Textbook Notes (280,000)
CA (160,000)
UTSC (20,000)
MGT (800)
MGTA01H3 (600)
Chapter 1

MGTA01H3 Chapter Notes - Chapter 1: Stainless Steel, Natural Monopoly, Tibet


Department
Management (MGT)
Course Code
MGTA01H3
Professor
Mc Conkey& Bovaird
Chapter
1

Page:
of 15
CHAPTER 1 - UNDERSTANDING CANADIAN BUSINESS SYSTEM
THE CONCEPT OF BUSINESS & PROFIT, p5
Business
Busn - organization that strives to earn profit by producing & selling goods/services
PROFIT - money remaining (if at all) after subtracting the business's revenue by the business's
expenses
   
- Are the "reward" the business owners get for taking risks dealing with investing time & money
- Given the business is managed well, the amount can be large
- Example: RBC - $3.3bil; Manulife Financial - $3.2bil; Imperial Oil Ltd - $2.6bil.
EXPENSES - aka "costs"; money the business spends for producing goods & services, and for
running the business
REVENUE - aka "sales"; money earned by business after selling its products & services
Business in Canadian Economic System (2)
- Exist for the owners who are free to set them up to earn profits
- Must consider the consumer's demands (ie. want/needs) when going for profits, as they have
freedom of choice
- Ie. can choose to buy or not buy
=> If there is no demand for goods or services that a business offers, then business will not be
successful, regardless of how efficient it may be at producing them
- Example: Snow-blower shop set up near equator, or skirt-shop set up in Antarctica
- Businesses can be successful if they
a) Offer the consumer needs that are not met by other businesses
Or
b) Have better ways to satisfy the consumer's needs
- Oppurtunity to succeed: if no one else is supplying that need, or other businesses are not
providing it efficiently or completely
THE CONCEPT OF BUSINESS & PROFIT, p6
Businesses
- Produce majority of goods & services people consume and employ most working people
- Potential to introduce new innovations
- Can provide oppurtunities for other businesses, which are their suppliers
- Quality of business situation affects quality of life & standard of living
- Production, consumption & employment are guaranteed to grow on and on given new forms of
the following arise:
- Technology
- Service businesses
- International oppurtunities.
- Business profits
- Can improve personal income of numerous owners & stockholders
- Business taxes
- Help to support government at any level.
- Other businesses support charities, provide community leadership
ECONOMIC SYSTEMS AROUND THE WORLD, p6
ECONOMIC SYSTEM - way in which nation allocates its resources among its civilians
- "Factors of production" - who owns & controls resources
- Makes one economic system differ from another
Factors of Production, p6
FACTORS OF PRODUCTION: Basic resources used by a country's businesses to produce
goods & services
1. LABOUR: mental & physical capabilities & talents of people
- Aka human resources
- People who work for company
- Example: Imperial Oil
- Huge company
- Requires its labour department consisting of people with various skills
- Example: managers, geologists, truck drivers
- Company can attain a true competitive advantage over other companies if its employees are
well-trained and knowledgable
2. CAPITAL: financial resources (aka funds) required to run an enterprise (aka
organization/business)
- Needed for obtaining & using resources, Example: Labour, to begin a new business and to keep
business progressing and ongoing
- Example: Inco
- Requires. $mil. To run its operations, buy & replace new equipment
- Small businesses have personal investment by owners as a major source of capital; coming
from individual entrepreneurs, partners who begin business together, or investors who purchase
stock
- Important & ongoing source of capital as soon as business starts = revenue coming from selling
products
3. ENTREPRENUERS: person who organizes & manages labour, capital & natural resources to
earn a profit by producing goods & services, but also has risk of failure
- Those people that accept the oppurtunties & risks that is associated with running a business
- Example: Jimmy Pattison, Izzy Asper
- Example: AOL creator Jimmy Kimsey
- Technical skills to comprehend the mechanics of the internet (labour)
- Conceptual skills to realize its future potential (labour)
- Had the skill to make correct decisions, while being risky
4. NATURAL RESOURCES: items used to produce goods & services; they are present in their
natural state
- Example: land, water, mineral deposits, trees
- Can also include all physical resources as well
- Example: Imperial Oil
- Uses multifarious natural resources
- Also uses land where oil is stationed, and land for refineries & pipelines
(physical resources)
5. INFORMATION RESOURCES: Information that business can utilize & rely upon, and can
help it achieve its goals
- Example: Market forecasts, economic data, and specialized knowledge coming from
employees
- These have replaced physical goods production in the role of importance
- Creating new info OR
- Modifying existing information for new users & different audiences
- Example: America Online (AOL)
- In exchange for monthly access fees, it provides numerous online services for its
subscribers
Types of Economic Systems
- Each type of economic system has distinguished ways of managing factors of production
- Example: ownership of these factors varies from being private, to government owned
- Example: how are decisions made about production & allocation