Textbook Notes (363,264)
Canada (158,281)
MGTA01H3 (583)
Chapter 2

MGTA03 Chapter 2

4 Pages
Unlock Document

University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA03Summer2011 Chapter 2 Understanding the Environment of Business The Economic Environmento All business operate within a larger external environmento External environment everything outside an organizations boundaries that might affect it o External environment plays a major role in whether the business will be successful or not o Managers should not only react to changes in the external environment but also be proactive and try to influence the environment o Economic environment conditions of the economic systemin which an organization operates o Purpose of an economic system assemble and organise the factors make things people want so people will buy them in turn creating profits for businesseseveryone benefitso Three key goals of the Canadian economic system economic growth economic stability and full employment Economic GrowthThe Business Cycle o How do we know an economic system is growing o Business cycle pattern of short term ups and downs expansions and contractions in an economy o It has 4 recognizable phases peak recession trough and recovery o Recession period during which aggregate output as measured by real GDP declines o Depression particularly severe and long lasting recession Aggregate Output and The Standard of Living o The main measure of growth in the business cycle is aggregate output o Aggregate output total quantity of goods and services produced by an economic system during a given periodincreasegrowth o When output grows more quickly than the population 2 things usually follow output per capita the quantity of goods and services per person usually goes up and the system provides more of the goods and services that people want o When this happens people benefit from a higher standard of living o Standard of living total quantity and quality of goods and services that a countrys citizens can purchase with the currency used in their economic system Gross Domestic Product o Gross domestic product GDP total value of all goods and services produced within a given period by national economy through domestic factors of production o If GDP is increasing the nation is experience economic growth o Gross national product GNP total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located o GDP profits earned by foreign firms in Canada is included o GNP profits Canada makes abroad is included o GDP and GNP are used to measure economic growth o Organization called Redefining Progress has proposed a more realistic way to asses economic activity o Genuine Progress Indicator GPI treats activities that harm our environment or our quality of life as costs and gives them negative valueso While GDP has increasing for many years studies show that GPI has been decreasing since 1970s 1
More Less

Related notes for MGTA01H3

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.