gr.10 unit 1 business - business fundamentals

sole proprietorship

a business owned by one person

• pros: easy to start and end, keep all profits

• cons: unlimited liability, responsible for all debts

partnership

Owned by 2 or more partners that share costs and responsibilities

• General partnership: actively involved, mutual agency

• Limited partnership: silent partner, investor, limited liability

• Pros: shared responsibilities/ debts, greater financial resources

• Cons: unlimited liability, mutual agency (you can be legally binded to your partner)

Franchise

Licensing a businesses name, operating procedures, designs, etc to another person

• Pros: training/help to set up given, good reputation

• Con: expensive, decision making is limited

Corporation

A business with 1 or more owners with limited liability and has been granted legal status. shares/stock may be owned by shareholders

• Pros: limited liability, lower tax rate

• Cons: value of shares may change due to external factors, complicated and costly to start up

Co-operative

Owned and operated by its customers and workers, each person has an equal share/vote

• Pros: shared costs/risks, equal control over business

• Cons: mutual agency, majority rule over decision making

what are the four business types?

retail, not for profit, service, manufacturing

retail

Selling things for profit. Ex: walmart

not for profit

Exists to meet the needs of the community. Ex: hobby groups, social groups

service

Doing an activity for profit. Ex: massage spas

manufacturing

making products out of raw materials to sell to retailers

what are the three business categories?

non-profit, for profit, not for profit

non-profit

• Meant to help others, mainly government related. Ex: school, public healthcare, charities

• Still make profit but its not their ultimate goal

for profit

• most businesses. ex: walmart

• making money is the goal

not for profit

• still make money but that is not its purpose. ex: charities

goods

a physically tangible item that is sold for profit

services

an intangible thing that is sold for profit. ex: massage services

profit

money left over after all business expenses are paid

profit = revenue - expenses

consumer

the person that buys the goods/services offered by a company

what is maslows hierarchy?

a theory developed to explain the motivations and behaviors of consumers

unlimited liability

• the law does not differentiate between the business and its owner so it is fully legally responsible for the businesses actions

• if someone were to sue the business they can come after the owner and their assets

limited liability

• the business and its owners are legally separate

• if a person were to sue the business they cannot go after the owners assets

silent partner

they are not involved in running the business, they are mainly just investors. they have limited liability

economics

the study of human decisions (production, distributions, consumption, etc) in using scarce resources to satisfy unlimited wants

corporate social responsibility

How companies integrate social, environmental, and economic issues into their business in their transparent and accountable way

• Compliance: acting to avoid repercussions

• Conviction: acting because they want to make a positive impact

what are the four drivers of CSR?

• Economic responsibility - be profitable

• Legal responsibility - obey the law

• Ethical responsibility - do what's right

• Discretionary responsibility - contribute to community

ethics

external rules that help us differentiate between right and wrong

morals

internal rules/opinions on what is right and wrong

fraud

lying with the intent of person or financial gain. there are many types of fraud, ex: consumer fraud, businesses trick consumers into buying goods through unethical ads

production process

1. purchasing - buying raw materials needs to create the good/service

2. processing - converting the raw materials into the product

3. quality control - checking that all products are up to standard

4. grading - giving the product a quality score

parent company

a company that owns another company

subsidiary

a company another company owns

flagship store

a very important sore for the company typically has a high volume of customers and has the newest products

production

when a person or business creates a product, service, or idea

capital

• money, assets, or investments (stock, buildings, machinery)

• all businesses need this to run

economic resources

• the things that allow businesses to create goods/services

• 3 types:

  • natural: materials that come from nature (oxygen, agriculture)

  • human resources: the people involved in the creation of goods/services (ex: nurses, construction workers)

  • capital resources: money, assets, investments (buildings, machinery)

scarcity

• the limited supply of something

• the foundation of economic activity, there are a limited number of resources that need to meet unlimited wants

opportunity cost

the benefit of doing one thing over another

• ex: if you decide to do homework instead of watching TV the opportunity cost of homework is the lost enjoyment of watching TV

command economy

all production and sales of goods and services is owned and ran by the government

market economy

all production and sale of goods and services is determined by the producers and consumers

mixed economy

having characteristics of both (canada is a mixed economy)

law of demand

as price increases, demand decreases

law of supply

as price increases, supply increases

what are the six principles of CSR

maslows levels

1. physiological needs - water, food

2. security needs - safety

3. belongingness and love needs - family, community

4. esteem needs - prestige

5. self-actualization - reaching full potential in all areas of life