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COMMERCE 1E03 Chapter Notes -Gross Domestic Product, Canada Pension Plan, Monopolistic Competition

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Rita Cossa

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Commerce 1E03
Chapter 1
Business Any activity that seeks to provide goods and services to others while operating at
a profit
Profit The amount a business earns above and beyond what it spends for salaries and other
Entrepreneur A person who risks time and money to start and manage a business
Revenue Total amount of money a business takes in during a given period by selling goods and
Loss When a business’s expenses are more than its revenues
Risk The chance an entrepreneur takes f losing time and money on a business that may not
prove profitable
Companies that take the most risks may make the most profit
Stake holders All the people who stand by the policies and activities of a business
These include: Investors, Customers, Surrounding Community, Environmentalist, Dealers
(retailers), Employees, Government, Suppliers, and Financial Institutions.
Offshoring Sourcing parts of the purchased inputs outside of the country
Outsourcing Assigning various functions, such as accounting, production, security, maintenance and
legal work to outside organizations
Non-Profit Organization An organization whose goals do not include making a personal profit for
its owners or organizers
Two ways to succeed in business: 1) rise up through the ranks of large companies
2) Start your own business and become an entrepreneur
Factors of Production: The resources used to create wealth
1. Land (or natural resources)
2. Labour

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3. Capital good (this includes machines, tools, buildings, or whatever else is used
in the production of goods. It does not include money. Money is used to buy
factors of production it is not a factor itself)
4. Entrepreneurship
5. Knowledge- information technology has revolutionized business, making it
possible to quickly determine wants and needs and to respond with desired
Countries are rich due to a combination of entrepreneurship and the effective use of knowledge
Business environment the surrounding factors that either help or hinder the development of business
Six elements:
1. The legal and regulatory environment : Tax laws ( also known as acts) , contract laws, elimination of
-The Constitution Act defines the powers that can be exercised by the different levels of
-Competition Act: maintain and encourage competition in Canada in order to promote the
efficiency and adaptability of the Canadian economy
-Regulations: rules or orders made by the government to carry out the purposes set out in
-Laws affect businesses, and are put in place to most times benefit the business
2. The economic: Income and expenditures, currency shifts, economic systems
The strength of the dollar value
3. The technological: Information and technology, databases, the internet
-Technology: inventions or innovations form applied science or engineering research.
-Productivity: The amount of output that is generated given the amount of input
-effectiveness means producing the desired result
-efficiency means producing goods and services using the least amount of resources
-e-commerce: The buying and selling of goods and services over the internet
-Business to consumer (B2C) Business to business (B2B)
-e-business: Any information system or application that empowers business processes

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-database: An electronic storage file in which information is kept; one use of databases is to
store vast amounts of information about customers
-Identity theft: Obtaining personal information about a person and using that information for
illegal purposes
4. The competitive: Components of competition, customer-driven, organization structure
3Components of Competition:
-Entry (barriers) Power of buyers and Suppliers Existing Competitors and Substitutes
-Empowerment: Giving front-line workers the responsibility, authority and freedom to respond
quickly to customer request
5. The social: Diversity, demographic changes, family changes
-demography: statistical study of the human population with regard to its size, density, and
other characteristics such as age, race, gender, and income
-baby boom echo: A demographic group of Canadians that were born from 1980-1995; the
children of the baby boomers
-baby boomers: A demographic group of Canadians that were born in the period from 1947-
6. The global: The quality imperative, free trade, global competition
-Carbon footprint: the impact of human activity measured in term s of carbon dioxide it causes
to be emitted into the atmosphere
-food miles: the distance travelled from the place where food is produced to the place where it
is eaten, considered in the terms of the environmental damage that transporting it entails
-green tax: a tax imposed with the intention of discouraging activities that may damage the
-eco village: A small scale, environment friendly settlement designed for sustainable living
Goods: Tangible products such as computers, food, clothing, cars and appliances
Services: Intangible products such as education, health care, insurance, recreation, and travel and
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