Chapter 1: A Context of Business: A Framework for Study Sept 5/12
: a group of people working towards a common goal
There are three broad categories:
a) public/governmental- provides goods & services to the public w/out
necessarily generating profit
b) private/non-governmental- offers goods & services w/out necessarily
c) private- produce goods & services w/ the intent of making profit to go
towards their shareholders or owners
Organizations are 1) social entities (composed of people) 2) created to achieve
common goals 3) interact with the environment
Organizations are seen as open systems: entities that are embedded in and
dependent on exchanges with the environment they operate within.
Organizations were once viewed as closed systems. This view only focused on the
Exhibit 1.2 *
The External Context (Environment) of Business
The environment of an organization has two dimensions:
1. Specific or Task Environment
Consists of stakeholders who have a direct impact on an organization
Ex. consumers, employees, competitors, suppliers, government, creditors,
local public, distributors, and unions
2. General Environment
Forces that surround and influence the specific environment.
Includes: political, economic, societal, labour, competitive, global, and
The Canadian Context
Economic Forces in Canada
GDP is a good indicator of the health of the economy.
Gross Domestic Product: the total value of a country’s output of goods &
services in a given year Competitive Forces in Canada
Canada has mainly focused on the extraction and processing of natural
Canada is much more involved in this than other countries at the same level
of economic development. This is criticized because other countries take
these raw materials and add value to them.
Types of competition:
Perfect competition: many small firms compete with identical products,
therefore they do not have any say about the prices
Monopolistic competition: large number of small firms with similar products.
They have some influence over the price a bit. Ex retail