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Lecture#2 - Business Environment/Management/Finance Includes: Business environment with external and internal. The levels and process of management. Factors of production. Capital Formation Progress. Canadian Financial System

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Wilfrid Laurier University
Jim Mc Cutcheon

Introduction to Business Lecture 2 Notes - Business Environment/Management/Financial System Characteristics of the External Business Environment  Extremely dynamic and constantly changing  Increasingly competitive  Increasingly globalized  Complex, interactive, two-way phenomena  Largely uncontrollable from the perspective of the individual firm or manager PEST: A Model for Analyzing the External Environment Political, Economic, Social, Technological  Because the external business environment is largely uncontrollable it must be constantly monitored by management Goal is to proactive vs. Reactive   The PEST model breaks the external environment down into four sub-environments o Discussed in Chapter 2 of your textbook A Firm's Internal Environment  Unlike the external environment a firm's internal environment is largely controllable  Consists of four key functional areas o Marketing o Finance and Accounting o Operations Management (Production) o Human Resources Management and Industrial Relations  These functional areas are the focus of BU121 Levels of Management  In most organizations (except very small businesses) there are three different levels of management o Top or Executive Level Management o Mid Management o First Line (Supervisory) Management o Each level has different but interrelated responsibilities Top Management  The primary responsibility of top management is to both develop and implement the strategies that will be employed by the firm to realize the critical success factors Middle Management  Mid Managers manage other managers  They are responsible for implementing the strategic plans devised by top management  They devise both the "tactical plans" and "functional strategies" (ie. Marketing financial, operational, and human resource plans and strategies) necessary to achieve the strategic plans developed by top management First-Line (Supervisory) Management  First line managers supervise non-managerial employees Introduction to Business Lecture 2 Notes - Business Environment/Management/Financial System  They are responsible for implementing the "tactical plans" and "functional strategies" developed by mid-management  First line supervisors manage the day to day and week to week activities of the individuals who do the actual work involved in building a firm's products or providing firm's services The Process of Management  All managers, irrespective of their level in the organization must master the process of management  Definition: the basic tasks performed by all levels of management in order to realize the firm's primary objective... Ie. Achieving the critical success factors in a manner that meets legitimate stakeholder expectations o Planning o Organizing (breaking things down) o Directing, Leading, Motivating, and Empowering (true challenge of management) o Controlling (watching plan, measuring actual performance, comparing to goals, take corrective actions) o Communicating Factors of Production (Chap 1)  Definition: The basic resources that a country's businesses use to produce goods and services  There are five basic factors of production: o Capital: the financial resources needed to operate a business o Labour: the mental and physical capabilities o Natural Resources: physical resources such as land, minerals, water o Entrepreneurs: people who accept the risks involved in creating and operating a business o Information Resources: information such as economic data, market information, various measures of performance (sales, costs) and the means whereby this information can be quickly summarized, retrieved, and used by managers Factors of Production: Capital  We will begin our discussion of the economic environment of business by examining how firms and government raise the capital (money) necessary to operate  Reference: Lab Manual p7-24 "Overview of the Canadian Financial System" reading  This is commonly referred to as the Capital Formation Process The Capital Formation Process (where they go to generate cas
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