RSM100 Midterm 1: Study

What is a Business

All profit seeking activities and enterprises that provides goods and services necessary to an economic system

How does businesses improve the standards of living?

Drives the economy, nation’s engine for economic growth and prosperity, countries depends on the wealth businesses generate (income for businesses, employees, + taxes to governments)

To succeed a business must..

know what their customers want and supply it quickly and efficiently

Products firms produce reflects: 

changes in consumer tastes and promotes technology and other changes

“When a business succeeds, everybody wins” because

they organize resources, know-hows, and finances for new technologies, medicinal breakthroughs, environmental improvements etc.

Key for long term success + growth of a business

flexibility: ability to change with times and marketplace

Every Business has what type of Interaction?

One between a buyer and seller

The reward for people who take on the risk of business is..

Profits

Profits serve as an ____ to start and maintain businesses

Incentive

Quest for profit = 

central focus of business

Functional Areas of Business Activity (3)

Management: planning organizing resources to achieve goals (sales, profits)

Marketing: handling customers, building long term relationships, understanding concern and buying behavior

Financial: accounting process, keeping financial records, documents for analysis and use, knowing product sales behavior is critical info with pricing

Non-profit Organizations place what above profits?

Public Service

The Two Types of Non-profits

1. Private Sector

2. Public Sector

Examples of Private Sector Non-profits

museums, libraries, charitable organizations

Examples of Public Sector Non-profits

government agencies, political parties, labor unions

How many Non-profits are there in Canada, their revenue, and jobs they provide?

160 000 non profits with $112 billion revenue, 2 million job and 2 billion volunteer hours

Economic requires ___ inputs for successful operations

Four basic inputs: Factors of Production

What are the 4 Factors of Production

• Natural resources

• Capital

• Human resources

• Entrepreneurship

**Government must make sure these inputs are good and exist for economies to reach full potential

Factors of Production: Natural Resources Definition

All production inputs useful in their natural states, therefore places with more natural resources have an economic advantage

Factors of Production: Natural Resources Examples

Agricultural land, building sites, forests, water, mineral deposits

Factors of Production: Capital Definition (4 types)

Technology, tools, information, and physical facilities

Technology helps companies operate and improve products —>

To be competitive firms need to continuously acquire, maintain, and upgrade its capital (needs $$)

Factors of Production: Human Resources Definition

Anyone who works, inputs physical labor and intellectual effort

companies rely on employee idea, innovation, and physical inputs

Talents employees are harder to acquire than smth like technology, can be your best assets

Factors of Production: Entrepreneurship definition

Willingness to take risks to create and operate a business

• Entrepreneurs sees opportunities to make profits and create plan to earn those profits successfully

Most business activities are about..

securing four-key inputs or developing substitutes

Canadian Businesses operate on an economic system called..

• the private enterprise system/capitalism

• the type of economic system a business is in affects patterns of resources they use

No business operates completely freely on its own it: 

operates within larger economic system of rules + constraints, directs how goods and services are produced, distributed, and consumed

Characteristics of a Private Enterprise System/Capitalism (4)

• rewards firms meeting and identifying consumer demands

• minimal government interference needed

• businesses that meet consumer = gain access to necessary means of productions and profits

• success depends on business and ppl involved

Who and What: Adam Smith

Father of Capitalism

Invisible Hand Concept

the economy is regulated by the “invisible hand”

The basic principle of the private enterprise system

• that being, competition (the battle among businesses for consumer acceptance

Benefit of Competition

• competition forms the best possible products and prices as less efficient firms are driven out

Competitive Differentiation

Unique combo of organization abilities, products, and approaches, sets companies apart

Combining Business and Tech in Fashion: Nordstrom

set up a tech lab with IT professionals to coming up with innovative ideas to change the way customers chop

• TextStyle: messaging app between salesperson and customers

• known for outstanding service + tech integration (competitive differentiation)

Basic Rights in the Private Enterprise System (4)

1) Private Property

2) Profits

3) Right to Freedom of Choice

4) Right to fair competition

Basic Rights in the Private Enterprise System: Private Property

• right to own, use, buy, sell, and hand down property (land, buildings, patents, possessions and intangible properties

Basic Rights in the Private Enterprise System: Profits

• right to all after-tax profits earned through activities, legally and ethically entitled to any income greater than costs

Basic Rights in the Private Enterprise System: Freedom of Choice

• maximizes individual wealth by providing options

• citizens choose own employment, purchases, investments

• able to change jobs, choose amongst difference brands for goods + service, etc.

Basic Rights in the Private Enterprise System: Fair Competition

• public sets rules for competitive activity, CAD gov. passed laws to prohibit excessively aggressive competitive practices designed to remove competition 

• the following is illegal (price discrimination, fraud in financial markets, deceptive advertising and packaging)

All Parties can’t be satisfied with gov. decisions: Canadian Radio Television and Telecommunications Commission (CRTC)

• increased costs to charged to small internet service providers buying access to larger ISP networks of Bell, Bell Aliant

• allowed larger ISPs to control network traffic

• began charging “usage based bills”

• smaller ISPs, forced to introduce limits and charge more, ended competitive advantage over larger ISPs which typically charge more for high volume users

• Smaller ISP complained, compromise pricing model was introduced but.. limits usuage but allows them to unlimited use packages to the demanded

• complicated marketplace

• Canada pays among the highest cellphones rates in the world, 13x higher than France