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MGTA01H3 (583)
Chapter 1

MGTA03 Chapter 1 Notes.docx

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Department
Management (MGT)
Course
MGTA01H3
Professor
Chris Bovaird
Semester
Fall

Description
MGTA03 Introduction to Management Chapter 1—Understanding the Canadian Business System The Concept of Business and Profit  a business is defined as an organization that produces or sells goods in an effort to make a profit  profit is the money that remains after a business’s expenses (the money a business spends on producing its goods and services and generally running a business) are subtracted from its revenue (money business earns selling its products and services)  the most efficient businesses identify consumer’s wants and needs and develop goods and services that meet that demand, no business can survive when there is no demand for its goods and services Economic Systems Around the World  an economic system is the way in which a country allocates a nation’s resources among its citizens, differ in the way which they manage factors of production Factors of Production  factors of productions are the resources that businesses use to produce goods and services: labour, capital, entrepreneurs, natural resources, and information resources:  labour: human resources, is the mental and physical capabilities and talents of people  capital: the financial resources required to operate an enterprise  entrepreneurs: an individual who organizes and managers labour, capital and natural resources to produce goods and services to earn a profit, but who also runs the risk of failure  natural resources: items used in the production of goods and services in their natural state including land, water, mineral deposits, trees  information resources: information such as market forecasts, economic data and specialized knowledge of employees that is useful to a business and helps it achieve its goals Types of Economic Systems  economic systems differ in the way they manage the factors of production and in the way decisions are made about production and allocation  in a command economy the government controls all or most of the factors of production (centralized government) and makes all or most production decisions  communism—government owns and operates all industries, the vision of Karl Marx was that individuals would contribute to society according to their abilities and receive economic benefits pertaining to their needs until society “matured,” once society matured government would wither away and people would gain direct ownership  socialism—government owns and operates main industries while individuals own and operate less crucial industries, however this economic system is efficient because in such societies there is extensive amount of the workforce working for the government and there are extremely high taxes  in a market economy individuals control most or all of the factors of productions and make all or most production decisions  capitalism—offers private ownership of the factors of productions and of profits from business activity  a market is a mechanism for exchange between the buyers and sellers of a particular good or service  a mixed market economy contains elements of both a command economy and a market economy, most practical and used economic system  privatization is the process of converting government enterprises into privately owned companies  deregulation is a reduction in the number of laws affecting business activity and in the powers of government enforcement agencies Interactions Between Business and Government How Government Influences Business  government as customer: buys thousands of different products and services from business firms  government as competitor: competes with business through Crown corporations which are accountable to a minister of parliament for their conduct  government as regulator: it protects competition, protects consumers, achieves social goals and protects the environment  government as taxation agent: imposes taxes on businesses  revenue taxes are taxes whose main purpose is to fund government services and progra
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