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MGTA01H3 (348)


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Management (MGT)
Chris Bovaird

~MANAGEMENT REVIEW~ Chapter 1 and Chapter 2 Part 1: Introducing the Contemporary Business World Chapter 1: Understanding the Canadian Business System 1. The Concept of Business and Profit Business : an organization that produces and/or sells goods or services in an effort to make a profit Profit: what remains after a business’ expenses have been subtracted from it’s revenues (expenses-revenue=profit!) • Businesses wouldn’t exist if there was no demand in the market, no matter how efficient the company is • Businesses produce most of our goods and services along with employing majority of working people • New forms of technology, services, and international opportunities promise to keep production and consumption and employment growing indefinitely 2. Economic Systems and Around the World Economic System : the way a nation allocates its resources among its citizens; differs in unions, who owns and controls the resources [FOP] Factors of Productions : resources used to produce goods and services • Labour: mental and physical labour of people, a wide variety of skilled people to keep the company up • Capital: financial resources needed to operate an enterprise, need it to start a business and keep it running • Natural Resources: items used in the production of goods and services in their natural state; (land, water, minerals, trees) • Entrepreneurs: an individual who organizes and manages labour, capital and natural resources to produce goods and services to earn a profit but also risks failures • Information Resources: ( not a big ro) information such as market forecasts, economic data and specialized knowledge of employees that are useful to help achieve goals. Types of Economic Systems • Different types of economic systems manage the FOP in different ways; privately and publicly owned; the way that decisions are made about productions and allocations Command Economies: the government owns and operates ALL industries • Communism and Socialism [2 basic forms]  Karl Marx’s Communism: a society in which individuals would ultimately contribute according to their own abilities and receive economic tax benefits according to their needs  Socialism: a less extensive command system. Government owns the major industries, large proportion works for the government which results in higher taxes Market Economies: a mechanism for exchange between buyers and sellers of a particular good or service, i.e. both buyers and sellers have freedom of choice, overpricing, and selling group • Capitalism: a type of market economy offering private ownership of the factors of production and of profits from business activity • Mixed Market Economy: a system featuring characteristics of both command and market economies ⇒ Most countries of the eastern bloc have adopted this Privatization: the transfers of activity from the government to the public sector, i.e. postal code=government air traffic ⇒ Another trend is deregulation, which is the reduction in the number of laws affecting business activity, i.e. airlines, pipelines, banking, trucking Interactions Between Businesses and Governments How Government Influences Businesses • Government as a Customer: buy thousands of different products and services from business firms, i.e. office supplies, buildings, computers, etc. ⇒ Leading purchaser in Canada, a number of different businesses depend on the governments purchases • Government as a Competitor: competes with businesses thrown crown corporations; account for a significant and wide variety of economic activity for Canada • Government as a Regulator: the government regulates businesses through many administrative boards, tribunals or commissions ⇒ Reasons: protecting competition, consumers, the environment, achieve social goals • Government as a Taxation Agent: imposed and collected by the governments, federal, provincial and municipal ⇒ Revenue Taxes (Income Taxes): provide to fund for various services and programs ⇒ Progressive Taxes: levied at a higher ratio on higher income taxpayers, and levied at a lower ratio on lower income taxpayers ⇒ Regressive Taxes: (sales tax): taxes levied at the same rate regardless of the persons income ⇒ Restrictive Taxes: taxes on alcohol, tobacco, gas because legislative bodies believe they should be • Government as a Provider of Incentives: to businesses in need and firms that provide through government organizations ⇒ tax rebates, assistance programs, tariffs • Government as a Provider of Essential Services: highways, roads, postal services, armed forces, hospitals, etc. 3. The Canadian Market Economy Demand and Supply in the Market Econo
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