Chapter 1 - Intro to Canadian Business.doc

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University of Toronto Scarborough
Management (MGT)
Zachariah Campbell

MGTA03 - Intro to Business I - Lecture Notes Week 1 MGTA03 - Introduction to Management Lecture #1 Read: Chapter 1 "Understanding the Canadian Business System" Purpose of this Chapter/Lecture: To set the scene To provide some basic definitions To explain a few key theories 1 MGTA03 - Intro to Business I - Lecture Notes Week 1 Key points: Business - definition and characteristics Profit/Loss Factors of production natural resources labour capital entrepreneurs Economics - defined and explained Economic systems planned or command economies market economies Markets - defined and explained Types of market or Degrees of Competition perfect competition monopolistic competition oligopoly monopoly 2 MGTA03 - Intro to Business I - Lecture Notes Week 1 Business an organization that provides (produces/ supplies/ makes/furnishes) (assures things are available) goods or services, to customers, in order to make a profit This is a business: Profit The difference between: $$$ in (revenues or sales) $$$ out (costs or expenses) Example of Profit: Take-away pizza business sells small, plain pizza Revenue (or sales) = $6.00 less Expenses (or costs) = - $5.00 Profit = $1.00 Profit The fundamental reason for a business to exist n.b. Not all organisations are businesses, e.g. hospitals, universities, churches; these provide services, but not for profit Loss - when expenses are greater than revenues i.e. It costs more money to produce the products and run the business, than the business can generate through sales. Examples of unprofitable (loss-making) businesses: 3 MGTA03 - Intro to Business I - Lecture Notes Week 1 Air Canada General Motors Chrylser Question: Why did GM not make a profit? Economics: The study of: how businesses, people make choices about: what things to produce/consume; how best to produce things; how best to distribute wealth. Basic Economic Theory  “Building Blocks”  Factors of production The basic building blocks (the "resources") used to produce goods or services. natural resources  raw materials found in/grown from the ground or harvested from nature. eg.; coal, iron, wheat, water, wood, cotton labour  human beings, i.e. workers capital  money, or the machines and technologies that money can buy. Examples: computers, telephones, welding machines, hammers, tractors entrepreneurs  the people who assemble and organise the other factors of production, the individuals who make it all happen Economic Systems 4 MGTA03 - Intro to Business I - Lecture Notes Week 1 the way different countries try to answer basic economic questions: who should own or control the factors of production? what should we produce, with the available factors? how best to share it? Q. Who should make those decisions? Command or Planned economies economic systems (i.e. countries) where the government owns most of the factors of production and makes most of the decisions regarding economic. 5 MGTA03 - Intro to Business I - Lecture Notes Week 1 2 Types of Command (Planned) Economy Communist Economies: The Government owns/controls almost all of the factors of production, makes almost 100% of the economic decisions. Example: there are very few, but probably North Korea Socialist Economies (Cuba): The Government owns/controls the majority of the factors of production, includ
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