Midterm Guide.docx

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Department
Business Administration
Course
BUS 100
Professor
Kim Milnes
Semester
Fall

Description
Chapter 1 1) Factors of Production  Capital, labour, entrepreneurs, information resources, natural resources  All most important/most important is least in supply 2) Types of Economic Systems  Communism – gov‟t owns factors of production, and makes all decisions, government owns all industries  Socialism – gov‟t owns/operates critical industries, individuals own non-critical businesses  Market – distribution of resources based on supply/demand, ownership open to those who want it, freedom of choice  Mixed – (Canada), combination of freedom/government intervention 3) Elements of Private Enterprise  Private Property – right to own, buy, use, sell and item  Freedom of Choice – the right to choose what to buy/sell, including one‟s labour  Profits – anticipated profits affect what is produced  Competition – for resources and customers…motivates efficiency 4) Competition  Pure Competition – lots of sellers, same product, lots of buyers, no individual price control  Monopolistic Competition – range of possible sellers, possibly unique but similar, limited price control  Oligopoly – few sellers, high barriers to entry, similar products, “market price”  Monopoly – one seller, unique product, price control (sometimes natural monopoly) 5) Government Influence  Customer (ex. Building contracts)  Regulator (environmental requirements)  Competitor (ICBC is crown corp.)  Taxation Agent (income tax, sales tax, liquor tax)  Provider of Incentives (programs to stimulate economy)  Provider of Essential Services (road, health, police, postal) Chapter 2 1) Remote Environment  Social-cultural environment (people‟s tastes, opinion on big/small businesses….)  Political-legal environment (domestic government regulations)  Technological environment (what tech. is available, how is it changing, who develops it)  Economic environment (where in economic cycle, are people spending, and on what)  Business environment  International environment (relationships between countries, global regulations) 2) Economic Environment  GDP = gross domestic product, total product made in Canada  Inflation is when gov‟t injects more money into system than system produces, causes Canadians to have more money, but prices increase by same amount  Real GDP = GDP adjusted for inflation  GNP = gross national product, total product produced under Canadian ownership, regardless of location  Unemployment is the % of people without work who are actively looking for work  Productivity is the how much of a good can be produced with set amount of resources… increase in productivity causes increase in standard of living  Exchange rate is the comparison of currencies value around the world  Fiscal policies = gov‟t set on how money is used  Monetary policies = set by Bank of Canada on inflation rate depending on economy (poor economic situation = low inflation rate = cheap to lend/invest = easy monetary policy) 3) Porter‟s Five Forces  Rivalry among competitors – intense competition, elaborate advertising, price wars  Threat of new entrants – can cause massive change…if easy for new entrants, comp. is high  Suppliers – how many suppliers? Fewer suppliers means suppliers hold more power  Buyers – how many buyers? Fewer buyers means buyers hold more power  Substitutes – practical substitute product? More substitutes = more competitive enviro. Chapter 3 1) Managerial Ethics  Managerial ethics are the standard of behaviours that guides managers in work (hiring, firing, promotion, assigning work, )  Must behave ethically7 towards employees (listed above)  Towards employer – not claiming false expenses, no conflict of interest, etc  Towards other agents – consumers, ex. Fair pricing  Assessing ethical behaviour….1: Gather relevant facts  2: determine most appropriate moral values  Make ethical judgement 2) Social Responsibility  idea that business should balance commitments to both individuals and groups that are directly affected by the organization  Stakeholders want as much money as possible, but to what extent….?  Responsible to: environment, consumers (truth in advertising, reasonable prices, etc.), employees, investors  Businesses either Obstructionists, Defensive, Accommodative, Proactive Chapter 4  Small business = <100 employees, independently owned/operated, does not dominate market  Entrepreneur is business person who accepts risks/opportunities of a new business o Takes imitative, independent, good problem solver o Identify opportunity  Access resources  New venture  growth, stability, decline, close 1) Parts of Entrepreneurship o Identify Opportunity  “think outside the box” and no “blocking” of ideas  Idea must: create/add value for consumer, provide competitive advantage, marketable and financially viable, low exit cost o Accessing Resources  Equity (personal savings, love money, private investors, venture capitalists)  Debt financing (financial institutions, suppliers)  Also use grants, incubators, etc. to allow for growth o Building the Right team  Diverse skills, access to different resources, track record of success o The “Fit”  Is it the right entrepreneur  Can the resources available fit the project  Can the entrepreneur access the resources 2) 4 Ways to Start a Businesses  Buying existing business o Pros: safer, have customers, suppliers, reputation, location, „the system is in place‟ o Cons: cost possibly, reputation, location, need to win over staff  Taking over family business o Pros: Good reputation, good relationships w/ customers, financial resources o Cons: family disagreements over control, nepotism issues, poor previous handling  Buying a franchise o Pros: more resources, reputation, distribution line, expert advice, higher chance of success o Cons: less creativity, extra fees (before profit), strict regulations, lack of control  Starting from scratch o Pros: Complete control o Cons: no guarantee of success, massive time commitment, no „life,‟ harder to get loan 3) Success and Failure  Success: hard work, drive determination; market demand; managerial competence; luck  Failure: poor management, neglect, weak control systems, inefficient capital 4) Three Legal Forms of Businesses  Sole proprietorship o Pros: Complete control, all profits, simple legal setup, tax benefits o Cons: unlimited liability, no continuity at death, hard to borrow money  Partnership o Pros: ability to grow by adding money/talent, easier to borrow, simple legal set up o Cons: unlimited liability, harder to transfer ownership, disputes o General Partner = actively involved in managing, unlimited liability o Limited Partner = not
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