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MGTA01H3 (348)

Management - Lecture and Textbook Notes.docx

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Management (MGT)
Chris Bovaird

Management Notes Chapter 1 Canadian Business System - Business an organization that provides goods or services, to customers in order to make a profit - Profit the difference between o $$$ in (revenues or sales) o $$$ out (costs or expenses) - Profit is a fundamental reason for a business to exist o Not all organizations are businesses (e.g. hospitals, universities, churches) o These provide services but not for profit - Loss o When expenses are greater than revenues o Example: it costs more money to produce the products and run the business than receiving the values of goods o Examples of loss making businesses: - Purpose of business is to sell something and make a profit out of it Economics: the study of how businesses, people make choices about - What things to produce/consume - How best to produce things - How best to distribute wealth - Factors of production - basic building blocks used to produce anything o Labors: human beings (i.e. workers) o Natural resources: raw materials found in ground, grown from earth, or harvested from nature (i.e. coal, wheat, water, wood) o Capital: money, or machines and technologies that money can buy (i.e. computers, phones, hammers, tractors) o Entrepreneur: the people who assemble and organize the other factors of production, the individuals who make it all happen - Economic systems o How difference countries answer basic economic questions: o Who should own or control the factors of production? o What should be produced, with the factors of production? - Command (planned) Economies o Countries where: - Market Economies o Countries where: individuals own/control the factors of production o Individuals make all/most of the decisions - Economic Systems o Countries differ as to how central the government is in running the economy o (copy chart from powerpoint) - Canada is a mixed Economy o Majority of factors (farmland, forests, mines) owned by private individuals o But government does intervene taxation and regulation) o Government provides some services - Mixed Economy 2 simple examples o I decide where I work, I negotiate my salary with the University. But, the government taxes me o Walmart (owned by Walton Family) sits in shopping mall next to LCBO (owned by Ontario Government) 1 | M a n a g e m e n t N o t e s How markets work: supply and demand - Law of supply o Producers will offer more of a product as its price increases, less as it drops - Law of demand o Consumers will buy more of a product as its price drops, less as it rises Not all markets are the same: - Ability of buyers to negotiate good prices, depends on number of sellers in the market Perfect Competition - Lots and lots of suppliers, and they are all small and must sell at the same price - Example: carton of milk Monopolistic competition - Lots and lots of suppliers, most are small and almost the same thing and at the same price - Example: coffee shop vs. Starbucks Oligopoly - Small number of suppliers (4 or 5) - Each tries to differentiate itself - Industry hard to enter, hard to exit - They watch each other closely - All are big/large - Example: Canadian baking industry Chapter 1 Textbook Notes Business an organization that seeks to earn profits by providing goods and services Profit the money that remains after a businesss expenses are subtracted from its revenues Expenses the money a business spends producing its goods and services and generally running the business (Also known as costs) Revenues the money a business earns selling its products and services (also known as sales) - Profits reward the owners for taking risks by investing their money and time - Businesses must know what consumers want or need in order to make a profit o Wont survive if there is no demand for its goods or services - Healthy business climate contributes to our quality of life and standard of living - Technology, service businesses and international opportunities keeps production, consumption and employment growing - Business profits enhance personal incomes while business taxes supports the government o Other supports charities Economic system the way in which a nation allocates its resources among its citizens Who owns and controls the resources (factors of production) Factors of production the resources used to produce goods and services Labour, capital, entrepreneurs, natural resources and now information resources Labour the mental and physical training and talents of people Also known as human resources People who work for a company Employees who are well trained and knowledgeable can be a real competition advantage for a company Capital the funds needed to operate an enterprise 2 | M a n a g e m e n t N o t e s Needed to start a business and then to keep it running and growing Major source: personal investment by owners that comes from Individual entrepreneurs Business partner Stock buyers Revenue (sales of product) Entrepreneurs an individual who organizes and manages labour, capital and natural resources to produce goods and services to earn a profit, but also runs the risk of failure Natural Resources items used in the production of goods and services in their natural state, including land, water, mineral deposits and trees E.g. water, tree, land and mineral resources Information Resources information such as market forecasts, economic data and specialized knowledge of employees that is useful to a business and that helps it achieve its goals Plays major role in todays societies Command economy an economic system in which government controls all or most factors of production and makes all or most production decisions Market economy an economic system in which individuals control all or most factors of production and make all or most production decisions Control production and allocation decisions through supply and demand Communism a type of command economy in which the government owns and operates all industries Karl Maxx saw a society where citizens would contribute according to their abilities and receive economic benefits according to their needs He expected government ownership of production factors t be only temporary Workers would own ownership when society had matured Most countries had abandoned communism in favour of a more market based economy Socialism a kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial industries Small business such as clothing stores and restaurants may be privately owned Workers are allowed to choose their occupation but most people tend to work for the government Extensive public welfare have resulted high taxes, thus socialism is declining in popularity Market a mechanism for exchange between the buyers and sellers of a particular good and service Buyer and seller enjoy freedom of choice of price and which product they would like to buy Capitalism a kind of market economy offering private ownership of the factors of production and of profits from business activity Mixed market economy an economic system with elements of both a command economy and a market economy; in practice, typical of most nations economies Privatization the transfer of activities from the government to the public sector Deregulation a reduction in the number of laws affecting business activity Deregulations free company do what they want without government intervention (simplifies the task of management Evident in many industries such as airlines, pipelines, baking, trucking and communication Government as Customer - Government buys different products and services from business firms o Office supplies, computers, highways - Largest purchases of advertising in Canada - Many businesses depend on government purchasing - Spends about a billion year Government as Competitor 3 | M a n a g e m e n t N o t e s - Competes with business through Crown corporations - Exist at both provincial and federal level Government as Regulator - Regulates business through many administrative boards, tribunals or commissions - Federal level (Canadian Radio-television) o Issues and renews broadcast licenses - Provincial boards and commissions regulates business through their decisions - Important reasons for regulating business o Protects competition, protects consumers, achieves social goals and protects environment Government as Taxation Agent - Taxes are imposed and collected by federal, provincial a
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