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Canada (156,094)
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STAT 100 (65)
Chapter 1

Bus201 Chapter 1.doc

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Simon Fraser University
STAT 100
Derek Bingham

Chapter 1Understanding the Canadian Business SystemThe Idea of Business and Profitbusiness managers must pay attention to many different things including the actions of competitors rapid technological change new product development corporate strategy risk management stock pricesBusiness is an organization that produces or sells goods or services in an effort to make a profitProfit is what remains after a businesss expenses have been subtracted from its revenuesprospect of earning profits is what encourages people to start and expand businessesNotforprofit organizationsan organization that seeks to earn profits by providing goods and servicesEconomic Systems Around the Worlda major determinant of how organizations operate is the kind of economic system that characterizes the country in which they do businesseconomic system allocates a nations resources among its citizensFactors of Production factors of production the resources used to produce goods and services labour capital entrepreneursand natural resources 1 Laboursthe mental and physical training and talents of people human resources2 Capital the funds needed to operate an enterprise3 Entrepreneurs an individual who organizes and manages labour capital and natural resources to produce goods and services to earn a profit but who also runs the risk of a failure 4 Natural Resources items used in the production of goods and services in their natural state including land water mineral deposits and trees5 Information Resources information such as market forecasts economic data and specialized knowledge of employees that is useful to a business and that helps it achieve its goals Types of Economic Systemssome systems ownership is privatefactors of production are owned by the governmentcommand economy an economic system in which government controls all or most factors of production and makes all or most production decisions market economy an economic system in which individuals control all or most factors of production and make all or most production decisions 1 Command economiestwo basic forms communism and socialismcommunism is a type of command economy in which the government owns and operates all industriesless extensive command economic system socialism a kind of command economy in which the government owns and operates the main industries while individuals own and operate less crucial industriesmany government operated enterprises are inefficient since management positions are frequently filled based on political considerations rather than abilityextensive public welfare systems have also resulted in very high taxessocialism is generally declining in popularity 2 Market Economics
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