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MGTA01H3 (583)
Chapter 1-2

Chapter 1-2 Notes

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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Business an organization that seeks to earn profits by providing goods and service Profit the money that remains (if any) after [revenues - businesss expenses] Expenses the money a business spends producing its goods and services and generally running the business Revenues the money a business earns selling its products and services Succeed 1) spot a promising opportunity 2) develop a good plan for capitalizing on it The opportunity involves goods or services that consumers want or need A healthy business climate also contributes directly to our quality of life and standard of living. N4 New forms of technology, service businesses, and international opportunities promise to keep production, consumption, and employment growing indefinitely. Business taxes help to support governments at all levels Many businesses support charities and provide community leadership A variety of economic systems are found around the world, we will first consider how the dominant ones operate. Economic system the way in which a nation allocates its resources among its citizens Factors of production the resources used to produce goods and services: labour, capital, entrepreneurs, and natural resources Labour the mental and physical training and talents of people; sometimes called human resources Employees who are well trained and knowledgeable can be a real competitive advantage for a company Capital the funds needed to operate an enterprise Investments can come from individual entrepreneurs, from partners who start businesses together, or from investors who buy stock Revenue from the sale of products is a key and ongoing source of capital once a business has opened its doors Entrepreneur an individual who organizes and manages labour, capital, and natural resources to produce goods and services to earn a profit, but who also runs the risk of failure www.notesolution.comNatural resources items used in the production of goods and services in their natural state, including land, water, mineral deposits, and trees Include all physical resources, e.g. use crude oil, and also needs the land where Information Resources information such as market forecasts, economic data, and specialized knowledge of employees that is useful to a business and that helps it achieve its goals While the production of tangible goods once dominated most economic systems, it plays a major role Much of what they do results in either the creation of new information or the repackaging of existing information for new users and different audiences America Online does not produce tangible products. Instead, it provides numerous online services for its millions of subscribers in exchange for monthly access fees. Different types of economic systems manage the factors of production in different ways Economic systems also differ in the way that decisions are made about production and allocation Command economy an economic system in which government controls all or most factors of production and makes all or most production decisions Individuals may be told where they can and cannot work companies are told what they can and cannot purchase or how much they pay for items Communism a type of command economy in which the government owns and operates all industries Marx envisioned a society in which individuals would ultimately contribute according to their abilities and receive economic benefits according to their needs. Once society had matured, government would wither away and the workers would gain direct ownership Most countries have now abandoned communism in favour of a more market-based economy Socialism a kind of command economy in which the government owns and operates all industries Less extensive command economic system Smaller businesses (clothing stores and restprivately owned www.notesolution.com
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