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31 terms

Chapter 5

STUDY
PLAY
free enterprise system
An economic system in which people are free to operate their businesses as they see fit, with little government interference.
patent
a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time
Trade secrets
Not patented, copyrighted, or trademarked - usually a "classified" formula, pattern, and design
trademark
A word, symbol, design, or combination of these that a business uses to identify itself or something it sells.
copyright
a document granting exclusive right to publish and sell literary or musical or artistic work
competition
The struggle between companies to attract new customers, keep existing ones, and take away customers from other companies.
Price competition
intense competition in which competitors cut the amount customers have to pay to gain business.
Nonprice competition
competition based on factors that are not related to price, such as product quality, service and financing, business location, and reputation.
monopoly
Exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices.
Profit
The money earned from conducting business after all costs and expenses have been paid.
Supply
The amount of goods producers are willing to make and sell.
Demand
Consumer willingness and ability to buy products.
Surplus
Supply exceeds demand
Shortage
Demand exceeds supply
Equilibrium
Supply equals demand
domestic business
A business that sells its products only in its own country.
global business
A business that sells its products to more than one country.
for-profit business
A business that seeks to make a profit from its operations.
nonprofit organization
An organization that can function like a business but uses the money it makes to fund the cause identified in its charter.
public sector
Local, state, and federal government agencies and services, such as public libraries and state universities.
private sector
Businesses not associated with government agencies.
industry
A group of establishments primarily engaged in producing or handling the same product or group of products or in rendering the same services.
Derived demand
The demand for industrial goods based on the demand for consumer goods and services.
Wholesalers
Channel of distribution that obtains goods from manufacturers and resells them to industrial users, other wholesalers, and retailers.
Retailers
Channel of distribution that buys goods from wholesalers or directly from manufacturers and resells them to the consumer.
Production
The process of creating, expanding, manufacturing, or improving on goods and services.
five "rights" of merchandising
the right goods
at the right time
in the right place
at the right price
in the right amount
SWOT analysis
A comparison of strengths, weaknesses, opportunities, and threats that helps executives formulate strategy.
Management
The business function of planning, organizing, and controlling all available resources to achieve company goals.
Finance
A business function that involves money management.
Accounting
The discipline that keeps track of a company's financial situation.