MGMT* 1000 Textbook Notes
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
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.
Employees who are well trained and knowledgeable can provide a real competitive advantage for a
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)
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.
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.
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
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 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
Mixed Market Economies
Command and M