Global Business Test 2

Front 1

stakeholders

Back 1

organizations customers, employees, community, government, service providers, and more

Front 2

ethics

Back 2

(morals) this is defined differently within and across cultures, so practices acceptable to some may not be acceptable to all.

Front 3

ethical dilemmas

Back 3

occur when the guidelines are not well developed or the ethical situation is ambiguous

Front 4

triple bottom line

Back 4

people, profits, and planet

Front 5

corporate social responsibility (CSR)

Back 5

refers to not only what companies do with their profits, but also how they make their profits.

CSR is often used interchangeably with other terms such as corporate citizenship, sustainable development, the triple bottom line, and corporate ethics.

Front 6

stockholders

Back 6

a person who owns shares of stock in a company.

without profit, businesses can't meet other objectives.

Front 7

exports

Back 7

any goods or services produced within the domestic country, but sold in a foreign country

Front 8

imports

Back 8

are any goods and services produced in a foreign country but purchased domestically

Front 9

balance of trade

Back 9

the difference between imports and exports. measures whether a country exports more to other countries or imports more from other countries.

Balance of trade = Exports - Imports

Front 10

trade surplus

Back 10

a positive balance of trade

ex) if US has a trade surplus, it would be considered a net exporter

Front 11

trade deficit

Back 11

a negative balance of trade.

ex) when the US imports more than it exports

Front 12

comparative advantage

Back 12

the idea that countries and businesses should specialize in the production of goods in which they have a lower opportunity cost.

Front 13

absolute advantage

Back 13

only considers the raw productivity of a country in a certain industry compared to other countries

Front 14

pollution haven

Back 14

hypothesis states that, when large industrialized nations seek to set up factories or offices abroad, they will often look for the cheapest option in terms of resources and labor that offers the land and material access they require

Front 15

licensing

Back 15

occurs when a firm (the licensor) allows a foreign company (the licensee) to produce its products and utilize its trademarks for a royalty fee.

Front 16

international franchise

Back 16

allows the franchisee to utilize the business name and sell the product in a given market area.

ex) Subway / Dunkin Donuts

Front 17

contract manufacturing

Back 17

allows for more control in accessing international markets by simply allowing a foreign company the ability to produce their product.

ex) Nike contracts with hundreds of foreign factories that produce its products.

Front 18

international joint ventures

Back 18

a special type of partnership between two or more companies in different countries. the partner companies share many parts of the business, including technology, profits, and risk. partners gain access to new markets.

Front 19

international strategic alliance

Back 19

(less formal partnership) firms gain access to new markets and create mutually beneficial advantages, often for a specific project. This is done without sharing of profits and risk, unlike international joint ventures.

Front 20

foreign direct investment (FDI)

Back 20

the purchase of permanent capital goods, such as a manufacturing factory or a business in a different country.

Front 21

foreign subsidiary

Back 21

(type of foreign direct investment) when a parent company in the home country purchases a company in another country.

Front 22

multinational corporation

Back 22

(type of foreign direct investment) a business that owns a physical presence in a foreign country. firms that simply export goods are not considered multinational corporations.

ex) large companies like Walmart

Front 23

non-tradable goods and services

Back 23

products that are not easily tradable due to their inherent characteristics.

ex) cement - too heavy, pizza - would spoil if traded between New York and Costa Rica, haircuts - require producer and consumer to be in the same location.

Front 24

trade protection

Back 24

a barrier instituted by a government entity designed to shield domestic industries and their workers from global competition

Front 25

tariffs

Back 25

taxes placed on imported goods

purpose: to remove any price advantage the foreign good may have in the domestic marketplace.

Front 26

quota

Back 26

(more direct barrier to trade)

a restriction on the overall quantity of a certain good that can be imported into a country

Front 27

non-tariff barriers

Back 27

(technical restrictions on certain products)

ex) a safety standard that is easy for domestic firms to meet but will impose a significant compliance expense on foreign firms

Front 28

World Trade Organization (WTO)

Back 28

created as a means to maintain lower political barriers to trade.

WTO is a forum for nations to negotiate the rules of international trade, with the overall purpose of the organization being to facilitate a harmonious flow of global trade.

Front 29

high-performance work systems (HPWS)

Back 29

are a result of focusing on strategies that capitalize on people.

a HPWS positively impacts the bottom line

ex) Southwest Airlines, Google, Disney, Zappos

Front 30

employer attractiveness

Back 30

defined as envisioned benefits that a potential employee sees in working for a specific organization.

job seekers attracted to: reputation and corporate social performance, compensation and benefits, intellectual challenge, brand perceptions, impressions of coworkers, location and size.

Front 31

qualifications

Back 31

include the applicants knowledge, abilities, skills, and other characteristics, such as personality and attitude.

Front 32

validated selection tools

Back 32

are those that have been shown to predict various aspects of performance.

ex) job applications, personality and intelligence tests, resumes, and job interviews

Front 33

job application

Back 33

(one of the most common selection tools)

requests information about candidates work experiences and education, along with a list of references.

Front 34

intelligence test

Back 34

asses potential employees cognitive skills. these tests are highly valid predictors of job performance across virtually all jobs.

Front 35

personality tests

Back 35

assess factors such as conscientiousness, extraversion, openness to experience, emotional stability, emotional intelligence, entitlement, narcissism, and agreeableness.

Front 36

structured interviews

Back 36

where all applicants are asked the same job related questions.

(shown to be most valid type of interview)

Front 37

unstructured interviews

Back 37

allow managers to craft their own questions for each of the candidates.

they become more valid when multiple interviewers are included and the questions are based on the job and not based on irrelevant information.

Front 38

semi-strucutred interviews

Back 38

a combination of structured and unstructured interview questions

Front 39

needs

Back 39

first phase in effective training - the needs assessment phase.

training should address the specific needs of the organization.

Front 40

development

Back 40

second phase in effective training - the development phase

this phase ensures that training environments are conducive to learning and that the training meets the organizations goals and objectives.

Front 41

evaluation

Back 41

third phase in effective training - evaluation phase

goal is to assess whether the training program has successfully dressed the needs of the organization by meeting its stated objective and goals

Front 42

leniency

Back 42

bias

when an employer gives an undeserving employee normal ratings because of their own bias and to avoid their own discomfort. they are lenient and don't want to give bad ratings.

Front 43

legally defensible

Back 43

able to be defended in the court of law.

ex) if employee sued the company with a claim that the company unfairly appraised performance, manager must ensure that the appraisal awarded could be defended in court.

Front 44

360-degree performance appraisals

Back 44

include the ratings from two or more raters.

these include ratings from supervisors, peers, and subordinates.

less likely to exhibit bias.

Front 45

Age Discrimination in Employment Act

Back 45

law based on persons 40 yrs of age +

can not fire simply based on age if employee is performing satisfactorily.

Front 46

Americans with Disabilities Act

Back 46

protects against discrimination if person has a physical or mental impairment that substantially limits one or more major life activities.

included: obese persons and persons with AIDS

Front 47

sole proprietorship

Back 47

the simplest form of a business. the owner is the business.

anyone who does business without creating a separate business organization is a sole proprietorship.

72% of businesses in US. 4% of all sales receipts.

Front 48

unlimited liability

Back 48

legal obligations general partners and sole proprietors face because they are liable for all business debts if the business can't pay its liabilities.

disadvantage because all debt is treated as personal debt, failure of repayment may cause sole proprietor to repay themselves&lawsuits toward business can be directed at personal assets.

Front 49

partnership

Back 49

an association of two or more persons to carry on as co-owners of a business for profit.

Front 50

general partnership

Back 50

three essential elements:

1. A sharing of profits or losses

2. A joint ownership of the business

3. An equal right to be involved in the management of the business.

Front 51

limited partnership

Back 51

maintains the rights to a share of the company's profits and joint ownership for those who are partners, but gives up the rights to management decisions of the business or liability for losses beyond his/her investment.

Front 52

limited liability

Back 52

means that the limited partner is only liable up to the amount that was invested directly into the business's formation or expansion.

Front 53

corporation

Back 53

is a legal entity created and recognized by state law with assets and liabilities separate from those of its owners.

Front 54

shareholder

Back 54

is an owner of a corporation.

shareholders of the corporation do not face unlimited liability. the corporation is liable.

Front 55

dividend

Back 55

is a percentage of the profits that is distributed to each shareholder.

Front 56

double taxation

Back 56

refers to the fact that all corporate profits are taxed twice.

Front 57

C corporation

Back 57

C corporations are an alternative to S corporations, where profits pass through to owners and are only taxed at the individual level, and limited liability companies, which provide the legal protections of corporations but are taxed like sole proprietorships.

Front 58

S corporation

Back 58

A Subchapter S (S Corporation) is a form of corporation that meets the IRS requirements to be taxed under Subchapter S of the Internal Revenue Code. This gives a corporation with 100 shareholders or less the benefit of incorporation while being taxed as a partnership.

avoid paying corporate income taxes.

Front 59

limited liability company (LLC)

Back 59

is under the larger umbrella of the S corp.

combines the limited liability aspects of the corporation and avoids double taxation.

LLC's generally do not have shareholder restriction.

Front 60

franchise

Back 60

arrangement in which the franchisor licenses the franchisees to use the trademark, trade name, or copyright in the selling of goods and services in a given territory for a monetary payment.

Front 61

franchisor

Back 61

the owner of a trademark, trade name, business operation, or copyright.

Front 62

franchisees

Back 62

use franchisors trademark, trade name, or copyright.

Front 63

royalty

Back 63

is an ongoing fee based on the amount of revenue the franchise earns.

Front 64

franchise agreement

Back 64

consists of the terms and conditions associated with purchasing the franchise.

Front 65

negative halo effect

Back 65

refers to the potential of a different owner hurting the overall image and brand.

Front 66

incentive

Back 66

is simply a way to motivate an employee for the good or service provided.

Front 67

lump-sum payment

Back 67

an amount of money that does not change no matter how many hours are worked.

ex) annual salary

Front 68

piece-rate payment

Back 68

is an amount of money paid for every unit of the good or service produced.

Front 69

employment contract

Back 69

is an agreement between a business and an employee, which specifies how much the employee will be compensated in exchange for the provision of a good or service.

Front 70

Securities and Exchange Commission (SEC)

Back 70

is responsible for detecting and preventing accounting fraud.

mission "to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."

Front 71

accounting

Back 71

is the process of gathering financial information; organizing it in an accurate, consistent and easy to use format; and analyzing and reporting the data to the relevant stakeholder.

Front 72

Financial Accounting Standards Board (FASB)

Back 72

is a private, non-profit organization whose primary purpose is to establish and improve generally accepted accounting principles within the United States in the public's interest

Front 73

International Accounting Standards Board (IASB)

Back 73

The IASB engages closely with stakeholders around the world, including investors, analysts, regulators, business leaders, accounting standard-setters and the accountancy profession.

Front 74

private accountants

Back 74

those employed directly by a single firm or organization.

Front 75

public accountants

Back 75

are also available, for a fee, to assist in the documentation and process of gathering financial information;

they are external to the business itself

Front 76

certified public accountants (CPAs)

Back 76

are public accountants that pass examinations created by the American Institute of Certified Public Accountants

Front 77

Generally Accepted Accounting Principles (GAAP)

Back 77

the rules and accounting standards that publicly traded companies in the United States must follow.

Front 78

International Financial Reporting Standards (IFRS)

Back 78

more than 120 other countries allow or require firms to adhere to these accounting rules and regulations.

Front 79

accounting cycle

Back 79

procedure 2 prepare major financial statements.

steps include: bookkeeping, or the gathering of all financial transactions; creating a journal where all transactions are recorded; establishing a ledger which combines all information into specific categories; and preparing a trial balance, a summary of all financial data.

Front 80

balance sheet

Back 80

summarizes the assets, liabilities, and the owners equity for a firm at a specific point in time

Front 81

accounting equation

Back 81

Assets = Liabilities + Owners Equity

Front 82

assets

Back 82

anything that is valued by a firm, tangible or not.

3 categories: current assets, long term assets, and intangible assets.

Front 83

liabilities

Back 83

are anything that a firm owes to non owners.

1) short term liabilities

2) long term liabilities

non owners are often creditors or suppliers

Front 84

owners equity

Back 84

is money that the firm owes to owners and can also be considered stockholders equity

Front 85

retained earnings

Back 85

are the profits that are owed to the owners of the company, but instead of returning the profits directly to the owners, it is reinvested into the company for projects.

Front 86

income statement

Back 86

reports the financial results of a firm over a given period of time

Front 87

net income

Back 87

is the difference between the money brought in and all the costs incurred to the company

positive net income means that the company is profitable and can potentially expand

Front 88

revenues

Back 88

the first part of the income statement, refers to the increase in cash or assets resulting from business activities.

Front 89

cost of good sold

Back 89

(cost of revenue) this is the cash a firm spends to carry out its business activities.

Front 90

gross profit

Back 90

the difference between the revenue and the cost of goods sold.

Front 91

net operating income

Back 91

is simply the annual income generated by an income-producing property after taking into account all income collected from operations, and deducting all expenses incurred from operations.

Front 92

non-operating costs

Back 92

consist of taxes paid to the government or interest paid on pervious loans.

Front 93

statement of cash flows

Back 93

is the final major financial statement that identifies where cash is coming in from and how it is being used.

Cash Inflows - Cash OUTflows = Total Cash Flow

Front 94

operating activities

Back 94

refer to the sale of goods and services, as well as the cash used to cover expenses. other operating activities include cash received from additional ownership or interest receipts.

Front 95

investing activities

Back 95

refer to the sale or purchase of capital goods such as machinery, buildings or land and other long term investments.

Front 96

financing activities

Back 96

refer to the purchase or repayment of long term loans or the issuing of new stock or the payment of dividends

Front 97

ratio analysis

Back 97

the process of using calculations and ratios from the financial reports

Front 98

profitability ratios

Back 98

measure the ability of firms to transform resources into net income.

are a gauge of the productivity of a firm.

Front 99

liquidity ratios

Back 99

measure the ability of a firm to pay short term bills.

Front 100

leverage ratios

Back 100

measure the extent to which a firm relies on debt to finance its operations.

Front 101

managerial accounting

Back 101

is the branch of accounting that focuses primarily on the needs and requirements of internal stakeholders (managers, employees, etc)

Front 102

budgeting

Back 102

the process that is intended to detail how a business will acquire and utilize resources to reach a predefined goal.

Front 103

operating budget

Back 103

a budget that projects the revenues that will be brought in through sales and the costs that are required to meet the sales projections.

Front 104

financial budgets

Back 104

project the expected cash flow and the capital expenditures for the business.

Front 105

master budget

Back 105

ties each individual budget together to provide a unified representation of a firms future expectations and it guides the best course of action

Front 106

cost accounting

Back 106

understanding the cost of production.

Front 107

independent audit

Back 107

this is the evaluation of the financial reports by an unbiased auditor to ensure there is no wrongdoing in the preparation of the reports that would affect decisions made by external stakeholders such as potential investors, creditors, or the gov't.

by law, publicly traded companies must obtain IA