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Lecture

COMM LEC #1.docx

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Department
Commerce
Course
COMMERCE 1B03
Professor
Rita Cossa
Semester
Fall

Description
Commerce Lecture Notes #1 – Chapter 1 Taking Risks and Making Profits Within the Dynamic Business Environment General Definitions • A business is any activity that seeks to provide products (i.e., goods and services) to others while operating at a profit • Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses. • Business principles are also used in government agencies and non-profit organizations, which oftentimes have goals other than making a personal profit for their owners or organizers • Risk Reward Trade-Offs • Since not all businesses make a profit, starting a business can be risky • Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable • People have different tolerances for risk • To decide which is the best choice for you, you have to calculate the risks and the potential rewards of each decision • Two ways to succeed in business are to 1. Work your way to the top within a company • The advantage of working for others is that somebody else assumes the entrepreneurial risk and provides you with benefits 2. Start your own company • When you consider Canada’s wealthiest citizens, you will find that they arrived at their wealth as a result of this entrepreneurial spirit (or they were born into a wealthy family) • Two Markets • Consumer Market (Business to Consumer / B2C) o Products that are purchased for personal use o Business Market (includes Business to Business [B2B] and Business to Government [B2G]) o Product are purchased for resale OR o For use in the manufacture of other products OR o For daily operations o A business can sell to both types of markets (consumer or target business) • Stakeholders o Defined as all the people who stand to gain or lose by the policies and activities of a business • Customers want value • Employees want security • Investors want a strong ROI (return on investment) • Suppliers want to be paid • Dealers want support • Financial institutions want returns • Surrounding communities want “equity” • Governments want compliance • Environmentalists want change Creating Economic Wealth • If you were to analyze countries to see what causes the differences in the levels of wealth, you would have to look at the factors of production in each country **Figure will be on test What make countries rich today are a combination of entrepreneurship and the effective use of knowledge Entrepreneurs use what they’ve learned (knowledge) to grow their businesses and increase wealth Standard of Living and Quality of Life A country’s businesses are part of an economic system that contributes to the standard of living and quality of life for everyone in the country (and, potentially, the world) The term standard of living refers to the amount of goods and services people can buy with the money they have The term quality of life refers to the general well-being of a society in terms of its political freedom, natural environment, education, health care, safety, amount of leisure, and rewards that add to the satisfaction and joy that other products provide Maintaining a high quality of life requires the combined efforts of businesses (the more money businesses create, the more is potentially available to improve the quality of life for everyone), non-profit organizations, and government agencies It’s important to be careful • working to build a higher standard of living may lower the quality of life if it means less time with family or more stress The Business Environment It consists of the uncontrollable surrounding factors that either help or hinder the development of businesses *** Memorize • Businesses that create wealth and jobs grow and prosper in a healthy environment • Thus, creating the right business environment is the foundation for social benefits of all kinds including good schools, clear air and water, good health care, and low rates of crime • Businesses normally cannot control their environment, but they need to monitor it carefully and do what they can to adapt as it changes The Global Environment • In Figure 1.3 Ex: Lululemon – competitive environment (offshoring to Taiwan), trend in Social Environment (more people here want to live healthy) – company always scanning Business environment The Technological Environment • Technology refers to inventions or innovations from applied science or engineering research o Productivity is the amount of output you generate given the amount of input • The more you can produce in any given period of time, the more money you are worth to companies • Effectiveness means producing the desired result while efficiency means producing goods and services using the least amount of resources Social Media Marketing • Social media is the term commonly given to Web sites and online tools that allow users to interact with each other in some way – by sharing information, opinions, knowledge, and interests • There are two distinct dimensions to social media marketing o 1. It includes consumer-generated online-marketing efforts to promote brands and companies for which they are fans (or conversely, negatively promoting brands and companies for which
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