Textbook Notes (363,471)
Canada (158,372)
MGTA01H3 (583)
Chapter 2

Chapter 2

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 2 External environment everything outside an organizations boundaries that might affect it no single firm can control the environment, managers should not simply react to changes; they should be proactive and at least try to influence their environment Economic environment conditions of the economic system in which an organization operates The Business Cycle pattern of short term ups and downs (expansions and contractions) in an economy Recession Period, during which aggregate output, as measured by real GDP, declines. Depression particularly sever and long lasting recession Aggregate output total quantity of goods and services produced by an economic system during a given period an increase in aggregate output is growth 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 Measures of economic performance: Gross Domestic Product (GDP) GDPCapita Productivity Unemployment Inflation Purpose of an economic system Assemble organize resources; make things people want; so people will buy them; creating profits for businesses; so everyone will be better off Gross Domestic Product (GDP) - $$ value of all goods and services produced in a country in one year The larger the GDP: more workers, using more resources, are producing more things of value Only says whether something is big, not whether its shrinking or growing If GDP is going up, the nation is experiencing economic growth GDP Growth Growing GDP: more people making more stuff Falling GDP (recession): fewer people making less stuff www.notesolution.com
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