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MGTA01H3 (348)
Lecture

MGTA03 chap 1-5.doc

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Department
Management (MGT)
Course
MGTA01H3
Professor
Bill Mc Conkey
Semester
Fall

Description
Chapter 1 Understanding the Canadian Business SystemThe Concept of Business and ProfitTermsBusiness An organization that produces or sells goods or services in an effort to make a profit Revenues The money a business earns selling its products and services Expenses The money a business spends producing its goods and services and generally running the business Profit The money that remains if any after a businesss expenses are subtracted from its revenuesEconomic Systems around the WorldTerms Economic System The way in which a nation allocates its resources among its citizens Factors of production The resources used to produce goods and services labour capital entrepreneurs and natural resources Labour Also referred to as human resources labour is the mental and physical capabilities of people An example can be seen in a major corporation All members of the corporation who contribute to running and maintaining the business its liabilities and assets are forms of labour Capital The funds used to operate an enterprise A major source of capital for small businesses is personal investments which can come from individual entrepreneurs from partners who start businesses together or from investors who buy stock Another form of capital can be the revenue that enters the business once it successful enters the economic marketNatural resources Items used in the production of goods and services in their natural state including land water mineral deposits and trees Once just limited to resources that could only be produced in nature it now relates to include all physical resources Entrepreneurs The people who accept the opportunities and risks involved in creating and operating businesses An example can be seen in the establishment of Facebook by Mark Zuckerburg who had the technical skills to understand the benefits of connecting to the Internet and realized the potential behind network connections between its users The entrepreneur is able to identify unmet consumer needs such as advertising and selling a good or service The entrepreneur is able to spot a promising opportunity and develop a good plan for capitalizing on it Information resources information such as market forecasts economic data and specialized knowledge of employees that is used to a business and that helps it achieve its goalsan economic system in which government controls all or most Command economyfactors 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 Mixed market economy An economic system with elements of both market and command economies Privatization the process of converting government enterprises into privately owned companies Deregulation reduction in the number of laws affecting business activityCommunism two basic forms of command economies are communism and socialism originally proposed by Karl Marx communism is a system in which the government owns and operates all sources of production Marx envisioned a society in which individuals would ultimately contribute according to their abilities and receive economic benefits according to their needs he also expected government ownership of production factors to be only temporary once society has matured government would wither away and the workers would gain direct ownershipSocialismless extensive command economic system than communism socialism owns and operates only selected major industries smaller businesses such as clothing stores and restaurants may be privately owned workers in socialist countries are usually allowed to choose their occupations despite this a large population generally works for the governmentCapitalism a kind of market economy offering private ownership of the factors of production and of profits from business activityit is referred to as a political basis of market processes which sanctions the privateownership of the factors of production encourages entrepreneurship by offering profits as an incentiveInteractions between Business and GovernmentHow the government influences businessGovernment as customer government purchases thousands of different products and services from business firms the government is also the largest purchaser of advertising many businesses depend on government purchases if not for their survival at least for a certain level of prosperityGovernment as competitor the government competes with other business as Crown corporations which are accountable to a minister of Parliament for their conduct Crown corporations exist at both the federal and provincial level and account for a significant and wide variety of economic activity in CanadaGovernment as regulator government regulates business through many administrative boards tribunals or commissionat the federal level examples include the Canadian RadioTelevision and Telecommunications Commission CRTC which issues and renews broadcast licenses the Canadian Transport Commission CTC which makes decisions about route and rate applications for commercial air and railway companies and the Canadian Wheat Board which regulates the price of wheat at the provincial level provincial boards and commissions regulate business through their
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