Chapter 2 Lecture

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Management (MGT)
Ingrid L.Stefanovic

Chapter 2. ppt / 01 Laurence, Hugh MGTA03, Lec. 03 Understanding the Environment of Business The Business in its Economic Context and its Economic Performance Business Environments o Business is an economic organization that engages in exchanges o Each business is therefore separate from other businesses, and other organizations o This means every business exists in a wilder environment o -:8L3088K,8,3³L38L/0´,³-4:3/,7\´,3/,3³4:98L/0´ o %K0³4:98L/0´L89K003;L7432039 o Everything that is NOT the business o But that affects the business o :8L308808K,;02:O9L5O0³4:98L/08´,3/2:O9L5O003;L74320398 o Typical environments o Economic environment o Technological environment o Social environment o Political environment o Legal environment o ,.K03;L7432039L8,3³4:98L/0´9K,9,110.989K0-:8L3088³L38L/0´,89K0-:8L3088 interacts over its boundary o We will look at the economic environment today o Text has some other comments on the other environments Economic Environment o In Canada o What are the goals of the Canadian economic system o How do we measure performance of the economy o What are the threats to achieving the goals o Goals of the Canadian Economic System o Growth o Stability o Full employment o Growth means o Producing more of the things people want o So they will purchase more of them o To create profits for the suppliers o And a better standard of living for customers o In order to grow o The economy must produce more o It must be efficient Chapter 2. ppt / 02 o So that products can be sold at a price that attracts consumers and makes a profit for suppliers o Growth means o Producing more o Being more efficient o To measure growth, we start with aggregate output o Total quantity of goods and services produced by an economy in a given period of time o We can also calculate output per capita o The aggregate output divided by the population o Output per capita is the output for each person in an economy o It measures how much, on average, each person is producing o When output per capita rises, economists say that the standard of living is rising o Standard of living o Measure of what people can purchase, and the quality of their consumption, in terms of what they earn in the economy Measuring Economic Growth o .0\20,8:70L8*748842089L.!74/:.9³*!´ o Total value of the goods and services produced within a national economy within a given period through domestic factors of production o GDP for Canada in 2005 would be: o Total value of goods and services o Produced within Canada o During a particular year o 425,7L84341*!1LJ:708,OO4Z8:894.425,70,30.4342\¶85071472,3.04;079L20 o Nominal and Real GDP o Nominal GDP is measured in current prices and currency values o Real GDP is adjusted for ƒ Inflation of prices ƒ Changes in the value of local currency o Real growth rate is calculated using Real GDP o Real GDP is often expresses as Real GDP per capita o Real GDP divided by the population o This gives us a measure of the production for each person in the economy, corrected for inflation of prices and fluctuations in the value of currency o Actual GDP Calculation is sum of: o Consumer spending o Government spending o Business investment o Net exports o These spending accounts are used as a way of calculating what is produced, sold and invested Chapter 2. ppt / 03 o Business Investment o Counts only what the business consumes itself o Does not count intermediate spending o When business buys raw materials, that sale is not counted o But when business produces an item it does not sell in that period, the value of that item DOES go into business investment o Net Exports o Balance of trade ƒ Total up the value of all ite
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