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Chapter 1

MCS 1000 Chapter Notes - Chapter 1: Canadian National Railway, Retail, Planned Economy


Department
Marketing and Consumer Studies
Course Code
MCS 1000
Professor
Douglas Adlam
Chapter
1

Page:
of 4
MGMT* 1000 Textbook Notes
Chapter 1
Concept of business and Profit
Businesses produce most goods and services we consume today, and employ the majority of working
people. They also create new innovations and provide opportunities for other businesses to serve as
suppliers.
Healthy business contributes directly to our quality of life and standard of living.
Economic Systems Around the World
Businesses differ all around the world; they operate based on the economic system they are in.
Factors of Production
Largest difference between economic systems is the factors of production: labour, capital,
entrepreneurs, and natural resources. Information resources are often included as well.
Labour
Employees who are well trained and knowledgeable can provide a real competitive advantage for a
company.
Capital
Capital is needed to keep a company up and running, investments can come from individual
entrepreneurs, from partners who start a business together, or from investors that buy stock.
Small businesses provide capital for their business with personal investments.
Entrepreneurs (Only definition)
Natural Resources (definition)
Information Resources
Much of what a business does is a result from either the creation of new information or the
repackaging of existing information for new users and difference audiences.
Types of Economic Systems
Different economic systems manage factors of production differently, in some systems
ownership is private; in others, government owns the factors of production.
Command Economies
Two basic forms of command economies are socialism and communism (Karl Marx).
China had the highest opposition towards communism, despite the Chinese government being a
supporter of communism ideology.
With socialism most major industries would be owned by the government, although workers can
choose their occupations, most will work for government.
Unqualified managers being hired for government operated businesses (making them do poorly)
and extensive public welfare systems result in high taxes making socialism decline in popularity.
Market Economies
Ecommerce is used for business-to-consumer transactions as well as joining together many
business-to-business transactions. B2B transactions far exceed B2C transactions in dollar
value.
Markets allow customers freedom of choice, without much government involvement.
Input and Output Markets
Input markets, firms buy resources from households
Output market, firm supplies goods and services.
Capitalism
Capitalism allows freedom of choice. One can spend or invest money where they
would like, and can choose to work wherever they want.
Same goes for a company in a market, they can produce anything they would like,
and sell it for whatever price they wish to sell it. This is where competition comes
into play.
Mixed Market Economies
Command and Market economies are two extremes, in reality we live in a mixed market economy.
Beginning in the 1990’s privatization occurred, and federal governments sold many government
owned companies. In Canada these include Air Canada, and Canadian national railways. This changed
in 2008 when the recession occurred and government bailouts were needed.
Deregulation was another trend starting in the 1990s but was reversed after the recession struck.
This allowed companies more lax rules, however in 2008 and 2008 the business laws tightened up.
Interactions between Business and Government
Government as Customer
Government offer a high amount of profit to many business, as they purchase many products and
services such as office supplies/buildings, military equipment, and many other services the
government provides us with. Total government expenditures to businesses in 2008 was $243.4
billion.
Government as Competitor
Government competes with businesses through Crown corporations
Government as Regulator
Government regulates many business activities through administrative boards, tribunals, and
commissions. Some examples are the Canadian Radio-Television and Telecommunications
commission (CRTC), Canadian Transport Commission (CTC), and Canadian Wheat board.
Government promotes competition, protects consumers, achieve social goals, and protect the
environment with regulation.
Promoting Competition
Competition helps stimulate maximum production, distribution, and employment.
One of the policies eliminates business agreements that could reduction competition among
companies.
Protecting Consumers
The government uses acts to help protect consumers, such as the Hazardous Products Act,
Tobacco Act, Weights and Measures Act, Textile Labeling Act, and the Food and Drug Act.
Achieving Social Goals
Social goals promote well-being of our society. They include universal access to health care, safe
workplaces, employment insurance and decent pensions.
Protecting the Environment
Legislation that protect the environment include: Canada Water Act, Fisheries Act, and
Environmental Contaminants Act.
Government as Taxation Agent
Revenue taxes, Progressive Revenue Taxes, Regressive Revenue Taxes, and restrictive taxes are
all taxes imposed by the government to help fund government operations.
Government as provider of Incentives
They provide incentives for businesses to produce items, or to businesses that may help other
businesses or the government itself.
Tax rebates are also some incentives for business that the government offers, and it also offers
help to internationally businesses with the Department of Foreign Affairs and International
Trade (DFAIT) by promoting Canadian companies to international consumers