Textbook Notes (367,893)
Canada (161,477)
MGTA01H3 (583)
Chapter 1

Management Chapter 1 Notes

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

Description
Chapter One: Understanding the Canadian Business System - Business: an organization that seeks to earn profits by providing goods and services - Profit: the money that remains after a business expensive are subtracted from its revenues o Reward the owners of business for taking risks o Amounts can be very large if business managed well o Most profitable companies in 2005 RBC, Manulife Financial, Imperial Oil - Expenses: the money a business spends producing its good and services and generally running the business - Revenues: the money a business earns selling its product and services - Canada’s economic system businesses exist to earn profits for owners who are FREE to set them up - Consumers have freedom of choice o Business must take into account what consumers need - Business wont survive if there is no demand – or no demand in a certain location - How can business be successful? if you identify unmet consumer needs or ways to satisfy consumers - Who can succeed? someone who can stop an opportunity and develop a good plan for capitalizing it - Healthy business climate contributes directly to our quality of life and standard of living - Businesses support charities and provide community leadership Economic Systems around the World - Major determinant of how organizations operate kind of economic system - Economic System: the way in which a nation allocates its resources among its citizens www.notesolution.com o They differ in terms of who owns and controls resources Called ‘factors of production’ Factors of Production - Factors of Production: the resources used to produce goods and services: labour, capital, entrepreneurs, natural resources o Information resources are now often included as fifth factor Labour: - Labour: the mental and physical training and talents of people – called human resources - people who work for a company - huge business requires labour force with wide skills - employees who are trained and knowledgeable – real advantage to company Capital - capital: funds needed to operate an enterprise o required to obtain resource and labour - need capital to START and keep it running - major source of capital personal investment by owners - Investments can come from individual entrepreneurs, partners, investors who buy stock Entrepreneurs - Entrepreneurs: an individual who organizes and managers labour, capital and natural resources to produce goods and services to earn a profit - Runs the risk of failure - People who accept the opportunities and risks involved - Well known Canadian entrepreneurs Jimmy Pattison + Izzy Asper www.notesolution.com - AOL started by James Kimsey o Had technical + conceptual skills Natural Resources - Natural Resources: items used in the production of goods and services in their natural state - Includes land, water, mineral deposits and trees - Newer perspective broaden idea to physical resources Information Resources - Information Resources: information such as market forecasts, economic data + specialized knowledge of employees that is useful to a business and that helps achieve its goals - Much of what they do is create new information or repackage existing information for new users - Ex: America Online - AOL is information business Types of Economic Systems - Command economy: an economic system in which government controls all/most factors of production and makes all/most production decisions o Relies on a centralized government to control - Market economy: individuals control all/most factors of production and make all/most production decisions Command Economies www.notesolution.com - two basic forms of command economies COMMUNISM + SOCIALISM - Communism: a type of command economy in which government owns and operates all industries o Proposed by Karl Marx o He envisioned a society where individuals would contribute according to their ability + receive benefits according to their needs o Expected government ownership of production to be only temporary o Once society has matured – government would ‘wither’ away o Workers would gain direct ownership - Socialism: a kind of command economy in which the government owns and operates the main industries, while individuals own and operate less crucial industries o Government owns/operates selected major industries o Smaller businesses (clothing stores, restaurants) may be privately owned o Usually allowed to choose their occupation Most work for the government o Many government owned enterprises are inefficient Management positions are filled based on politics rather than ability - Extensive public welfare systems o Because of this – very high taxes - Socialism generally declining Market Economies - Market: a mechanism for exchange between the buyers and sellers of a particular good or service - How does a market economy work? An example: www.notesolution.com o Both buyers and sellers enjoy freedom of choice Buyers are free to charge what they want Customers are free what to buy – based on quantity - Capitalism: a kind of market economy offering private ownership of the factors of production and of profits from business activity o Individuals are free to work wherever and to invest or to consume o Companies can create whatever they choose and fix whatever price o Encourages entrepreneurship by offering profits as incentive o Economic basis operation of demand and suppy Mixed-Market Economies - Most countries rely on some form of mixed market economy - Mixed market economy: an economic system with elements of both command + market economy. typical of most nations’ economies - Privatization: the transfer of activities from the government to the public sector o Ex: most countries of the former Eastern block adopted market mechanisms o The postal system in most countries is government owned/managed o Canada privatized its air traffic control It become efficient and productive, profitable - Deregulation: the reduction in the number of laws affecting business activity and in the powers of government enforcement agenies o This process frees companies to do what they want o Without government intervention o Simplifying task of management www.notesolution.com o Evident in airlines, pipelines, banking, trucking + communication Interaction between Business and Government How Government Influences Business Government as Customers: - Governments buy thousands of different products o Office supplies, buildings, computers, highways, helicopters etc - Largest purchaser of advertising in Canada - Many businesses depend on government for purchasing and survival - Amount to billions of dollars each year Government as Competitor: - Government competes through crown corporations - Crown Corporations accountable to minister of parliament for their conduct o Exist both at provincial and federal level Government as Regulator: - Regular many aspects of business activity o Through administrative boards, tribunals, commissions - At federal level o Canadian Radio-television and Telecommunications Commission (CRTC) issues and renews broadcast licenses o Canadian Transport Commission (CTC) www.notesolution.com Makes decisions about route and rate applications for air and railway companies o Canadian Wheat Board Regulates price of wheat - Sometimes business feel government is unfair as regulator - Several important reasons for regulating business o Protecting competition Ensure that healthy competition exists among business firms Competition is crucial to market economy Without restrictions – large firms could drive out smaller firms Tries to eliminate restri
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