Ch. 1: Introducing the Contemporary Business
Business: organization seeking to earn profit by providing products (may be tangible
o Profit: money that remains after a business’ expenses (money spent in
production and running the business) are subtracted from its revenues (money
earned through sale of products).
Economic system: way which nation allocates resources among citizens. Differ in
terms of resource ownership and resource control.
o These resources are call “Factors of Production” (5):
ƒ Labour (human resources) and the skills of a workforce
ƒ Capital (financial resources) needed to start and run an enterprise.
ƒ Natural Resources: all physical resources.
ƒ Information Resources (specialized knowledge): market
forecasts, demographics, help to achieve business goals.
ƒ Entrepreneurs: accept risks and opportunities; manage all other factors
of production in the firm.
o Types of Economic systems:
ƒ Command Economies (centralized government, government owns most
industries), “communism” (government owns all industries), socialism
(only some major industries are controlled).
ƒ Market Economies (individuals make decisions about factors of
“market” (mechanism for exchange), freedom of choice widely enjoyed.
Capitalism: Political idea with private ownership and
encouragement of entrepreneurship.
Mixed*Market Economies: most economic systems, elements of both
command and market. Current trend towards “privatization” (transfer
of government activities to public sector because government*managed
industries are inefficient) and deregulation (reducing laws that affect
o Governments influence business as 6 things:
6 Customers (Eg: office supplies, military supplies)
6 Competitors (Eg: Crown corporations owned by government compete
with private sector)
Protecting Competition: Eg: ensuring healthy
competition, protecting smaller firms
Protecting Consumers: Eg: safety standards, warning
Achieving Social Goals: Eg: safe workplaces, employment