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Chapter 1

MGMT 1000 Chapter Notes - Chapter 1: Planned Economy, Retail, Environment And Climate Change Canada


Department
Management
Course Code
MGMT 1000
Professor
Kathleen Rodenburg
Chapter
1

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INTRODUCING THE CONTEMPORARY BUSINESS WORLD
Business: an organization that produces or sells goods or services in an effort to make a profit.
Profit: hat eais afte a usiess’s epeses hae ee sutated fo its sales eeues.
- Profits reward owners of businesses for taking the risks involved in investing their time and
money.
Not-for-profit Organizations: Organization that provides goods and services to customers but does not
seek to make a profit while doing so
- Need source of revenue to pay for expenses though.
- Nothing is ever free
ECONOMIC SYSTEMS AROUND THE WORLD
- The most important difference between economic systems around the world is who controls the
factors of production
Economic System: alloates a atio’s esoues aog its itizens.
Factors of Production: The asi esoues that a out’s usiesses use to podue goods ad
services.
- Labour (Human Resources)
- Wokig people. Hua esoues. → Refes to the etal ad phsial apailities of
someone. (Education, health, etc)
- Capital:
- Funds needed to start a business and to keep it operating and growing.
- Major sources of Capital: profits from sale, personal investment by owners, sale of stock
to investors, funds borrowed from banks and other lending institutions.
- Entrepreneurs
- People who accept opportunities and risks involved in creating and operating
businesses.
- Profit motivation
- Natural Resources
- Land, water, mineral deposits, trees, etc
- Information
- Specialized knowledge and expertise of people who work in businesses
- Information found in market forecasts and other forms of economic data
- Key factor because unlike the others, information can be shared without being
diminished
TYPES OF ECONOMIC SYSTEMS:
- Different types of economic systems manage the factors of production
- Ownership is private vs factors of production owned by government
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Command Economy: relies on centralized government to control most or all factors of production and
to make all of the production and allocation decisions.
Market Economy: Individuals, producers, consumers make product and allocation decisions through
supply and demand.
COMMAND ECONOMIES
- Communism(the right): Government owns and operates all sources of production
- Makes resource distribution decisions
- Incentive to work hard becomes more difficult
- Original plan: individuals would contribute according to their abilities and receive
economic benefits according to their needs.
- Countries abandoned communism for market-based economy
- Socialism (the left): Governments owns and operates critical industries
- Examples: hydro, water works
- People allowed to choose where they want to work but a large portion work for
government
- DECLINING FACTORS:
- Ma etepises ae ieffiiet eause aageet positios ae ased o
political considerations rather than ability.
- Etesie puli elfae → High taes
MARKET ECONOMIES:
- Market: exchange between buyers and sellers of a particular good or service
- Economic basis is supply and demand
- People’s illigess to suppl ad pa ill eah euiliiu
- Buyers and sellers have freedom of choice
- Buyers and sells determine what the market price is, they change cost structure so
people will buy
- E-Commerce:
- (B2C) - Business to consumer
- (B2B) - Business to business (exceeds B2C)
- In market economy, B2B and B2C take place without government involvement.
INPUT AND OUTPUT MARKETS
Input and Output Markets: People should be paid enough to be able to buy what they make:
- With no government intervention, this works ^^
- These two create a cycle:
- Input markets: firms buy resources from households then supply them.
- Output markets: firms supply goods and services in response to demand on the part of
the households.
Capitalism: political basis for the free market economy
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