Textbook Notes (381,007)
CA (168,313)
UTSC (19,303)
MGT (1,095)
MGTA01H3 (583)
H Laurence (25)
Chapter 1

Chapter 1 notes

5 Pages
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Department
Management (MGT)
Course Code
MGTA01H3
Professor
H Laurence

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Chapter 1 Understanding the Canadian
Business System
The Concept of Business and Profit
Business: an organization that produces or sells goods and services in an effort to make a
profit.
Profit: what remains after a businesss expenses have been subtracted from its revenues
Expenses (costs): money a business spends producing its goods and services, running the
business
Revenues (sales): money earned selling its goods and services
-businesses that can identify, plan and then act on an opportunity based on consumer
wants/needs will succeed and make a profit.
-many businesses contribute to society through producing/selling goods/services, new
innovations, charities, taxes for gov. support
Economic Systems around the World
-a major determinant of how organizations operate is the kind of economic system that
characterizes the country in which they do business.
-an economic system is the way a nation allocates its resources among citizens
-economic systems are differentiated by factors of production
5 Factors of Production
-basic resources that a countrys businesses use to produce goods and services
-Labour (human resources): mental and physical capabilities of people
-Capital: financial resources to operate an enterprise; investments => revenue
-Entrepreneurs: individuals who organizes/manages labour, capital, natural resources to
produce goods/services to earn profit while accepting risks (opportunity + risk)
-Natural Resources: items used for the production of goods/services in their natural state
(land, water, mineral deposits, trees)
-Information Resources: market forecasts, economic data, knowledge of employees, info
that help to achieve goals
-information as a business
Types of Economic Systems
www.notesolution.com
-Command economy relies on gov. control of all or most factors of production and
production/allocation decisions
Communism: system in which gov. owns and operates all sources of production
Socialism: gov. owns selected major industries (political considerations > ability)
while smaller businesses are privately owned
-Market economy is where individuals control all or most production/allocation decisions
through supply and demand
A market is a mechanism for exchange b/w buyers and sellers of a particular
good/service
Both buyer and seller have a freedom of choice
Capitalism: a kind of market economy offering private ownership of the factors of
production and encourage entrepreneurship by offering profits as an incentive
-Mixed market economy: system featuring both command and market economy
characteristics
Privatization: process of converting gov. enterprises into privately owned
companies
Deregulation: a reduction in # of laws affecting business activity => simplifying
task of management
Interactions between Business and Government
How Government Influences Business
-Government as customer
Gov. buys thousands of different products/services from businesses (office supplies,
buildings, computers, highways, consulting services, advertisement)
-Government as competitor
Compete with business through Crown corporations
-Government as regulator
Broadcast licences(CRTC), commercial air and railway (CTC), prices of wheat
www.notesolution.com

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Description
Chapter 1 – Understanding the Canadian Business System The Concept of Business and Profit Business: an organization that produces or sells goods and services in an effort to make a profit. Profit: what remains after a business’s expenses have been subtracted from its revenues Expenses (costs): money a business spends producing its goods and services, running the business Revenues (sales): money earned selling its goods and services -businesses that can identify, plan and then act on an opportunity based on consumer wants/needs will succeed and make a profit. -many businesses contribute to society through producing/selling goods/services, new innovations, charities, taxes for gov. support Economic Systems around the World -a major determinant of how organizations operate is the kind of economic system that characterizes the country in which they do business. -an economic system is the way a nation allocates its resources among citizens -economic systems are differentiated by factors of production 5 Factors of Production -basic resources that a country’s businesses use to produce goods and services -Labour (human resources): mental and physical capabilities of people -Capital: financial resources to operate an enterprise; investments => revenue -Entrepreneurs: individuals who organizes/manages labour, capital, natural resources to produce goods/services to earn profit while accepting risks (opportunity + risk) -Natural Resources: items used for the production of goods/services in their natural state (land, water, mineral deposits, trees) -Information Resources: market forecasts, economic data, knowledge of employees, info that help to achieve goals -information as a business Types of Economic Systems www.notesolution.com -Command economy relies on gov. control of all or most factors of production and production/allocation decisions Communism: system in which gov. owns and operates all sources of production Socialism: gov. owns selected major industries (political considerations > ability) while smaller businesses are privately owned -Market economy is where individuals control all or most production/allocation decisions through supply and demand A market is a mechanism for exchange b/w buyers and sellers of a particular good/service Both buyer and seller have a freedom of choice Capitalism: a kind of market economy offering private ownership of the factors of production and encourage entrepreneurship by offering profits as an incentive -Mixed market economy: system featuring both command and market economy characteristics Privatization: process of converting gov. enterprises into privately owned companies Deregulation: a reduction in # of laws affecting business activity => simplifying task of management Interactions between Business and Government How Government Influences Business -Government as customer Gov. buys thousands of different products/services from businesses (office supplies, buildings, computers, highways, consulting services, advertisement) -Government as competitor Compete with business through Crown corporations -Government as regulator Broadcast licences(CRTC), commercial air and railway (CTC), prices of wheat www.notesolution.com Protect competition, consumers, environment, to achieve goals -Government as taxation agent Revenue taxes: main purpose to fund gov. services/programs Progressive revenue taxes: levied at higher rate on higher-income taxpayers and lower on lower income taxpayers Regressive revenue taxes: levied at the same rate regardless of income => poorer people pay a higher percentage of their income (ex. Sales tax) Restrictive tax
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