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University of Toronto Scarborough
Management (MGT)
Ingrid L.Stefanovic

MGTA03Christ Bovaird [email protected], MW-232 September 15, 2009 In class test 12.5% Mid term exam 37.5% Final Exam 50% business: an organization thatprovides goods or services to customers in order to make a profit o buys things, use things to supply things to people who needs it or wants it o can be successful when businesssatisfy consumer needs and wants o provides goods and services and employ working people, create new innovations andprovide opportunities for other businesses (suppliers) o contribute to quality of life and standard of living, keep industries growing Profit: difference between$$ in and $$ out (revenue or sale cost or expenses) o Fundamental reason for a business to exist (not all organizations are businesses: hospitals, universities, churches, provide services but not for profit) Loss: expense > revenuecosts more to produce or run the business than sales generated o Air Canada: competition, recession, too many people working but too little people flying o General Motors, Chrysler: no ones buying new cars, Economics: The study of how businesses, people make decisions o what to produceconsume o how best to produce things o how best to distribute wealth (spend) Factors of production: basic building blocks used to produce anything o Natural resources: raw material in or grown from ground (ex. Coal, water, wood, cotton) o Labour: human beings, mental and physical capabilities of people o Capital: money or machines and technologies that money can buy (ex. computers, phones, tractors, hammers, welding machines, investments) o Entrepreneurs: people who assemble and organise the other factors, to make it happen Accept the opportunities and risk in creating business o Information: specialized expertise and knowledge of people, economic data Businesses create new information or repackage existing information too (AOL) September 22, 2009 5 factor of production (maybe): information, but information does not do anything unless you have human to interpret, analyse the information Economic systems: the way countries try to answer basic economic questions o Who should own or control the factors of production? o What to produce with the available factors? o How best to share it? www.notesolution.comMGTA03Christ Bovaird [email protected], MW-232 Command or planned economies: the govt owns most factors of production and makes most decisions regarding economic o Communist economies: govt ownscontrols almost all of the factors of production, makes almost 100% of the economic decisions (ex. North Korea) o Socialist economies: govt ownscontrols the majority of factors production (principal industries), makes most of the economic decisions (ex. Cuba) People choose their jobs but large portion works for govt Govt operated enterprises are inefficient because mgmt is based politically Welfare system result in high taxes Market economies: individuals own most of the factors of production and makes most of the decisions regarding the 2 key economic questions o Capitalist economy: all factors of production owned by private individuals, state plays no role in making economic decisions (no example) o Mixed economy: private individuals owncontrol majority of the factors of production and makes most of the economic decisions (Canada, USA, France, Germany, Japan) Privatizationprocess of converting govt enterprises into privately owned companies o TNT post group, Canadian air traffic control system, reduced payroll and boosted efficiency & productivitybecame more profitable Deregulationreduction in # of laws affecting business activity and in the power of govt enforcement agencies (let companies do what they want) Canada: farmland, forests, mines owned by private individuals o Decisions about labour, technology, made by private sector o Govt does intervene and is involved in the economy o Ex. Wal-mart (owned by Walton Family) beside LCBO (owned by Ontario govt) Market is not a place, it is a bunch of activities, where buyers and sellers exchange Prices and volume of transactions are set by buyers (pay as little as possible) and buyers (get as much as possible) Market prices set by buyers and sellers making thousands transactions every minute everyday Law of supply: producers offer more as price increase, less as it drops Law of demand: consumers purchase more of a product as price drops, less as it rises Demand and supply schedule: assessment of the relationships bt levels of D&S Equilibrium market price: price at which Q Dntersects Q S Surplus: Q S Q Dusiness lose money Shortage: Q D Q Susiness make less than what they couldve made Private enterprise: o private property rights: own resources o freedom of choice: sell labour to anyone, choose products, etc o profits: influence individual choices o competition: motivates business efficiency
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