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Midterm

MGTA01H3 Study Guide - Midterm Guide: Hydro One, Liquor Control Board Of Ontario, Eway


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird
Study Guide
Midterm

This preview shows pages 1-3. to view the full 12 pages of the document.
WHAT IS BUSINESS?
One or more people have an idea, and has to put in the time, thought and effort to carrying out the idea
-
an organized effort,
to create or provide something,
that people want and will pay for,
(...at some risk)
Business:
-> businesses created as the result of the time, effort and energy of the people who start and run them
Customers need and want things and will pay for them
-
Business: Characteristics
Clients, when people who use services of a professional
-
Customers: the people who need or want, and are willing to pay for, the things that a business provides
Business: Definitions
Revenues/Sales: the money that comes in
Money business spends in order to provide for customers
-
Costs/expenses: the money that goes out
Made when revenues are most than the costs, where business owners become wealthier
-
The profit belongs to the owner of the business
-
Profit: revenue - expenses (the difference)
When revenues are less than the costs, where business owners become poorer
-
When the revenue that a business generates isn't enough to cover all costs and expenses involved in running the
business
-
Loss:
(Quiz question: which company had the most revenue in 2014? Walmart)
Are an organized effort that requires time and effort and provide services giving people what
they want BUT INTENT ISN'T PROFIT
-
Ex. UofT not a profit b/c tuition fees pay for less than 40% of the cost of running the university
Ex. Hospitals, universities, churches
For the "not for profit" organizations, that provide services but not intended for profit
-
** Key reason for a business to exist:
Not For Profit Organization: an organization that may provide products and services, and may collect revenue, but is not intended to
make a profit
Products: things that result from human or mechanical effort or as the result of a natural process
"public sector" organizations
Ex. Provide health, education, safety, security, and welfare
-
Money comes from the taxpaying public
-
Government run businesses
Goods: products which are tangible, that can be held and touched
The money and credit cards are tangible, but the bank provides the convenience of having our paychecks deposited
straight to account, etc which is not tangible
-
Ex. The bank
Services: products which are intangible, such as services that we can't see or touch, but we benefit from the experience of receiving
the service
Lecture 01 (1)
May 3, 2016
12:31 AM
MGTA01 Page 1

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Assumes that people will make the choice to co-operate with others b/c it is in their own interest to do
so
-
Believed in Liberalism: a theory that espouses that people should be left to pursue their own self-interest,
without government interference
Wrote book called "The Wealth of Nations"
Adam Smith supported it
-
Was interested in the relationship b/w the people who owned the business and the people who worked for
the business
Referred to the people who start and own businesses "capitalists" and people who work for them as
"labourers"
Argued that the means of production are a class of people who grow wealthy by exploiting the labour of
others
Karl Marx was against it
-
Incentive= profit
-
The Profit Motive: people give up their time, energy and money if there is incentive to do so
Running a business is difficult and complicated
Businesses must anticipate needs
Customers are unpredictable
Businesses can and do fail
-
Business characteristic: "Risk"
MGTA01 Page 2

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

THE FACTORS OF PRODUCTION
The factors required to "produce" goods and services
-
"factors of production": the building blocks in business
Ex. Coal, wheat, water, wood, oil
Oldest industries are farming and fishing
-
Natural resources: raw materials found in the ground, grown from earth, or harvested from nature
a)
Ex. workers, human beings
Labour: the people who contribute their efforts to a business
b)
Ex. Tractors, hammers, printers, phones
Capital: machines and technologies that money can buy
c)
A business combines these factors --> products
Ex. Walmart, McDonalds
"labour intensive" = organization relying on lots of labour
-
Ex. Farming, fishing, forestry, mining
"resource intensive" = business relying on natural resources
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Ex. Banking (most in the world), auto manufacturing
"capital intensive" = business replying on lots of money, equipment, and technology
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Factor intensity
Theory: an attempt to explain something complicated, hard to understand, or hard to prove
Someone who "entrer (enters)" into a situation and "prendre (takes)" initiative
-
People that form businesses
-
-> they assemble and organize the other factors of production to create business!
Without entrepreneurs, factors of production would exist, but there would be a lack of organizing and coordinating
influence
-
Entrepreneurs: people motivated to take time, incur costs and take risks, to make the effort to make something happen
d)
4th factor:
Enterprise: a project or undertaking that requires energy and effort and whose outcome is uncertain
Entrepreneurship: the willingness or the motivation to take initiative, and to accept the risk of failure in return for
suitable gratification or reward
Quantity quality and cost of factors determine -> quantity, quality and cost of products
Factor Substitution: Substituting one factor for another factor, so products can be made more quickly, cheaply, and easily
-> labour substituted for capital
Ex. tractor can do the work of 40 men
Occurred in the 18th century
-
Inventions that are mostly labour saving
-
Eventually spinning jenny could produce more than 20 of the manual
-
Ex. The machine called the spinning jenny duplicated the action of manually operated spinning wheels
The Industrial Revolution: a series of technological developments and inventions that transformed the manufacturing,
agriculture, mining, and transportation industries
-
The Information Revolution
-
-> labour substituted for capital
Ex. Email and text can deliver more than 20 men
Information: businesses need to collect vast amounts of information to understand and successfully meet the needs of their
customers, and effectively use their natural resources, labour and capital
e)
** Some theorists suggesting a 5th factor of production:
Lecture 02 (2)
May 9, 2016
11:24 PM
MGTA01 Page 3
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