Textbook Notes (363,508)
Canada (158,391)
MGTA01H3 (583)


7 Pages
Unlock Document

University of Toronto Scarborough
Management (MGT)
Chris Bovaird

MGTA03-Chapter 1/Lecture 1 Notes · Business o An organization that seeks to earn profit by providing goods and services · Profit o Revenue-expenses=profit o The money that remains after expenses are subtracted from revenue · Expenses o “Costs” o Costs of running a business o Money that is spend by a business to produce goods and services · Revenues o “Sales” o $$ that a business earns from selling its products and services · In order to survive, a business must meet a customer’s need either by: o Identifying an unmet need o Finding a better way to satisfying a need · Economic system o The way in which a nation allocates its resources among its citizens · Factors of production o Resources used to produce goods and services o 4 traditional factors of production § labour (human work) · mental and physical training and talents of people · sometimes called human resources · 1 factor of production § capital · funds needed to operate an enterprise · obtaining and using labour requires capital · for small businesses, a major source of capital is personal investment § entrepreneurs · a person who organizes and manages labour, capital and natural resources to produce oods and services to earn a profit · also runs the risk of failure § natural resources · items used in the production of goods and services in their natural state, including water, land, mineral deposits and trees · newer perspectives broaden the idea to include all physical resources § new: 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 · Types of Economic Systems o Command Economies § Government controls all or most: · factors of production · production and allocation decisions § 2 basic forms: · communism th o proposed by 19 century German philosopher, Karl Marx o government owns and operates all sources of production o Marx imagined people contributing according to their abilities and receiving economic benefits according to their needs o Government is temporary, once society matures, governments would wither away and workers would have direct ownership · Socialism o Government owns and operates only selected major industries o Smaller business may be privately owned e.g. clothing stores o Workers are allowed to choose their career (but a large proportion works for the government) o Many of the government-operated industries are inefficient because management positions are usually filled for political reasons rather than ability o Also result in high taxes (e.g. extensive welfare systems) o Market Economies § individuals (both producers and consumers) control production and allocation through supply and demand § market: mechanism for exchange between the buyers and sellers of a particular good or service § buyers and sellers have a freedom of choice to charge what they want and to buy what they want § Political form: · capitalism o type of market economy o private ownership of factors of production and of its profits o major differences from command economies: § individuals are told where they can/can’t work § companies are told what they can/can’t manufacture § consumers have little or no choice for: · what they purchase · how they pay o Mixed Market Economies § Most countries use this type of economy § Privatization: · Transfer of activities from the government to the private sector o Very common for countries in former eastern bloc (former U.S.S.R. countries in eastern Europe) § This is how they are mixed, because they are mixing in aspects of market economies (by privatizing certain things) § Deregulation · Reduction in the number of laws affecting business activity and in power of government enforcement agencies · Simplifies task of management because there is less government control · Interactions Between Business and Government-How Gov’t influence business o Government as Customer § Buy different products and services § Largest purchaser of advertising in Canada o Government as competitor § Competes with business through Crown corporations that are accountable to a minister of parliament for their conduct § Crown corporations exist at provincial and federal level · Account for a large portion of economic activity in Canada o Government as regulator § Both federal and provincial governments regulate aspects of business activity through: · Administrative boards · Tribunals · Commissions · Licensing § Reasons for regulating activity: · Protecting competition · Protecting consumers · Achieving social goals · Protecting the environment o Government as taxation agent § Revenue taxes · Taxes whose main purpose is to fund government services and programs § Progressive revenue taxes · Levied at a higher rate on people with higher incomes and lower rates for lower-income taxpayers § Regressive revenue taxes · Taxes that case poorer people to pay a higher % of income than richer people · Same rate regardless of a person’s income § Restrictive taxes · Taxes put on certain activities that legislators think should be controlled · E.g. alcohol, tobacco and gasoline o Government as provider of incentives § Offer incentive programs to help stimulate economic development § Con: may cause difficulties with our trading partners § Pro: may stimulate the economy § Examples of incentives: · Services provided to businesses through government organizations e.g. Statistics Canada · Interest-free loans · Suspension of customs duties o Government as provider of essential services § Facilitate business activity through the services they supply § Creat stability that encourages business activity § Federal · Highways · Postal service · Minting money · Armed forces · Statistical data · Fiscal & monetary policy § Provincial and municipal: · Streets · Sewage · Sanitation systems · Police and fire departments · Hospitals · Education · The Canadian Market Economy • The Laws of Demand and Supply ◦ demand ▪ a buyer's willingness and ability to purchase a product/service ◦ supply ▪ a producer's willingness and ability to offer a good or service for sale ◦ demand and supply follow "laws" ▪ law of demand ▪ as the price drops, buyers will buy more of the product ▪ as the price increases, buyers will buy less of a product ▪ law of supply ▪ as the price of a product rises, producers will supply more of the product ▪ as the price of a product drops, producers will supply less of the product • The Demand and Supply Schedule ◦ careful analysis, systematic studies and marketing research is done ◦ assessment of the relationships between different levels
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.