Management-Textbook Notes.pdf

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
Chapter 1 Introducing the Contemporary Business WorldSunday September 1 20131032 AMBusiness organization that produces or sells goods in order to make a profitProfit the amount that remains after expenses are subtracted from revenueRevenue the total amount made by the organization aka SalesCanadian economic system Anyone can setup a business to earn profitsConsumers also have freedom of choice to buy what they wantGoalBusinesses must take in account consumer demandsBusinesses must identify unmet needs or better current needs Economic Systems around the World the way in which a nation gives out resources amongst the populationEconomic systems differ in the way countries manage factors of productionFactors of Production resources used to produce goods and servicesLabour natural resources capital entrepreneursLabour human resources mental and physical capability of peopleAdvantageous if people are more knowledgeableCapital funding needed to operate businessCan be own investment partners or investors who invest in stocksRevenue keeps the business going ongoing source of capitalEntrepreneurs people who take a risk in operating a business or starting a new oneManages and organizes labour capital and natural resources in order to produce goods and services for profitMay run the risk of failure Natural Resources items used in their natural state for goods and servicesInformation Resources highly reliant because market forecasts specialized expertise knowledge of people and other economicdata used to predict future of organizationTypes of Economic Systems different ones manage factors of production in different waysOwnership is privateFactors owned by governmentCommand Economies rely on centralized government to control factors of production and to make most allocation decisionsCommunism government owns and operates all factors of production Karl Marx Theory Envisioned society where government was a guideSociety would later be allowed to take ownership of own servicesDid not work out as plannedSocialism government owns and operates only major businessesLarge population works for governmentInefficient because management positions are based on political consideration rather than abilityCauses high taxation and extensive public welfareSocialism declining in popularityMarket Economies buyer free to sell what they want consumer free to buy what they want Canadian economyCapitalism promotes private ownership of factors of production and of profit from the businessEconomic basis of market economy is process of demand and supply Mixed Market Economies mix of both types of economies Canadian economyPrivatization from government to private ownedEg Canadian air traffic control system is now privatizedPros reduced payroll greater efficiency and productivity more profitableDeregulation reduction of laws on the organizationHow Government Influences Business Canadian EconomyGovernment as CustomerGovernment buys lots of goods and servicesEg office buildings computers office supplies helicopters etcGovernment as CompetitorCompetes with businesses through Crown corporations accountable to minister of parliamentCrown Corporations government owned business hydro oneGovernment as RegulatorRegulates businesses through administrative tribunal or commissionEg Canadian Wheat Board controls price of wheatReasons for regulating protect competition protect consumers achieve social goal and protect environment Government as Taxation AgentRevenue Tax to fund services and programsProgressive Revenue Tax more tax for higher income low tax for lower incomeRegressive Revenue Tax sales tax same for all income levelsPoorer people end up paying higherof their income Restrictive Tax tax on alcohol tobacco etcImposed to control questionable products and provide revenue to the organizationGovernment as Provider of IncentivesEg toyota and hyundai receive much money in the form of training workers interest free loans and suspension of custom dutiesGovernment as Provider of Essential ServicesProvides highways postal services minting of money armed forces etc Creates stability that encourages business activityDemand and Supply in a Market EconomyLaw of Demand willingness to buyBuyers will purchase more of the product as price drops and less of the product as price increasesLaw of Supply willingness to offer goods and servicesProducers will offer more product as price rises and less of the product as price decreasesDemand and Supply ScheduleAssessment of relationship between demand and supply of good and its price at different levels Textbook Notes Page 1 Buyers will purchase more of the product as price drops and less of the product as price increasesLaw of Supply willingness to offer goods and servicesProducers will offer more product as price rises and less of the product as price decreasesDemand and Supply ScheduleAssessment of relationship between demand and supply of good and its price at different levelsDemand and Supply CurvesCurve can be formed from the data inthe schedulePlot demand and supply on same graphPOI is the market price or equilibrium profit maximizing price at which goods demand and supply is equal Surplus and ShortageSurplus supply exceeds demandShortage demand exceeds supplyEven though price may go up in this situation profit will still be lower than if equilibrium was metPrivate Enterprise and Competition in a Market EconomyPrivate enterprise system allows individuals to pursue own interest with minimal government restriction4 things required in private enterprise systemPrivate Property Rights ownership of resources in hands of individualFreedom of Choice choose what to buy who to hire and what to produceProfits influence entrepreneurs on what goods they should produce more profit when you work on your ownCompetition motivates businesses to gain advantage business must produce goods efficiently and be able to sell at reasonable profitCompetition forces businesses to be better or cheaperCompany with inferior expensive products will fail Degrees of CompetitionPerfect competition 2 important things must exist small firms and lots of themProducts of all firms must be very similar so that buyer views them as the same thingBoth buyer and seller knows the price that others are paying and receiving in the marketplaceSince firms are small easy to enter or leave marketGoing price set by supply and demand and accepted by both buyer and sellerEg Canadian agricultural industryMonopolistic competition Fewer sellers than perfect competition but same number of buyersSellers try to make their product unique from others by creating brand names design or style advertisingMay be large or small businesses and can leave market easily if they have toEg tide coke pepsi etcOligopolySmall number of sellers but they are quite large Difficult for new sellers to come into market because of the large capital investment neededVery influential in the sense that if one seller decides on an action the other firms will likely do the sameEg boeing and airbus are the only two airplane manufacturersMonopolyOnly one producerComplete control over price of the productOnly constrainthow much consumer demand will fall as price risesEg cable tv is currently a local monopoly It will lose business if telephone and satellite companies start providing tv channelsNatural Monopoly found in industries where one company can most efficiently provide the goodEg electric company in a province responsible for all the power needed Textbook Notes Page 2
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