Automatic Millionaire Report and Vocab

By:
Joshua Kabins
business 101
professor: Robb Bay, Ph.D.
1-702-228-1903

Josh Kabins
Buisness 101
vocab
Chapter 1:
1. Business- any activity that seeks to provide goods and services to others while operating at a profit.
2. Goods- tangible products such as computes, food, clothing, cars, and appliances.
3.Services- intangible products(i.e., products that cant be held in your hand) such as education, health
care, insurance, recreation, and travel and tourism.
4. Entrepreneur- a person who risks time and money to start and manage a business.
5.
Revenue- the total amount of money a business takes in during a given period by selling goods
and services.
6. Profit- the amount of money a business earns above and beyond what it spends for salaries and
other expenses.
7. Loss- when a businesss expenses are more than its revenues.
8. Risk- the chance an entrepreneur takes of losing time and money on a business that may not prove
profitable.
9. Standard of living- the amount of goods and services people can buy with the money they have.
10. E-commerce- the buying and selling of goods over the Internet.
Chapater 2:
1. Invisible hand- A phrase coined by Adam Smith to describe the process that turns self-directed
gain into social and economic benefits for all.
2. Capitalism- an economic system in which all or most of the factors of production and distribution
are privately owned for profit.
3. Supply- the quantity of products tat manufacturers or owners are willing to sell at different prices
at a specific time.
4. Demand- the quantity of products that people are willing to buy at different prices at a specific
time.
5. Market price- the price determined by supply and demand
6. Inflation- a general rise in the prices of goods and services over time.
7. Deflation- a situation in which prices are declining
8. Recession- two or more consecutive quarters of decline in the GDP.
9. Depression- a severe recession, usually accompanied by deflation.
10. National debt- the sum of government deficits over time.
Chapter 3:
1. Importing- buying the products from another country.
2. Exporting- selling products to another country.
3. Free trade- the movement of goods and services among nations without political or economic
barriers.
4. Balance of trade- the total value of a nations exports compared to its imports measured over a
particular period.
5. Dumping selling products in a foreign country at lower prices than those charged in the
producing country.
6. Foreign direct investment(FDL)- the buying of permanent property and businesses in foreign
nations.
7. Exchange rate- the value of one nations currency relative to the currencies of the other countries.
8. Devaluation- lowing the value of a nations currency relative to the other currencies.

9. Tariff- a tax imposed on imports.

10. Embargo- a complete ban on the import or export of a certain product, or the stopping of all trade
with a particular country. 23
Chapter 4:
1.
Ethics-standards of moral behavior, that is, behavior accepted by society as right versus wrong.
2. Compliance-base ethics codes- ethical standards that emphasize preventing unlawful control an d
by penalizing wrongdoers.
3. Integrity-based ethics codes- ethical standards that define the organizations guiding values, create
an environment that supports ethically sound behavior and stress a shared accountability among
employees.
4. Whiiistle-blowers- insiders who report illegal or unethical behavior.
5. Corporate social responsibility(CSR)- a business concern for the welfare of society.
6. Corporate philanthropy- the dimension of social responsibility that includes charitable donations.
7. Corporate social initiatives- enhanced forms of corporate philanthropy directly relate to the
companys competencies.
8. Corporate responsibility- the dimension of social responsibility that includes everything from
hiring minority workers to making safe products.
9. Corporate policy- the dimension of social responsibility that refers to the position a firm takes on
social and political issues.
10. Social audit- a systematic evaluation of an organization progress toward implementing socially
responsible and responsive programs.
Chapter 5:
1. Sole proprietorship- a business that is owned, and usually managed by one persone.
2. Partnership- a legal form of business with two or more owners.
3. Corporation- a legal entity with authority to act and have liability apart from its owners.
4.
Unlimited liability- the responsibility of business owners for all of the debt of business.
5. Limited partnership- a partnership with one or more general partners and one or more limited
partners.
6. General partner- an owner who has unlimited liability and is active in managing the firm.
7. Limited partner- an owner who invests money in the business but does not have any management
responsibility or liability for losses beyond the investment.
8. Limited liability- the responsibility of a business owners for losses only up to the amount they
invest; limited partners and shareholders.
9. Conventional corporation- a state-chartered legal entity with authority to act and have liability
separate from its owners.
10. Merger- the result of two firms forming one company.
Chapter 6:
1. Entrepreneurship- accepting the risk of starting and running a business.
2. Affiliate marketing- an internist- based marketing strategy in which a business rewards individuals
or others businesses for each visitor or customer the affiliate sends to its website.
3. Entrepreneurs- creative people who work as entrepreneurs within corporations.
4. Enterprise zones- specific geographic areas to which governments try to attract private business
investment by offering lower taxes and other government support.
5. Incubators- center that offer new businesses low-cost offices with basic business services.
6. Venture capitalists individuals or companies that invest in new businesses in exchange for partial
ownership of those businesses.
7. Small business administration- a U.S. government agency that advises and assists small businesses
by providing management training and financial advice and loans.
8. small business investment company program- a program through which private investment

companies licensed by the small business administration lend money to small businesses.
9. Market- people with unsatisfied wants and need who have both the resources and the willingness
to buy.
10. Service corps of retired executives- an SBA office with volunteers from industry, trade
association, and education who counsel small businesses at no cost.
Chapter 7:
1. Management-the process used to accomplish organizational goals through planning, organizing,
leading, and controlling people and other organizational resources.
2. Planning-a management function that includes anticipating trends and determining the best
strategies and tactics to achieve organizational goals and objectives.
3. Organizing-a management function that includes designing the structure of the organization and
creating conditions and systems in which everyone and everything works together to achieve
the organization's goals and objectives
4. Leading-creating a vision for the organization and guiding, training, coaching, and motivating
others to work effectively to achieve the organization's goals and objectives.
5. Controlling-a management function that involves establishing clear standards to determine
whether or not an organization is progressing toward it goals and objective, rewarding people
for doing a good job, and take corrective action if they are not.
6. Vision-an encompassing explanation of why the organization exists and where it's trying to
head.
7. Mission Statement-an outline of the fundamental purposes of an organization.
8. Goals-the broad, long-term accomplishments an organization wishes to attain.
9. Objectives-specific, short-term statements detailing how to achieve the organization's goals
10. SWOT Analysis-a planning tool used to analyze an organization's strengths, weaknesses,
opportunities, and threats.
Chapter 8:
1. Economies of Scale-The situation in which companies can reduce their production costs if they
can purchase raw materials in bulk; the average cost of goods goes down as production levels
increase.
2. Hierarchy-A system in which one person is at the top of the organization and there is a ranked
or sequential ordering from the top down of managers who are responsible to that person.
3. Bureaucracy-An organization with many layers of managers who set rules and regulations and
oversee all decisions.
4. Chain of Command-The line of authority that moves from the top of a hierarchy to the lowest
level.
5. Span of Control-The optimum number of subordinates a manager supervises or should
supervise.
6. Centralized Authority-An organization structure in which decision-making authority is
maintained at the top level of management at the company's headquarters.
7. Decentralized Authority-An organization structure in which decision-making authority is
delegated to lower-level managers more familiar with local conditions than headquarters
management could be.
8. Tall Organization Structure-An organizational structure in which the pyramidal organization
chart would be quite tall because of the various levels of management.
9. Flat Organization Structure-An organization structure that has few layers of management and a
broad span of control.
10. Departmentalization-The dividing of organizational functions into separate units.
Chapter 9:
1. Production-The creation of finished goods and services using the factors of production: land,

labor, capital, entrepreneurship and knowledge.

2. Production Management-The term used to describe all the activities managers do to help their
firms create goods.
3. Operations Management-A specialized area in management that converts or transforms
resources (including human resources) into goods and services.
4. Form Utility-The value producers add to materials in the creation of finished goods and
services.
5. Process Manufacturing-The part of the production process that physically or chemically
changes materials.
6. Assembly Process-The part of the production process that puts together components.
7. Continuous Process-A production process in which long production runs turn out finished
goods over time.
8. Intermittent Process-A production process in which the production run is short and the
machines are changed frequently to make different products.
9. Computer-Aided Design (CAD)-The use of computers in the design of products.
10. Computer-Aided Manufacturing (CAM)-The use of computers in the manufacturing of
products.
Chapter 10:
1. intrinsic reward-personal satisfaction you feel when you preform will and complete goals.
2. extrinsic reward-something given to you by someone else as recognition for good work; e.g.
rewards: pay increases, praise, promotion.
3. scientific management-studying workers to find the most efficient ways of doing things and
then teaching people those techniques
4. time-motion studies-studies, begun by frederick taylor, of which tasks must be performed to
complete a job and the time needed to do each task.
5. principle of motion economy-theory developed by frank and lillian gilbreth that every job can
be broken down into a series of elementary motions.
6. hawthorne effect-the tendency for people to behave differently when they know the are being
studied.
7. maslow's hierarchy of needs-theory of motivation beaded on unmet human needs from basic
physiological needs to safety, social, and esteem needs to self-acualization needs.
8. motivators-in herzbergs theory of motivating factors, job factors that cause employees to be
productive and that given them satisfaction.
9. hygiene factors-in herzbergs theory of motivating factors, job factor that can cause
dissatisfaction if missing but that do not necessarily motivate employees if increased.
10. goal-setting theory-the idea that setting ambitious but attainable goals can motivate workers and
improve performance if the goals are accepted, accompanied by feedback, and facilitated by
organizational conditions.
Chapter 11:
1. Human Resource Management (HRM)-The process of determining human resource needs and
then recruiting, selecting, developing, motivating, evaluating, compensating and scheduling
employees to achieve organizational goals.
2. Affirmative Action-Employment activities designed to "right past wrongs" by increasing
opportunities for minorities and women.
3. Reverse Discrimination-Discrimination against members of a dominant or majority (eg whites
or males) usually as a replace of polices designed to correct previous discrimination against
minority or disadvantage groups
4. Job Analysis-A study of what employees do who hold various job titles.
5. Job Description-A summary of the objectives of the job, the type of work to be done, the

responsibilities and duties, the working conditions and the relationship of the job to other
functions.
6. Job Specifications-A written summary of the minimum qualifications required of workers to do
a particular job.
7. Recruitment-The set of activities used to obtain a sufficient number of the right employees at
the right time.
8. Selection-The process of gathering information and deciding who should be hired, under legal
guidelines, to serve the best interests of the individual and the organization.
9. Contingent Workers-Employees that Include part-time workers, temporary workers, seasonal
workers, independent contractors, interns, and co-op students.
10. Training and Development-All attempts to improve productivity by increasing an employee's
ability to perform. Training focuses on short-term skills, whereas development on long-term
abilities.
Chapter 12:
1. union-An employee organization whose main goal is representing its members in employeemanagement negotiation of job-related issues
2. craft union-An organization of skilled specialists in a particular craft or trade.
3. knights of labor-The first national labor union; founded 1869.
4. American federation of labor (AFL)-An organization of craft unions that championed
fundamental labor issues; founded in 1886.
5. industrial unions-Labor organizations of unskilled and semiskilled workers in mass-production
industries such as automobiles and mining.
6. congress of industrial organizations (CIO)-union organizations of unskilled workers; broke
away from the American Federation of Labor (AFL) in 1935 and rejoined it in 1955.
7. yellow-dog contract-A type of contract that required employees to agree as a condition of
employment not to join a union; prohibited by the Norris-LaGuardia Act in 1932.
8. collective bargaining-The process whereby union and management representatives form a
labor-management agreement, or contract, for workers.
9. certification-Formal process whereby a union is recognized by the National Labor Relations
Board (NLRB) as the bargaining agent for the group of employees.
10. decertification-The process by which workers take away a union's right to represent them.
Chapter 13:
1. Marketing-The activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large.
2. Marketing Concept-A three-part business philosophy: (1) a customer orientation, (2) a service
orientation, and (3) a profit orientation.
3. Customer Relationship Management (CRM)-The process of learning as much as possible about
customers and doing everything you can to satisfy them - or even exceed their expectations with goods and services.
4. Marketing Mix-The ingredients that go into a marketing program: product, price, place, and
promotion.
5. Product-Any physical good, service, or idea that satisfies a want or need plus anything that
would enhance the product in the eyes of consumers, such as the brand.
6. Test Marketing-The process of testing products among potential users.
7. Brand Name-A word, letter, or group of words or letters that differentiates one seller's goods
and services from those of competitors.
8. Promotion-All the techniques sellers use to inform people about and motivate them to buy their
products or services.

9. Marketing Research-The analysis of markets to determine opportunities and challenges, and to

find the information needed to make good decisions.
10. Secondary Data-Information that has already been compiled by others and published in journals
and books or made available online.
Chapter 14:
1. Value-Good quality at a fair price. When consumers calculate the value of a product, they look
at the benefits and then subtract the cost to see if the benefits exceed the costs.
2. Total Product Offer-Everything consumers evaluate when deciding whether to buy something;
also called a value package.
3. Product Line-A group of products that are physically similar or are intended for a similar
market.
4. Product Mix-The combination of product lines offered by a manufacturer.
5. Product Differentiation-The creation of real or perceived product differences.
6. Convenience Goods and Services-Products that the consumer wants to purchase frequently and
with a minimum of effort.
7. Shopping Goods and Services-Those products that the consumer buys only after comparing
value, quality, price, and style from a variety of sellers.
8. Specialty Goods and Services-Consumer products with unique characteristics and brand
identity. Because these products are perceived as having no reasonable substitute, the consumer
puts forth a special effort to purchase them.
9. Unsought Goods and Services-Products that consumers are unaware of, haven't necessarily
thought of buying, or find that they need to solve an unexpected problem.
10. Industrial Goods-Products used in the production of other products. Sometimes called business
goods or B2B goods.
Chapter 17:
1. Accounting-The recording, classifying, summarizing, and interpreting of financial events and
transactions to provide management and other interested parties the information they need to
make good decisions.
2. Managerial Accounting-Accounting used to provide information and analyses to managers
inside the organization to assist them in decision making.
3. Certified Management Accountant (CMA)-A professional accountant who has met certain
educational and experience requirements, passed a qualifying exam, and been certified by the
Institute of Certified Management Accountants.
4. Financial Accountant-Accounting information and analyses prepared for people outside the
organization.
5. Annual Report-A yearly statement of the financial condition, progress, and expectations of an
organization.
6. Private Accountant-An accountant who works for a single firm, government agency, or
nonprofit organization
7. Public Accountant-An accountant who provides accounting services to individuals or business
on a fee basis.
8. Certified Public Accountant (CPA)-An accountant who passes a series of examinations
established by the American Institute of Ceritified Public Accountants (AICPA).
9. Auditing-The job of reviewing and evaluating the information used to prepare a company's
financial statements.
10. Independent Audit-An evaluation and unbiased opinion about the accuracy of a company's
financial statements.

Josh Kabins
business 101
7/10/14
Everyone can be a Millionaire
The Automatic Millionaire written by David Bach, gives the average person the confidence and
knowledge to be an automatic millionaire. By this he tries to discover ones own latte factor which
everyone, whether or not we know it, suffers from. With regards to this Bach tries to give helpful
advice to ensure a healthy and stable financial future. This so called Automatic Millionaire isn't a get
rich quick scheme but helps people ensure a healthy retirement knowing that they would be well off for
the untold future without work.
The Latte Factor is a key concept that people tend to over think or disregard as something
beneficial or to their liking which in the long run might lose them a lot of money. This might lose
people millions of dollars over a course of their life time. One example of the Latte Factor as given in
the Automatic Millionaire is of a person that might daily go out and buy a coffee before or after work.
This coffee might cost them five dollars, but with this coffee they of course need a donut on the side
which cost an additional two dollars. Together they both cost a total of seven dollars. In the course of a
year this would come to cost that individual an outstanding $2,555.00 annually. Unfortunately, what
people dont seem to understand that over ones working career this would cost them over one-hundred
thousand dollars. What this person should have been doing was saving that money by not buying the
coffee and placing it in a 401k account. This would gain interest over time increasing their overall
income over a life time (pending on the economy). Bachs idea is that everyone has a Latte Factor
from buying bubble gum to new cars. If everyone could cut down on their latte factor they could save a
lot of money increasing their overall wealth. Knowing this wouldn't make people millionaires over
night, but people would still increase their over all wealth slowly and surely.
Investing early in a 401k account is vital for maximum financial gain as taught in the book. One
example of this is a person at the age of eighteen who places 15 thousand dollars into a 401k plan and

gets out a million dollars at the age of 65. But if one is to place the same amount of money into the
same plan at a age of 35 they would get a return of less money. Due to the time in which the money
was in the account to sit there and gain interest. Furthermore that same person at the age of 35 would
have to place several thousands of dollars more into the start of the plan to even get close to the same
outcome of the person who place 15 thousands dollars in to the account at the age of 18.
One of the best investments in which the Automatic Millionaire mentioned was buying homes.
By this property investments usually gain value over time and therefor are a good investment. This is
due to limited space and it being always in demand. But unfortunately the book The Automatic
Millionaire was written in 2004. Therefor it wasn't prepared for the huge drop in the market in 2008. I
believe if David Bach was to rewrite this book he would include that in the current market house
investments after the sudden hug dip would be great for huge financial gain. But I would also suspect
for people who suffered greatly from the crash he would say don't sell your homes yet hold on them
and they will increase in value over time. He also mentioned with the people who are looking at homes
they are better off to buy the home fully using mortgages over renting. Therefor it would be most cost
effective over time.
Overall the book the Automatic Millionaire is a great book in which it tries to help the average
joe make profit over the span of a lifetime. By limiting ones own Latte factor they are able to save
thousands of dollars over years and possibly make a million dollars with proper investment with the
money saved. Second investing early in a 401k is vital for maximum finical growth due to time in
which the money will sit in the account and therefor the interest will gain interest. Finally buying
homes is generally always a great investment to make. But unfortunately the stock market is always a
factor and a risk everyone takes which hold significant gain and serious losses. Even though everyone
has the ability to become prosperous and wealthy when it come to retirement and become an automatic
millionaire.

Work cited:

Bach, David. The Automatic Millionaire: A Powerful One-step Plan to Live

and Finish Rich. New York: Broadway, 2004. Print.