MGTA03 - Intro to Business I - Lecture Notes Week 1
MGTA03 - Introduction to Management
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
Business - definition and characteristics
Factors of production
Economics - defined and explained
planned or command economies
Markets - defined and explained
Types of market or Degrees of Competition
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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:
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
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:
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Question: Why did GM not make a profit?
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
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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.
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2 Types of Command (Planned) Economy
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