Textbook Notes (362,796)
Canada (158,054)
MGTA01H3 (583)
Chapter 2

Chapter 2 notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Ch. 2: Understanding the Environment of Business External environment everything outside an organizations boundaries o Managers must understand this environment if the business is to compete wi thin it Economic environment conditions of economic system the organization op erates within o Eg: low inflation, moderate growth, moderate unemployment Low inflation: cost of supplies is constant but organization cant increase prices. Business cycle: patter of short term updowns in an economy (expansions and contractions) o Recession: aggregate (grossed, combined) output, measured by real GDP, de clines Depression: severelonglasting recession Aggregate output: total quantity of goodsservices produced by economic sy stem in a given period. o Increase in Aggregate output signifies an economic expansion A higher standard of living results when aggregate output grows faster th an population (increased output per capita and more services people want). Standard of living: total quantityquality of the goods and services that ca n be purchased by a countrys citizen with the currency used in their economic system. Gross Domestic Product (GDP): total value of all goodsservices produced within given period of time by national economy through domestic factors of production. o Going up: growth Gross National Product (GNP): same, but regardless of where the factors of production are located. o Eg: includes profit earned abroad by a Canadian company. Conversely, those profits www.notesolution.com
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