53. Business consultant Peter Drucker said that the most important factor of production is
knowledge.
54. Most business experts agree that entrepreneurship and the effective use of knowledge are
the most important contributors to the creation of wealth.
55. The business environment refers to the surrounding factors that either help or hinder the
development of businesses.
56. Sarah is a recent U.S. college graduate who is interested in starting an import tea
business. If she follows through with her plans, she will be a pioneer, because only a handful of
women choose to start businesses in the U.S.
57. Countries with an inadequately trained work force and few entrepreneurs often achieve
the highest levels of income by relying on a large number of workers.
58. If they wish to create more wealth, poor nations should focus on policies that increase
entrepreneurship and the effective use of knowledge.
59. To realize his passion, Alex recently opened Original Tunes, Inc., a small state–of–the–art
recording studio in Nashville, TN. He probably could have set up shop in several major cities, but
Nashville offered him the two most important factors that he learned in business school would
enhance the creation of wealth: labor and political freedom.
60. Greg recently completed his degree in construction management and is planning to start
a business developing apartment buildings. After researching several potential areas, he chose
Mexico City due to its high population. Greg felt that this factor would create a large labor pool,
the most important of the five factors of production.
61. Jarett is supposed to be cramming for finals but his mind keeps wandering to the
Colorado slopes. Several years ago, his Uncle Mike made it big and now owns a ski lodge just
north of Aspen. He promised Jarett a management trainee position and the opportunity to buy
into the company by contributing a portion of his paycheck each month back into the business.
As he dreams about the opportunity to be his own boss, reality bites as Jarett scans his business
book and reads, “freedom to succeed also means freedom to fail.”
62. Taxes and government regulations are part of the economic and legal environment in
which businesses operate.
63. High taxes and government restrictions help to encourage entrepreneurs by providing
greater incentives for people to work hard and create profit.
64. One of the best things the governments of developing countries can do to increase wealth
is to minimize interference with the free exchange of goods and services.
65. In countries where businesses cannot enter into binding contracts, business owners
assume additional risk.
66. In an effort to increase wealth and their country’s standard of living, many governments
are taking over major industries and operating them as nonprofit organizations.
67. Corruption and illegal activities are expected in a capitalist system and can be beneficial.
68. One way for a government to actively promote entrepreneurship is to establish a currency
that’s tradable in world markets so that you can buy and sell goods anywhere in the world using
that currency.
69. Honesty, integrity, and high ethical standards are essential to a capitalist economic
system like the one that operates in the United States.
70. Laws that allow companies to write enforceable contracts decrease the risk of doing
business.
71. In rich countries such as the United States, changes in the level of taxation have little
impact on the incentives of entrepreneurs.
72. The failure to uphold high ethical business standards by a few companies can negatively
impact the entire U.S. business community.
73. Several years ago, the government of the small nation of Allegro owned the nation’s
telephone company and landlines. This relatively poor government relied on taxes to develop this
industry and provide service to its citizens. If the government desired to rapidly improve people’s
access to phone service, its best course of action would involve selling the telephone company to
private investors.
74. The government of the nation of Winstone is trying to achieve a high quality of life by
imposing strict regulations to protect the environment and ensure safe working conditions in
factories and mines. The government also has established ambitious programs to help the poor,
financing them by setting high tax rates. These efforts by Winstone’s government should create
an atmosphere that encourages entrepreneurship.
75. Though it has received a lot of attention, the development of the Internet has had less of
an impact on the way businesses operate than many other technological changes.
76. An increase in productivity indicates that more can be produced in a given time period
with the same amount of resources.
77. Technology can help businesses become more efficient and productive.
78. Productivity is the amount of output you generate given the amount of input such as hours
worked.
79. Effectiveness means producing goods and services using the least amount of resources.
80. Effectiveness means producing the desired result.
81. Technology refers to everything that makes business operations more effective, efficient,
and productive.
82. E-commerce is the buying and selling of goods over the Internet.
83. The B2B Internet market consists of selling goods and services to consumers.
84. The rise of Internet marketing has become particularly important in doing business in the
B2B markets.
85. The business-to-business segment of e-commerce is of less importance than the
business-to-consumer segment of e-commerce.
86. Technology allows firms to be more responsive to their customers’ wants and needs.
87. Bar codes are a form of technology that has enhanced a company’s ability to be
responsive to consumer needs.
88. An electronic storage file where information is kept is called a CPU.
89. The databases of a business often include a great deal of information about the firm’s
customers.
90. Information in a database allows firms to carry only the products that the local population
wants.
91. Identity theft is when individuals or firms access people’s personal information and then
use it for illegal purposes and activities.
92. The main difference between B2C and B2B e-commerce is that B2C uses only the
Internet, while B2B combines e-commerce with traditional (bricks-and-mortar) outlets.
93. There is less risk involved in starting an e-commerce-only business than there is in trying
to add e-commerce to a traditional (bricks-and-mortar) store.
94. One of the major advantages to firms involved in e-commerce is that the technology is
still so new that the Internet-based firms face very little competition.
95. Nicki has joined with several other investors to form a new company that sells foot-care
products to consumers over the Internet. Nicki has invested in a B2C e-commerce company.
96. Over the past several years, workers in the small nation of Rainland have enjoyed an
increase in the number of holidays and a reduction in the average length of the workday that
have reduced the total number of hours they work each year. However, the output per worker in
Rainland is higher now than it was before the reduction in hours. These facts suggest that
productivity in Rainland has increased.
97. SleekWrap is a company that produces industrial coatings for the steel industry. Until
recently it relied on wholesalers to distribute its products to other businesses, but now it also
sells directly to its business customers through its website. This is an example of the largest and
most important type of e-commerce transaction.
98. As emerging technologies become widespread, businesses tend to find better uses for
them. However, in the case of the Internet, businesses that sell B2B have not benefited from
directly selling to their business customers in the same way that B2C companies have done.
99. With the emergence of the Internet, Jasmine finds it easy to do all her gift buying online.
She takes comfort in the fact that new technologies if installed properly are seldom used in
unethical ways.
100. Technological innovation has a ripple effect. With the advent of the Internet, Tyler, a
certified tech-nerd, is being courted by companies to write the next generation of antivirus
software. He tells us its big business!
101. To remain competitive in today’s market, firms must produce a quality product and offer
outstanding service at a reasonable price.
102. Producing a high-quality product will ensure success in the competitive environment.
103. Successful firms follow a customer-driven strategy, as opposed to the management-driven
strategy used in the past.
104. Zero defects means that there is a company goal of no mistakes in making products.
105. Traditional businesses have a managerial focus rather than a customer focus.
106. Competition is fierce! One way to respond quickly to customer needs is to develop a
strategy of empowering employees.
107. A policy of empowerment encourages managers to make decisions quickly for their
frontline employees.