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,
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
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
• CASE - Sam the Record Man:
1. What factors inside this organization may have contributed to the
• 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
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
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
• 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
• 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.
• 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
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: