Business: all profit-seeking activities and enterprises that provide goods and
services necessary to an economic system (provides the means for improving
a nation’s standard of living).
Profits: rewards for businesspeople who take the risks involved to offer
goods and services to customers (incentive for people to start companies,
expand them, and provide consistently high-quality competitive
Not-for-profit Organizations: organizations whose primary aims are public
service not returning a profit to its owners.
o 160,000 + registered NFPO’s in Canada.
o Operate in both public/private sectors.
o Approx. half of their revenue comes from government grants (mostly
Factors of production: four basic inputs for effective operation:
o Natural Resources (basic inputs required in any economic system)
o Capital (firms need to continuously acquire, maintain and upgrade
o Human Resources (effective, well-trained human resources can
provide firms with a significant competitive edge)
o Entrepreneurship: the willingness to take risks to create and operate
FACTOR OF PRODUCTION CORRESPONDING FACTOR PAYMENT
Natural Resources Rent
Human Resources Wages
Private Enterprise System (capitalism): an economic system that rewards
firms for their ability to identify and serve the needs and demands of
Adam Smith (known as the father of capitalism): the economy is best
regulated by the “invisible hand” aka competition (battle amongst business
for consumer acceptance).
Competition Differentiation: the unique combination of organizational
abilities, products, and approaches that sets one company apart from its
competitors in the minds of customers.
Basic Rights in the PES:
o Private Property: the most basic freedom under the PES, the right to
own, use, buy, sell and hand down land, buildings, machinery,
equipment, patents, individual possessions, and intangible kinds of
property. o Profits: Businesses are entitled to all after-tax profits they earn
through their activities.
o Freedom Choice: a PES relies on citizens to choose their own
employment, purchases, and investments (a private enterprise
economy maximizes individual wealth by providing options).
o Competition: PES allows fair competition by allowing the public to set
the rules for competitive activity (Canadian government has laws to
prohibit excessively aggressive competitive practices designed to
remove the competition)
Entrepreneur: a person who seeks a profitable opportunity and takes the
necessary risks to set up and operate a business (PES needs entrepreneurs to
99% of all new businesses are small businesses (employ -500 & income
Small businesses generate 45% of Canada’s economic output and create 80%
of all new jobs.
Six Eras in Business History
1. The Colonial Period (Before 1776)
Colonial society featured rural and agricultural production
Colonial cities functioned as marketplaces for farmers and
Economy depended on the output of farms.
Colonists depended on Europe for manufactured items and financial
2. The Industrial Revolution (1760-1850)
Economy moved to a factory system that mass-produced items by
using numerous semiskilled workers.
Profit was made from large-scale production and by increasing a
company’s use of machines.
Began to buy in bulk (more savings).
Agriculture became mechanized.
New railroad systems aided in the increased pace of the revolution.
3. The Age of Industrial Entrepreneurs (Late 1800s)
Opportunities created from the IR increased entrepreneurship in
Inventors created new production methods and a virtually endless
number of commercially useful products. (i.e. Alexander Graham Bell,
his father Melville and friend Reverend Thomas Henderson started
what is now known as Bell Canada Inc. in 1877)
Advanced the Canadian business system and increased the overall
standard for living for Canadians. This created a new demand for
4. The Production Era (Through 1920s)
Businesses began to focus on the activities needed to produce
manufactured goods. Work became more specialized, and huge, labour-intensive factories
were common in North America.
Managers, who were trained in operating companies, were given the
responsibilities of business owners (produced more goods using
Attention was on internal processes instead of external influences.
Marketing was rare.
Little attention paid to consumer wants/needs.
5. The Marketing Era (Since 1950s)
After The Great Depression, sales and advertising became important
activities (selling meant marketing in this period).
Consumer Orientation: a business philosophy that focuses first on the
consumers’ unmet wants and needs, and then designs products to
meet those needs.
Branding: the process of creating in consumers’ minds an identity for
a good, service, or company; a major marketing tool in contemporary
Brand: a name, term, sign, symbol, design, or some c