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Chapter all

MGMT 1000 Chapter all: textbook notes MGMT


Department
Management
Course Code
MGMT 1000
Professor
Kathleen Rodenburg
Chapter
all

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MGMT*1000*16
Textbook Notes
Chapter 1: Understanding the Canadian Business System
The Idea of Business and Profit
Business: an organization that produces or sells goods or services in an effort to make a profit
o Businesses produce most of the goods and services that we consumer, and they employ
many of the working people in Canada
o Taxes that businesses pay help to support governments a all levels
Profit: is hat eais afte a usiesss epeses hae ee sutated fo its eeues.
Non for profit organization: an organization that provides goods and services to customers, but
does not seek to make a profit while doing so
o use the funds they generate from government grants or the sale of goods or services to
provide services to the public
o Example: Charities, educational institutions, hospitals, labor unions, government
agencies
Economic Systems around the World
A major determinant of how organizations operate is the kind of economic system that
characterizes the country in which they do business.
Economic System: the way in which a nation allocates its resources among its citizens
o alloates a atios esoues aog its itizes.
Economic Systems differ in terms of who owns and controls these resources, known as the
fatos of podutio
Factors of Production
Key difference between economic systems is the kind of economic system in which they do
business
Labor:
o The people who work for a company
o Also known as human resources
o The mental and physical capabilities of people
Capital:
o The funds that are needed to start a business and to keep it operating and growing.
o Major sources of capital for businesses are personal investment by owners, the sale
of stock to investors, profits from the sale of products and services, and funds
borrowed from banks and other lending institutions
Entrepreneurs
o The people who accept the opportunities and risks involved in creating their own
businesses
Natural Resources:
o Include all physical resources such as land, water, mineral deposits, and trees.
Information
o Includes the specialized knowledge and expertise of people who work in businesses,
as well as information that is found in market forcasts and various other forms of
economic data.
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MGMT*1000*16
Textbook Notes
o Information is a key factor of production because it can be shared without being
diminished
Types of Economic Systems
Different economic systems manage the factors of production in different ways
Command Economy:
o An economic system in which government controls all or most factors of
production and makes all or most production details
o Communism:
Originally proposed by Karl Marx
System in which the government owns and operates all sources of
production
Marx envisioned a society in which individuals would ultimately
contribute according to their abilities and receive economic benefits
according to their needs
Examples: Cuba, Vietnam, China
o Socialism:
The government owns and operates only selected major industries
Smaller businesses such as clothing stores and restaurants are privately
owned.
Large population of workers work for the government
Declining in popularity due to
Many governments operated enterprises are inefficient
Extensive public welfare systems have resulted in high taxes.
Market Economies
o Mechanism of exchange between the buyers and sellers of a particular good or
service.
o Business to Consumer (B2C) and Business to Business (B2B) exchanges take
place without much government involvement
o Input and Output Markets:
Input Market:
Firms buy resources from households, which then supply those
resources
Output Markets:
Firms supply goods and services in response to demand on the
part of the households
The activities of both the input and output markets create a circular
flow
Capitalism:
A economic system in which markets decide what, when, and
for whom to produce.
Allows private ownership of the factors of production and
encourages entrepreneurship by offering profits as an incentive.
Mixed Market Economies
o Opposite of market economy
o Most countries rely on some form of mixed market economy that features
characteristics of both command and market economies
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MGMT*1000*16
Textbook Notes
o Privatization:
the transfer of activities from the government to the private sector
o Nationalism:
Converting private firms into government owned firms
o Deregulation:
a reduction in the number of laws affecting business activity and in the
powers of government enforcement agencies
A studied by the conference board of Canada showed that deregulation
caused a sharp increase in productivity on sectors like freight and
airlines
This trend has slowed down due to the recession in 2008-2009
Interactions between Business and Government
How government influences Businesses
o The government plays several key roles in the Canadian economy, and each of
these roles influence business activities in some ways
Government as a consumer
The government buys thousands of different products and
services from business firms, including office supplies, office
buildings, computers, battleships, helicopters, management and
engineering consulting services
Many businesses depend on government purchasing, if not for
their survival then at least for a level of prosperity
Government as a Competitor
The government competes with businesses through Crown
corporations, which are accountable to a minister of parliament
for their conduct.
Ex. Hydro Quebec and Canada post
Crown competitions exist at both provincial and federal levels
Government as a regulator
Federal and provincial governments in Canada regulate many
aspects of business activity through administrative boards,
tribunals, and commissions, but there is a continuing debate
about how much influence government regulators have, and
how much they should have.
Political government have regulatory bodies
The reason for regulating business activity include protecting
competition, protecting consumers, achieving social goals, and
protecting the environment
Promoting Competition
o Competition is crucial to a market economy, so
government regulates business activity to ensure that
healthy competition exists within business firms
o Without these restrictions, a large company with vast
resources could cut its prices and drive smaller firms out
of the market. ( the guidelines for canadas competition
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