DECA Study Guide

Business Management & Administration

Business Law
● Ethical​​-​ Pertaining to morals or the principles of morality; pertaining to right
and wrong in conduct; being in accordance with the rules or standards for right
conduct or practice, especially the standards of a profession.
● Liable​​- Responsible by law; legally answerable.
● Purchase order​​- A document that authorizes a purchase transaction between
the buyer and seller. It identifies the prices, discounts, dating, transportation,
charges, quantities, and other terms and conditions. applicable to any order
issued by a buyer to a seller. *It becomes legal when the order is signed and
accepted by the vendor, and becomes a contract binding both parties.
● Tax liability​​- A debt or total amount of tax an individual owes.
● Inheritance tax​​- A tax that individuals must pay to the state when they receive
inheritance. They have to pay a tax percentage based on how much they are
inheriting.
● Truth In Lending Act​​- A federal law that requires finance charges, such as the
annual percentage rate, terms of the loan, and total costs to the borrower, to be
disclosed to consumer credit terms before signing.
● Equal Employment Opportunity Commission (EEOC)​​-​ ​Responsible for
the fair and equitable treatment of employees with regard to hiring, firing, and
promotions.
● Occupational Safety and Health Administration (OSHA)​​- Sets guidelines
for workplace safety and environmental concerns and enforces those regulations.
● Securities and Exchange Commission (SEC)​​- Regulator of the sale of
securities (stocks and bonds). Responsible for issuing licenses to brokerage firms
and financial advisers. Investigates any actions among corporations that affect
the value of stock. *Protects investors.
● Food and Drug Administration (FDA)​​- Regulates the labeling and safety of
food and health products.
● Consumer Product Safety Commission (CPSC)​​- Responsible for
overseeing the safety of products such as toys, electronics, and household
furniture.
● Environmental Protection Agency (EPA)​​- Protects human health and our
environment. Responsibilities include monitoring and reducing air and water
pollution, as well as overseeing recycling & hazardous waste disposal.
 ● Federal Trade Commission (FTC)​​- Enforces the principles of a
private-enterprise system and protects consumers from unfair or deceptive
business practices.
● Sherman Anti-Trust Act (1890)​​- the first measure passed by the U.S.
Congress to prohibit trusts and monopolies.

Types of Economies
● Market Economy​​- An economic system determined by the market, and is
characterized by free enterprise and little governmental interference.
*Consumers decide what will be produced by casting economic votes.
● Economic Votes​​- Purchases that consumers make in the marketplace influence
which goods and services are produced in a market economy.
● Traditional Economy​​- An economic system determined by tradition, and is
characterized by agricultural goods/services and later progression into
market/command economies.
● Command Economy​​- An economic system determined by the government,
and is characterized by maximum government regulation of production, prices,
and quantity of specific goods/services.

Starting a Business
● Capital​​- Primary expenses needed to start and operate a business.
● Entrepreneurs​​- Individuals who expand their business in the form of products,
personnel, and target markets, and are involved in the daily management of their
businesses. *They do not need to start a business from scratch, they can purchase
franchises.
● Franchise owners​​- People who want to be entrepreneurs yet must expand
their business or create new businesses.
● Chronological résumé​​- A resume that lists an applicant's education and
experience in order according to date, beginning with the most recent.
● Functional résumé​​- A resume that emphasizes major accomplishments and
lists an applicant’s education and experience according to importance.
● Generalized résumé​​- A resume that lists broad, general information about an
applicant’s education and experience, rather than specific information.
● Job specification​​- An explanation of the skill, knowledge, and characteristics
required for a job position.
● State departments of vocational rehabilitation​​- Agencies that provide
current information about requirements of many jobs and suggestions about
other agencies to contact.
Types of Businesses
● Vendor​​- Someone who sells a product; anyone who supplies a good or service.
● Sole Proprietorship​​- A type of business where only one person completely
owns and is entirely responsible for their business.
● Partnership​​- A legal agreement between 2 or more people to be jointly
responsible for the success of failure of a business.
● Corporation​​- A business chartered by a state or sovereign that legally operates
apart from the owner(s). *By starting a corporation, one can sell stock to gain
capital & cover business expenses. By owning a majority of the stock themselves,
they control business.
● Private enterprise​​- Business activities unregulated by state ownership or
control. *Private businesses privately exchange stock in the stock market, rather
than publicly.
● Industry​​- Ownership/management of companies and factories. *Industries are
classified into 3 sectors: primary or extractive, secondary or manufacturing,
tertiary or services
● Monopoly- ​a single company or group owns all or nearly all of the market for a
given type of product or service; absence of competition *Outlawed by Sherman
Anti-Trust Act.

Business Channel
● Wholesaler​​- An intermediary who helps move goods between producers and
retailers.
● Wholesaling​​- The business of selling goods in large quantities to retailers.
● Retailing​​- The business of selling goods to the consumer. *Retailing takes place
when goods are sold to the ultimate consumer.
● Ultimate consumer​​- The customer who (finally) buys the product and is the
last link in the business channel.
● Intensive distribution​​- A method of selling products through every
wholesaler/retailer where consumers might look for it.
● Exclusive distribution​​- A method of selling products through just one
wholesaler/retailer. *Allows the manufacturer to maintain tight control over the
product.
● Franchise​​- A right/privilege to market products or services in a specific area.

Operating a Business
● Operating expenses​​- All of the expenses involved in running a business.
● Cost of goods​​- The amount of money paid for raw materials and products sold.
 ● Information management​​- The process of collecting information and
developing a system for storing information. *Collecting information can also be
used for marketing purposes.
● Inventory​​- Goods and materials that a business holds for the ultimate purpose
of resale.
● Stock​​- Money invested in a business; the quantity of money/goods accumulated
for the future.
● Stock turnover​​- Number of times the average inventory has been sold and
replaced in a given time period.
● Mass production​​- The production of a few products in large quantities in a
short span of time.
● Productivity​​- The amount and value of results produced from set amounts of
resources. *Economically measured by the rate of output per unit of input. Inputs
include resources such as labor and capital. Outputs include results such as
revenue.
● Service orientation​​- The business philosophy of consistently providing quality
service to customers.
● Communication​​- How businesses provide information and policies to their
customers. *Effective communication is truthful to customers and provides them
with accurate information and correct answers to their questions. Successful
businesses are never rude to a customer or go against their wishes.
● Quality assurance​​- A process businesses use to prevent defective products
from being created/sold; a guarantee to the customer that all products
manufactured and sold are not defective in any way.
● Hours open/ Operating hours​​- The length of time during the day that a
business is open for service to the public.

Management Functions
● Planning​​- The function of management that deals with creating future goals
determining the course of action necessary to accomplish them. Planning decides
the path the business will go on.
● Organizing​​- The function of management that accomplishes goals by gathering
the resources necessary. Resources include manpower, money, raw material, and
other tools. *Organizing includes identifying activities, assigning resources and
duties, and delegating authority.
● Staffing​​- The function of management that supplies the business with human
personnel. Deals with employees and using each staff member’s abilities to its
maximum potential. *Staffing includes recruitment, training and development,
and promotions or transfer.
 ● Directing​​- The function of management that involves overseeing the processes
in the business. Directing supervises staff activities and how resources are being
used, to make sure everything is working effectively. *Directing involves
supervision, motivation, leadership, and communication.
● Controlling​​-​ ​The function of management that ensures all procedures in the
business are operating according to set standards, and corrects any deviations in
the system. Controlling ensures the business runs effectively and that progress is
made towards business goals.

Project Management
● Statement of Work (SOW)​​- A document that describes the type, amount, and
quality of work that a client agrees to perform for an organization. It must detail
pricing, payment, and terms and conditions. *Generally included as part of a
contract.
● Work breakdown structure​​- A model of the project which displays all the
critical elements and important tasks, and how they relate to each other and the
general project. It usually resembles a flowchart, with key objectives highlighted
and connected to supplementary tasks. *Useful for assisting staff, allocating
resources, budgeting, and scheduling.

Employees
● Managers​​- Overseers who set policies to guide operation of the business, make
sure employees and customers know the rules. *Can take suggestions from
customers, salespeople, and suppliers to develop their policies.
● Project team​​- A team of employees from different sectors of the company who
are assigned to work together on a specific project.
● Work circle​​- A group of employees who carry out an entire work process.
● Quality circle​​- A group of employees who are given work situations/problems
to study and discuss in order to recommend solutions to management.
● Standing committee​​- A group of employees whose work continues over a long
period of time.
● Compensation policies​​- Guidelines the business follows in paying employees.
● Workers' compensation​​- Insurance purchased by employers to provide
benefits, such as disability payments, to employees who are injured on the job.
● Training materials​​- Resources that companies supply to new employees so
that they learn about the company's structure, business strategies, and operating
policies and procedures, as well as how to analyze material
Employee Happiness
● Extrinsic satisfaction​​- Salaries, commissions, and bonuses- actual rewards
obtained from one’s occupation.
● Intrinsic satisfaction​​- Occupational satisfaction obtained from personal
results and feelings within one’s self.
● Concomitant satisfaction​​- Results obtained from positive working conditions
such as a pleasant work environment or good relations with coworkers.
● Vocational satisfaction​​- Overall pleasure obtained from working in an
occupation.

Business Competition
● Indirect competition​​- Competition between businesses that offer different
products.
● Direct competition​​- Competition between businesses that offer similar
products.
● Price competition​​- Competition between businesses that involves the pricing
of their products.
● Nonprice competition​​- Competition between businesses that involves factors
other than price. (ex: quality of products/employees)
● Competitive Pricing​​- When a business sets the price of their product based on
what the competition prices their similar product.

Computers in Business
● Operating system​​- The software that actually runs the computer, serving as the
bridge for hardware and software applications. It also provides security for the
computer.
● Database​​- A computerized data storage system that allows business to add and
update company information and to organize it in many different ways.
● Spreadsheet software​​- A computer program that allows a business to perform
accounting or other financial calculations accurately and easily. *Business can
make changes to specific numbers and figures in the spreadsheet, and quickly see
the resulting effect on its financial status.
● Point of sale software​​- An integrated software application that enables the
business to perform a variety of functions beyond the point of sale. (ex: allows the
business to place special orders and control inventory).
● Transaction process​​- A computerized information system that processes daily,
routine business transactions at the operation level of large companies.
● Digital convergence​​- Digital services that were once separate entities now
combined into new forms. (ex: Internet companies offering phone service).
 ● Automated Oversight​​- Software that assigns risk limits to certain employees
or departments. The technology can also track and monitor those individuals and
find if they exceed the risk limit, notifying management at once.

Accounting in Business
● Stockholders​​- People who own a share in a corporation, with limited liability.
● Stock market​​- Letting other people help you with parts of your company in
terms of expenses. A stock exchange.
● Supply and demand​​- 2 factors that interact together and influence the pricing
of a private enterprise’s product.
● Profit and loss statement​​- A financial statement released every quarter or
year that details a company's ability to generate profit. It summarizes revenues,
expenses, and total profits, showing whether a company has gained or lost.
● Risk pyramid​​- Shows a comparison of one investment to another. The top of
the pyramid signifies highest risk, while the base signifies lowest risk.
● Time value of money​​- The value of money increases as time passes. (ex: In a
bank, if you deposit $4,000, in 5-10 years the monetary value of that will
increase).
● Double-entry accounting system​​- The modern-day accounting system that
records transactions using a system that has equal and opposite effects at least
two accounts. Transactions are recorded in terms of debts and credits, so that the
sum of all debts equals the sum of all credits.

Business Loans
● Loan​​- When one individual borrows money from another individual and agrees
to pay it back after a certain amount of time.
● Installment loan​​- A monetary loan that is repaid with a series of scheduled
payments.
● Credit​​- The granting of a loan and the creation of a debt; any type of postponed
pay.
● Borrower​​- The individual who borrows money, also known as the debtor.
*When the borrower agrees to a loan, he/she is making a contractual agreement
to pay back a loan in a certain manner within a specific time period.
● Lender​​- The individual who loans money, also known as the creditor. *If the
borrower does not have the collateral or credit history to obtain the loan, the
lender requests that another person co-sign for the loan.
● Interest​​- A leasing charge to the borrower for the use of the assets given to
him/her by the lender.
 ● Interest rate​​- Interest that is usually paid annually, also known as the annual
percentage rate.
● Open account​​- An account with an unpaid balance or has a nonzero debit or
credit balance.

Insurance
● Insuring​​- Guaranteeing against loss or harm caused by the business’s product.
*Monetary compensation is often paid by the company to the customer if harm
does arise from the product.
● Insurance​​- The act of insuring one’s property, life, person, and other assets in
case of an accident. *The insurance company generally pays for most, but not all,
expenses arising from the accident.
● Policyholder​​- The person who buys the insurance policy.
● Life insurance​​- Insurance that pays benefits to the family after the death of the
policyholder. It provides a savings and investment program at current market
rates and has cash value.
● Term insurance​​- Life insurance that covers a specific number of years.
● Homeowner's insurance​​- Insurance that guarantees against damage to the
property of property owners.
● Risk Retention Group​​- An insurance company that is state-chartered and
insures against liability risks for commercial business and government
organizations. They are mutual companies, owned and provide insurance to the
members of the group. They are not regulated the same way as regular policies.
*Created by the federal Liability Risk Retention Act in 1986.

Knowledge Management
● Knowledge Broker​​- Also known as an infomediary, an intermediary or
third-party seller who provides their client with information or advice on
goods and services, competitors, and research. They can also assist their
client on investments or purchases.
● Knowledge Economy​​- An economy based on the buying, selling, creating,
and evaluating of knowledge, or intellectual capital. The trading of ideas and
information is dominant, and worker knowledge can impact a company’s
value, but not officially. There are different economic concepts.
● Knowledge Flow​​- The transfer of knowledge between individuals in the
same business, as well as the gathering and releasing of information outside
the business.
● Knowledge Holder​​- An individual who has knowledge valuable to the
business or individuals in the business.
 ● Knowledge Management Strategy​​- Effective strategy includes the “push”
and “pull” strategy: employees are encouraged to contribute to the general
knowledge base at the company, or can make requests to gain expert
knowledge. *Crucial to business success because it leads to greater
connectivity and problem solving, while giving a competitive edge.
● Tacit Knowledge​​- Knowledge that individuals have but do not consciously
realize they possess.
● Explicit Knowledge​​- Knowledge that individuals have and consciously
realize they possess. *Crucial that tacit knowledge is converted to explicit
knowledge.
● Knowledge Vigilance​​- The state of a business that currently pursues and
obtains outside knowledge, as well as raising internal knowledge awareness
and creates knowledge management systems.
● Learning Organization​​- An organization that promotes the transfer of
knowledge between individuals and focuses on obtaining knowledge. It also
emphasizes experimentation and critical thinking, leading to rapid
innovation that lets it thrive. *A characteristic of a successful business.
● Information Technology Infrastructure Library (ITIL)​​- A set of
document and resources that is very comprehensive on information
technology. *An essential resource for companies on best practices and
techniques on how to handle information technology.

Quality Management
● Capability Maturity Model Integration (CMMI)​​- A procedure
technology companies use to assess their electronic product production
systems. It often aims to improve production speed and delivery to
customers, and is generally software-integrated.
● Six Sigma​​- Founded by Motorola in 1986, a renowned business
management strategy that focuses on the best possible quality for business
products. It also seeks to eliminate all defects from the production line and
the product itself. Groups of employees check production processes and
improve them or eliminate them if they do not produce customer satisfaction.
*A six sigma process has 99.99966% of products free from defects.
● Quality Control​​- A process that seeks to decrease the variability of product
outcomes during production, and correct any activities causing defects.
● Quality Improvement​​- A process that seeks to increase product quality,
and increase production efficiency by reducing waste or product losses.
 ● Quality Manual​​- An official document that describes a company’s quality
management system and its operations. *Generally include descriptions of
quality standards, company policy, staff roles, and quality control system.

Helpful Links (Referenced by DECA themselves):

http://www.managementstudyguide.com/what_is_management.htm
http://www.ehow.com/about_6559640_importance-code-conduct.html
http://smallbusiness.chron.com/