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Chapter 1

Management (MGT)
Course Code
Chris Bovaird

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Chapter 1
Business t an organization that seeks to earn profits by providing goods and services
Profit t ]ÁZu]v(µ]v[ÆvZÀvµ(}u]Àvµ
of who owns and controls these resources, known as Z^(}}(}µ]}v_X
Factors of production t labour, capital, entrepreneurs, and natural resources (information resources)
Labour t is the mental and physical capabilities of people.
Capital t the financial resources needed to operate an enterprise
Entrepreneurs t the people who accept the opportunities and risk involved in creating and operating
Natural resources t items used in the production of goods and services in their natural state.
Information resources t information such as market forecasts, economic data, and specialized
knowledge of employees that is useful to a business and that helps it achieve its goal
Types of economic systems t command and market economies
Command economy t an economic system in which government controls all or most factors of
production and makes most or all of the production decisions. Communism is a system in which the
government owns and operates all sources of production. Socialism is a system where the government
owns and operates only selected major industries. Only a small proportion of the country decides where
it may work, while most work for the government.
Market economy t an economy driven by the market, which is a mechanism for exchange between the
buyers and sellers of a particular good or service. Capitalism is a kind of market economy where it offers
private ownership of the factors of production and of profits from business activity.
Mixed market economy t an economic system with elements of both a command and market economy.
Privatization t the transfer of activities from the government to the public sector.
Deregulation t a reduction in the number of laws affecting business activity (without government
Government as a customer t government buys thousands of different products and services
Government as a competitor t competes through crown corporations
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