavorable balance of trade comes when a country imports more

than it exports such as the U.S. which has been in a trade deficit for about 20 years.
What is dumping?

Dumping is defined as the practice of selling products in a foreign country at lower prices than

those charged in the producing county. Companies sometimes use this tactic to reduce surplus

products in foreign markets or to gain a foothold in a new market by offering products for lower

prices than domestic competitors do. Japan and Russia for example have been accused of

dumping steel in the U.S. And Canada of dumping softwood lumber. U.S. laws against dumping

are specific and require that foreign firms must price their products to include 10 percent

overhead costs and an 8 percent profit margin. Now I believe it would be hard to prove some

nations of dumping when they are at a specific low cost advantage over the U.S. say in the area

of wages.

What are the advantages to a firm of using licensing as a method of entry in global markets?

What are the disadvantages?

Some advantages of using licensing as an entry point into global markets would be that

someone else has to come up with the money, also the licensor usually will assist with

distribution, promotion and consulting which it normally charges a fee for. The licensor also

usually gets paid a royalty on the product or services sold. Some disadvantages would be that

typically a licensor would license the product or service for an extended period of time, say 20

years, now if the licensor experiences tremendous growth the bulk of the revenue will go to the

licensor and not the licensee.

What services are usually provided by an export-trading company?

Some services usually provided by an export-trading company would be negotiations, payment

processing, dealing with foreign customs offices, documentation requirements such as weights

and measures. All of the aforementioned services are extremely important to a company that

does business abroad.

What is the key difference between a joint venture and a strategic alliance?

A joint venture is basically a partnership in which two or more companies often from different

countries join to undertake a major project. According to Coopers & Lybrand, a New York-based

international professional services firm, companies that participate in such partnerships grow

much faster than their counterpart companies that are not participating. Joint venture can even

be mandated by governments as a condition of doing business in their country. The benefits of

international joint ventures are clear: Shared technology, shared marketing and management

expertise, entry into market where foreign companies are often not allowed unless their goods

are produced locally, and shared risk. A strategic alliance is a long-term partnership between

tow or more companies establish to help each company build competitive market advantages.

Suck alliances can provide access to market, capital and technical expertise. Unlike joint

ventures, however, the do not typically involve shares costs, risks, management or even profits.

What is a multinational corporation? Can you name at least three multinational corporations?

A multinational corporation is an organization that manufactures and market products in many

different countries; it has multinational stock ownership and multinational management.

Multinational companies are usually extremely large. Some multinationals include; Exxon, Wal

Mart, and Ford Motor Co.

What are the major hurdles to successful global trade?

Some major hurdles to successful global trade would be simply the differences in culture.

Within the culture there are differences in religion, manners and customs, values and attitudes,

language and personal communication. Not having a distinct understanding of any of these

aspects of culture could break a company when it is trying to penetrate a foreign market. One

example of this would be Coca-Cola offending the Muslins in Saudi Arabia by putting the Saudi

Arabian flag on their packaging. The flag’s design contains a passage fro the Koran, and

Muslims feel their holy writ should never be wrapped up crumpled and thrown away.

What does ethnocentricity mean?

Ethnocentricity is when one culture has an attitude that its own culture is superior to another’s.

The U.S. is largely accused of being this way, where as for the most part foreign companies

adapt easily and effectively to American culture.

Which cultural and societal differences are most likely to affect global trade efforts? (Name at

least two)

Religion is a major cultural difference that may affect global trade. There are many different

religions in the world today and they are all different in the way that they are performed

ceremonially and what religious laws are contained in each one. Some religions may not allow

work on Sundays, some may not allow the eating of beef, which would be particularly bad

places for say a Burger King or McDonalds. Another sociocultural difference that can also affect
important business decisions involving human resource management would be how authority is

viewed upon by the working crowd. Consider what happened to one American manager in Peru

who was unaware of this important cultural characteristic and believed workers should

participate in managerial functions. This manager was convinced he could motivate his workers

to higher levels of productivity by instituting a more democratic decision-making style than the

style already in place. Son workers began quitting their jobs in droves. When asked why, the

Peruvian workers said the new production manager and supervisors did not know their jobs and

were asking the workers what to do, the workers thought of the managers as incompetent.