Ch. 1: Introducing the Contemporary Business World
•Business: organization seeking to earn profit by providing products (ma
y be tangible or service).
oProfit: money that remains after a business’ expenses (money sp
production and running the business) are subtracted from its
revenue (money earned through sale of products).
•Economic system: way which nation allocates resources among citizens.
Differ in terms of resource ownership and resource control.
oThese resources are call “Factors of Production” (5):
Labour (human resources) and the skills of a workforce
Capital (financial resources) needed to start and run an e
Natural Resources: all physical resources.
Information Resources (specialized knowledge): market fo
recasts,demographics, help to achieve business goals.
Entrepreneurs: accept risks and opportunities; manage al
l other factors of production in the firm.
•Types of Economic systems:
o Command Economies (centralized government, government own
industries), “communism” (government owns all industries), soci
alism (only some major industries are controlled).
oMarket Economies (individuals make decisions about factors of
production): “market” (mechanism for exchange), freedom of choi
ce widely enjoyed.
Capitalism: Political idea with private ownership and
encouragement of entrepreneurship.
o MixedMarket Economies: most economic systems, elements of
command and market. Current trend towards “privatization” (tr
government activities to public sector because government
industries are inefficient) and deregulation (reducing laws that
affect business activities)
•Governments influence business as 6 things:
oCustomers (Eg: office supplies, military supplies)
oCompetitors (Eg: Crown corporations owned by government com
pete with private sector)