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RSM100Y1 Chapter Notes -Limited Liability Partnership, Unemployment, United States Treasury Security

Rotman Commerce
Course Code
Michael Khan

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Not-for-profit organizations:
Factors of production:
Natural resources:
Human resources:
Private Enterprise System: A type of economic system in which businesses need to
recognize consumer demands, and fulfill them. Profitable firms in this system fulfill
consumer demands the best. For example, businesses in Canada and the US function
under this system. In this system, it is necessary to fulfill consumer demands to gain
profit. This profit will result in access to more factors of production, which can be
used to generate even bigger profits.
Capitalism: Another name for private enterprise system (it is the same thing).
Businesses need to realize what consumers demand, and produce that product. The
businesses that serve consumers the best gain the largest profits.
Competition: The struggle between businesses to gain consumers. Businesses are
constantly battling for consumers to gain more profit. Businesses battle for
consumers in a number of ways, and the most important being a quality product. As
businesses compete for customers, they have to give out a better product than their
competition, so that the consumer buys from them. Due to this, less efficient firms
are driven out of the industry, whereas those firms that exceed consumers’ demands
are successful. For example, Microsoft and Google are competitors in the web,
consistently exceeding customer’s wants.
Competitive Differentiation: The way a company is unique compared to its
competition in the eyes of the consumers. It can be a combination of products sold,
abilities of the company, or selling approaches. Competitive differentiation is
needed in order for a firm to compete successfully.
Private Property: The most basic freedom in a Capitalist society. Like the name
suggests, it is essentially the right to own private property. It is the right to own, use,
buy, and sell any property owned. The citizens in a capitalist society need to have

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certain rights, and private property is the most basic. An example would be a
businessman that owns a building where his work is conducted. The building is a
form of private property, and the businessman can use it, buy it, sell it, or do
anything with it that he chooses.
Entrepreneur: A person who sets up and runs a business, because there is an
opportunity to generate profit. Entrepreneurs need to take numerous risks and
overcome many obstacles to be successful. Entrepreneurs are important to society
because they lead to economic growth, and keep pressure on existing companies to
exceed consumer demands. Essentially, the private enterprise system wouldn’t even
exist if people did not take risks and become entrepreneurs.
Consumer Orientation: Products that are designed by a business, to focus on
consumers’ unmet wants. In this philosophy, consumers are focused on first by the
business, and their wants dictate which products are sold. As a result of this,
consumers have an immense amount of choices in the market, because businesses
are looking to satisfy them. For example, Samsung is always creating new phones,
depending on what consumers want.
Brand: A term, logo, sign or in other forms that creates the identities of the products
of a firm. It is made in order to make the products stand out. Example can be Apple
Branding is the process of creating the uniqueness (such as services or goods) of
the firm into customers mind. It is a major marketing tool in contemporary
business. The Home Depot is an example since the community knows its brand for
its excellent customer services, an entrepreneur spirit and its feedbacks.
Transaction management: this approach was built during the Industrial
Revolution where firms concentrate on promoting and producing goods and
services in the hope that the revenue would cover the cost. More customers would
generate more revenue. The firms do not consider the ties with the customers.
Relationship Era: The firms began slowly to build ties with customers through
every transaction in order to obtain long-term customers. The strategy of customer
loyalty was being built and promoted. Less overall-cost, and knowledge of customer
preferences are both an advantage for the firms through competitive differentiation.
Relationship management: this approach is tied with Relationship Era which it
represents maintaining the ongoing ties with customers and the firms. It requires
the managers to gather the information on customers preferences and apply it to
pull the relationship ties with the customers closer.
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