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Midterm

ADMS 1000 Midterm Review.docx

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Department
Administrative Studies
Course
ADMS 1000
Professor
Xueda Song
Semester
Fall

Description
ADMS 1000 Midterm Review C HAPTER 1 - NTRODUCTION : • The External Context of Business: 7 Forces  Economic Forces - Depending on the state of the economy, an organization may have to alter itself/adapt in order to continue to succeed in the market. Ex. If the economy is poor, demand for an organization's products or services declines as people do not have money to spend. In Canada, we have a diverse workforce, we are egalitarian, and risk- adverse business culture. Natural resources - 13% of GDP but 50% of exports. Trade with the US - 25% of GDP but 85% of exports.  Competitive Forces - An organization must establish a competitive advantage in order to succeed in a competitive market. The more competition there is, the more an organization will have to adapt in order to offer more to consumers in order for them to buy your products instead of someone else's. In Canada, we have a largely open economy - trades internationally, primarily in resources. We are focused on the extraction and processing of our natural resources, especially logs and lumber etc. Because of our intense focus on this process, we have not developed the entrepreneurial and technological expertise of other nations.  Technological Forces - The majority of Canada's industries are resource based; companies sell unprocessed resources, and the prices for these products fluctuate depending on society's demand for them. In addition, Canada is moving further away from the agricultural sector and more towards the service and manufacturing sectors. Agricultural jobs and other various jobs are being replaced by technology and organizations must keep up with the latest technology in order to succeed in the market and create up-to-date products that consumers are interested in OR to be as efficient as possible. Knowledge workers are now in demand because they must have the necessary skills to adapt to technological change.  Labour Forces - Businesses must adapt to society and ensure that worker rights and privileges are just and up-to-date. Workforces must cater to society's needs. In Canada, the main workforce has been aging and now businesses must cater to an older population. Some businesses (health care, recreation, travel etc.) will benefit from this. In addition, more women have begun to enter the workforce. Finally, Canada's workforce is now more diverse and must accommodate for different culture and traditions (work hours, uniforms etc.)  Global Forces - Global forces are those of outside countries that impact the way a country operates and does business with others. This includes international trade, and foreign ownership. In Canada, most of our business is done with the US. We are very dependent on the United States as trade with them makes up a good portion of our profits. Also, Canada is a major trading nation and we import more than we export. Finally, many of our business are owned/are branches of foreign-owned companies. This has impeded the development of an innovative/entrepreneurial spirit in Canadian business.  Political Forces - Governments play a large role in the operation of businesses and how they are run. In Canada, our gov't is involved in promoting and protecting Canadian businesses. Ex. Foreign goods are more expensive than Canadian goods. The gov't also offers incentives for those who invest in new product development within Canada, engage in greater export activities, or who locate in underdeveloped regions in order to create jobs all over Canada.  Societal Forces - Businesses must operate with the interests of society in mind, as well as in accordance with the country's society. In Canada, there is a diversity of natural-resource based industries. We also invest more money on education than any other nation, and Canadian business must operate with integrity (according to business ethics). • CASE - Sam the Record Man:  1. What factors inside this organization may have contributed to the company’s demise? • People, Structure and Strategy. People - Jason S. is the owner who is passionate about music because he is a musician, and because he is Sam's son. He inherited the business from his father, however, this does not necessarily mean that Jason has the proper qualifications to run the business. Structure - It is a family owned business, which may be a weakness because those who own/work in the business might not have the proper qualifications to run the business and ensure its success. Strategy - The company only sells music by Canadian artists - this will limit the market of this business because not many people may specifically only want music by Canadian artists. They will also not be able to get the diversity of music they desire at this store, thus causing them to shop somewhere else.  2. What factors outside the organization may have contributed to the company’s demise? • Political, Global, Competitive, Technological and Societal. Political - The majority of society now downloads music illegally of the internet, and the government does not do much in order to protect intellectual property. Therefore, the store loses business because the government hasn't protected it through the banning of illegal music downloads. Global - Stores such as Wal-Mart and Costco are global companies who sell music that comes from all around the world rather than just Canada. In addition, they are mostly available everywhere rather than just at a few locations. Competitive - Stores such as Wal-Mart and Costco as well as the Internet have music and albums available online and in store for a much cheaper cost. If people can go online and purchase music, they save both time and effort as they do not need to go far. Also, the fact that larger stores can purchase greater quantities of albums etc. makes it possible for them to sell music for much cheaper than local stores. Technological - No one buys CDs anymore, and instead people download music online. Societal- The demographic market has changed as over the years, people who used to buy music from that store have now aged and the newer generation may not have the same interests in music that their elders do. Also, people are more accepting of 'copyright' issues and downloading music is ethically okay in the eyes of society. C HAPTER 2 - THE E CONOMIC CONTEXT : • The Factors of Production:  Labour - workers  Capital - buildings, machinery, tools, and equipment  Natural Resources - land and raw materials  Entrepreneurs - individuals who start up businesses  Knowledge - knowledge workers with specialized education, skills, and experience. • The Types of Economic Systems:  Command/ Centrally-planned Economies • Communism - government controls the factors of production. All resources, economic decisions, and what is produced + the quantity are distributed and determined by the government alone. EXAMPLES: North Korea and Cuba. • Socialism - government has large ownership in/control over the major industries that are essential to the country's economy. This influences business goals, types of goods produced, prices, and workers' rights. Individuals are heavily taxes so that the government can redistribute profits, thus allowing for more services to be provided for citizens. EXAMPES: France, Denmark and Sweden.  Market Economies • Capitalism - Factors of production are privately owned by individuals, not the government. People decide what to sell, and how much to sell them for, and supply and demand ultimately determine success. Rights are granted to individuals, such as the rights to own property, to compete, to make choices and to make a profit. Also, competition exists which is beneficial for both companies and consumers.  Mixed Market Economies • More than one type of economy is used. • Canada - most industries are private enterprises, but the government owns some companies/industries such as Canada Post, utilities (water etc.), some public land, health care, and LCBO. This makes Canada partially socialist. Canada also taxes its citizens to provide them with services. The government also somewhat plays a role in managing the economy. • The Types of Competition:  Oligopoly - There is a very small number of firms, high entry barriers, and firms are price setters. Example: Beer brewing, aircrafts etc.  Monopoly - There is only one producer, high market power to set prices (maximizes profits), absolute product differentiation, and absolute barriers to entry. Example: Microsoft, LCBO, Enbridge  Perfect Competition - The products are all the same, infinite buyers and sellers, no market power, no barriers, prices are constantly decreasing until they reach marginal cost (which means that there is no profit for the business, but excellent prices for the buyers).  Canada's economic system is based on the assumption that sufficient competition exists among business, which ensures that business provide the goods and services required by society at a fair cost. • The Economic Indicators:  The Busine
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