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MGTA01H3 (583)
Chapter 2

MGTA03 Chapter 2 Notes - GOT A 4.0

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Management (MGT)
Chris Bovaird

MGTA03H3 FLEC 01 Monday September 21 2009Chapter 2Understanding the Environments of BusinessThe Economic EnvironmentAll businesses operate within a larger external environmentExternal Environmenteverything outside an organizations boundaries that might affect itExternal environments plays a major role in determining the successfailure of an organization and so managers must be able to face that environment and compete within itNo single firm controls the environment and so managers need to be proactive and influential of their environmentEconomic environmentconditions of the economic system in which an organization operates Eg McDonalds Canadian operations are functioning in an economic environment characterized by moderate growth moderate unemployment most people can afford to eat out but that means McDonalds must pay higher wages to attract employees and low inflation McDonalds pays constant prices for supplies and thus cannot increase what they charge on items3 key goals of an economic system economic growth economic stability and full employmentEconomic GrowthToday less than 25 of the Canadian population works in agriculture This shows that due to devising better ways of producing products and improved technology agricultural efficiency has improved and agricultural production has grown increase in total outputThe Business CycleBusiness Cyclepattern of shortterm ups and downs expansions and contractions in an economy It has 4 phases peak recession trough recoveryRecessionperiod during which aggregate output as measured by real GDP declinesDepressionparticularly severe and longlasting recessionDuring the late 1990s the Canadian economy was continuously expanding particularly with the large amount of people who invested in the hightech stocks which later crashed in 2000
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