SGMA 217 Chapters 1-3

Service economy

The Canadian economy is now characterized as a service economy, one in which more effort is devoted to providing services than producing goods.

Potential benefits of studying business

1. It can help you choose a career 2. It can improve your career 3. Studying business can help you become a better-informed consumer and investor 4. It can help you become a more influential community member.

Four types of resources available to businesses

Material, human, financial, and informational.

Stakeholder

Any individual, group, or organization that has a vested interest (stake) in the business, and is impacted by a company's decision making, policies, actions, etc.

Standard of living

The number of products available (material goods and necessities), the wealth of the nation, and lifestyle opportunities.

Quality of life

The general well-being and happiness of people, communities, and societies based on both material and non-material factors that are important to people and is more difficult to measure than standard of living.

Five factors of the business environment

Political, economic and competitive, social, technological, and international.

Environmental scan

Allows businesses to develop plans to anticipate and respond to changes.

Economics

The study of how choices affect the acquisition, production, and distribution of scarce resources.

Microeconomics

Analyzes the decision making and behaviour of individuals, households, and companies regarding the allocation of scarce resources.

Macroeconomics

Provides an analysis of the economy as a whole; the primary areas of focus are the economic cycles, economic growth, and economic development.

Supply

The quantity of a product that producers are willing to sell at each of various prices.

Demand

The quantity of a product that buyers are willing to purchase at each of various prices.

Equilibrium price/market price

The price at which the quantity demanded is exactly equal to the quantity supplied.

Expansion

Occurs when an economy is growing.

Contraction

When the economy is shrinking.

Recession

When an economy's GDP contracts two or more consecutive quarters (three-month periods) in a row.

Depression

A severe recession that lasts longer than a typical recession and has a larger decline in business activity when compared to a recession.

Trough

The business cycle phase when a country's economy bottoms out and a country's production and employment reach their lowest points.

Recovery

When the economy begins to improve it is in the recovery phase, which can lead to expansion.

Gross domestic product (GDP)

The total dollar value of all goods and services produced by all people within the boundaries of a country over a set period of time.

Gross national product (GNP)

The total market value of all final goods and services produced by a country regardless of where the goods are produced.

Unemployment rate

The percentage of a country's labour force unemployed at any time.

Inflation

An economic statistic that tracks the increase in prices of goods and services over a period of time.

Consumer price index (CPI)

A typically monthly rolling or yearly index that measures changes in the prices of a fixed basket of goods and services purchased by a typical consumer in an urban area.

Producer price index (PPI)

Measures the changes in price Canadian producers receive or pay for goods and services.

Deflation

An economics statistic that tracks the decrease in prices of goods and services over a period of time.

Fiscal policy

The spending and tax policies of the government.

Deficit

Occurs when the government spends more money than it receives.

National debt

Accumulation of all previous deficits.

Monetary policy

The measures taken by the Bank of Canada to regulate the amount of money in circulation to influence the economy.

Interest rates

The cost of borrowing money and the reward for lending it.

Contractionary policy

The use of monetary policy by the Bank of Canada to tighten the money supply by selling government securities or raising interest rates.

Expansionary policy

The use of monetary policy by the Bank of Canada to increase the growth of the money supply.

Economic system

A combination of policies, laws, and choices made by governments to determine who owns and controls the factors of production.

Factors of production

The resources used to create goods and services, including natural resources, capital, labour, entrepreneurship, and knowledge.

Market economy

An economic system based on competition in the marketplace in which individuals own and operate the majority of businesses that provide goods and services.

Command economy

An economic system in which the government decides what goods and services will be produced, how they will be produced, for whom available goods and services will be produced, and who owns and controls the major factors of production.

Socialism

An economic system in which infrastructure is owned and controlled by the government.

Mixed economy

An economic system where most land and business are privately owned but with various levels of government involvement.

Perfect/pure competition

The market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product.

Monopolistic competition

A market situation in which there are many buyers along with a relatively large number of sellers that differentiate their products from the products of competitors.

Oligopoly

A market (or industry) in which there are few sellers.

Monopoly

A market (or industry) with only one seller and barriers to keep other companies from entering the industry.

Natural monopolies

Many monopolies in Canada are what is referred to as natural monopolies, where it just makes sense to have only one provider.

Legal monopoly

Created when a government entity issues a copyright, patent, or trademark.

Corporate governance

The way in which an organization is governed, directed, and administered; requires balancing the interests of all stakeholders.

Business ethics

The application of moral standards to business situations.

Competing fairly and honestly

Ethical businesspeople are expected to obey all laws and regulations, refrain from knowingly deceiving, misrepresenting, or intimidating others.

Avoiding conflicts of interest

COF occurs when an individual takes advantage of a situation for their own benefit while ignoring the interests of the organization and its stakeholders.

Bribe

Anything given to an individual that might unfairly influence that person's business decision.

Being transparent

The free flow of information inside and outside the company, including to investors, employees, customers, and other stakeholders.

Corporate social responsibility audits

Comprehensive reports that review a company's conduct and its impact on society.

Factors that affect/influence ethics

Individual factors, social factors, and opportunity.

Individual factors

Knowledge of an issue and personal values + goals.

Social factors

The law and cultural norms.

Opportunity

Competitive environment, level of supervision, and enforcement.

Preconventional ethics

A stage in ethical development where people behave in a childlike manner and make ethical decisions based on immediate punishment or reward.

Conventional ethics

The second stage in ethical development where people consider the expectations of an organization or society.

Postconventional ethics

The third stage in ethical development where people adhere to ethical standards of a mature adult.

Actors promoting ethical behaviour

The government, professional and trade associations, and organizations.

Ways companies can promote ethical behaviour

Demonstrate commitment from leadership, adopt a code of ethics, reward ethical behaviour, designate an ethics officer, protect whistle-blowers, learn from past mistakes.

Ethical dilemmas

Decisions where every alternative impacts various stakeholders in unpleasant ways.

Corporate social responsibility (CSR)

The recognition that business activities have an impact on society and the consideration of that impact in business decision making.

Economic model of social responsibility

The view that society benefits most when business is left alone to produce and market profitable products.

Socioeconomic model of social responsibility

The concept that business should emphasize not only profits but also the impact of its decisions on society.

Strategic giving

A strategy to positively impact the company by giving with an expectation of a gain.

Social/ethical/green/sustainable investing

Investors looking for opportunities that align with their beliefs and values.

Canadian Human Rights Act

Passed in 1977 with the goal of ensuring all employees in federally regulated activities are treated equally.

Employment Equity Act

Established in 1995 to mandate provision of equal employment opportunities for four designated groups.

Duty to accommodate

Employers may be required to take special measures for accommodation of differences.

Canadian Human Rights Commission (CHRC)

Ensures federally regulated employers are fulfilling their legal obligation to provide equal employment opportunities.

Caveat emptor

A Latin phrase meaning 'let the buyer beware'.

Canadian Code of Advertising Standards

Advertising must be truthful, fair, and accurate.

Four basic consumer rights

The right to safety, the right to be informed, the right to choose, and the right to be heard.

Green marketing

The process of developing and promoting environmentally friendly goods and services.

Environmental sustainability

Protecting the natural environment to ensure survival for present and future generations.