BUSINESS CUSTOM 2/E VOL. 1 Chapter 1 Readings (very detailed and helpful)

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Chapter 1: Understanding the Canadian Business System
The concept of business and profit
Business: An organization that seeks to earn profits by providing goods and services
Profit: The money that remains (if any) after a businesss expenses subtracted from its
revenues
Expenses: The money a business spends producing its goods and services and generally
running the business. Also referred to ascosts
Revenues: The money a business earns selling its products and services. Also referred to
assales
No matter how efficient a business is, it wont survive if there is no demand for its goods
and services
Someone who can spot a promising opportunity and then develop a good plan for
capitalizing on it can succeed
Economic systems around the world
Economic system: The way in which a nation allocated its recourse among its citizens
Factors of production: The resources used to produce foods and services such as labour,
capital, entrepreneurs, and natural resources
oLabour: The mental and physical training and talents of people; sometimes called human
resources
Employees who are well trained and knowledgeable can be a real competitive
advantage for a company
oCapital: The funds needed to operate an enterprise
Major sources of capital for small businesses is personal investment by owners
Investments come fromindividual entrepreneurs, partners who start biz together,
or from investors who buy stock
oEntrepreneur: An individual who organizes and manages labour, capital, and natural
resources to produce goods and services to earn a profit, but who also runs the risk of
failure
oNatural resources: Items used in the production of goods and services in their natural
state, including land, water, mineral deposits, and trees
oInformation resources (not so important): 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
Command economies: An economic system in which government controls all or most
factors of production and makes all or most production decisions
oCommunism: A type of command economy in which the government owns and operates
all industries
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