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Chapter 1

MGTA01H3 Chapter Notes - Chapter 1: Canadian Transport Commission, Izzy Asper, Jim Kimsey

Management (MGT)
Course Code
Chris Bovaird

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Chapter One: Understanding the Canadian Business System
-Business: an organization that seeks to earn profits by providing goods and services
-Profit: the money that remains after a business expensive are subtracted from its revenues
oReward the owners of business for taking risks
oAmounts can be very large if business managed well
oMost profitable companies in 2005 RBC, Manulife Financial, Imperial Oil
-Expenses: the money a business spends producing its good and services and generally
running the business
-Revenues: the money a business earns selling its product and services
-Canadas economic system businesses exist to earn profits for owners who are FREE
to set them up
-Consumers have freedom of choice
oBusiness must take into account what consumers need
-Business wont survive if there is no demand – or no demand in a certain location
-How can business be successful? if you identify unmet consumer needs or ways to
satisfy consumers
-Who can succeed? someone who can stop an opportunity and develop a good plan for
capitalizing it
-Healthy business climate contributes directly to our quality of life and standard of living
-Businesses support charities and provide community leadership
Economic Systems around the World
-Major determinant of how organizations operate kind of economic system
-Economic System: the way in which a nation allocates its resources among its citizens

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oThey differ in terms of who owns and controls resources
Called ‘factors of production
Factors of Production
-Factors of Production: the resources used to produce goods and services: labour, capital,
entrepreneurs, natural resources
oInformation resources are now often included as fifth factor
-Labour: the mental and physical training and talents of people – called human resources
-people who work for a company
-huge business requires labour force with wide skills
-employees who are trained and knowledgeable – real advantage to company
-capital: funds needed to operate an enterprise
orequired to obtain resource and labour
-need capital to START and keep it running
-major source of capital personal investment by owners
-Investments can come from individual entrepreneurs, partners, investors who buy stock
-Entrepreneurs: an individual who organizes and managers labour, capital and natural
resources to produce goods and services to earn a profit
-Runs the risk of failure
-People who accept the opportunities and risks involved
-Well known Canadian entrepreneurs Jimmy Pattison + Izzy Asper

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-AOL started by James Kimsey
oHad technical + conceptual skills
Natural Resources
-Natural Resources: items used in the production of goods and services in their natural
-Includes land, water, mineral deposits and trees
-Newer perspective broaden idea to physical resources
Information Resources
-Information Resources: information such as market forecasts, economic data +
specialized knowledge of employees that is useful to a business and that helps achieve its
-Much of what they do is create new information or repackage existing information for
new users
-Ex: America Online
-AOL is information business
Types of Economic Systems
-Command economy: an economic system in which government controls all/most factors
of production and makes all/most production decisions
oRelies on a centralized government to control
-Market economy: individuals control all/most factors of production and make all/most
production decisions
Command Economies
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