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MGTA01H3 (583)
Chapter 1

Chapter 1 Study Guide and Review Notes

3 Pages
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Department
Management (MGT)
Course Code
MGTA01H3
Professor
Ingrid L.Stefanovic

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Introduction to Management
CHAPTER 1-
The Concept of Business and Profit
x Business is an organization that wants to make a profit through sales
x Profit = Expenses ± revenues (profit is a reward for taking risks in investment and time)
x A business needs to meet consumer wants and needs to survive
x A person who can identify a opportunity and are able to meet it, will succeed
x Business provides variety of needs to society; such as new forms of technology, quality of life,
standard of living, stockholders, and support governments.
Economic Systems around the World
x (FRQRPLFV\VWHPDOORFDWHVDQDWLRQVresources among its citizens
Factors of Production
x Key diff. between economic systems are they way the factors of productions are managed
x Labor (aka Human Resources) : 1st factor of production, mental and physical capabilities of
people
x Capital: financial resources required to operate. Major source of capital is personal investments. *
Revenue is a key ongoing source of capital
x Entrepreneurs: Accept opportunities and risks involved in creating/operating a business.
x Natural Resources: Items used in their natural state in production of goods/services
x Information Resources: Information like market forecasts and economic data help businesses
achieve its goals.
Types of Economic Systems
x Economic systems manage the factors of production
x Command Economies (Proposed by Karl Marx*1):
x Two most basic forms: communism and socialism
x Communism is a command economy in which the government owns and operates all industries
x Socialism is a command economy where gov. owns major industries and smaller businesses
(clothing stores and restaurants) are privately owned
x In socialism a large part of the economy works for the government, and politics control the
management positions (makes enterprise inefficient); this economy is losing popularity
Market Economies
x Market: mechanism for exchange between buyers & sellers of a particular product/service
x Market economies operate based on freedom of choice (buyer or seller)
Capitalism
x This economy sanctions the private ownership of the factors of production and encourages
entrepreneurship by offering profits as incentives
x Mixed Market Economies
x A system featuring characteristics of both command and market economies (most countries use
this)
x Privatization: making gov enterprises privately owned.
x Deregulations: Gov. takes away laws ; company can operate without gov. intervention
x
Interactions Between Business and Government
How Government Influences Business
Government as a Customer
x Government support the survival of businesses by depending on the businesses for services such
as office supplies or buildings and computers
x Gov. is also the largest purchaser of advertising in Canada
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Description
Introduction to Management CHAPTER 1- The Concept of Business and Profit N Business is an organization that wants to make a profit through sales N Profit = Expenses revenues (profit is a reward for taking risks in investment and time) N A business needs to meet consumer wants and needs to survive N A person who can identify a opportunity and are able to meet it, will succeed N Business provides variety of needs to society; such as new forms of technology, quality of life, standard of living, stockholders, and support governments. Economic Systems around the World N .4342L.88902,OO4.,908,3,9L438resources among its citizens Factors of Production N Key diff. between economic systems are they way the factors of productions are managed N Labor (aka Human Resources) : 1 factor of production, mental and physical capabilities of people N Capital: financial resources required to operate. Major source of capital is personal investments. * Revenue is a key ongoing source of capital N Entrepreneurs: Accept opportunities and risks involved in creatingoperating a business. N Natural Resources: Items used in their natural state in production of goodsservices N Information Resources: Information like market forecasts and economic data help businesses achieve its goals. Types of Economic Systems N Economic systems manage the factors of production N Command Economies (Proposed by Karl Marx* ): 1 N Two mos
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