IFAT CHAPTERS 1-5

business

an organization that offers products to satisfy society’s needs and wants often in exchange for money.

good

a physical, tangible product that we can see and touch

service

an intangible product that we experience or use

service

what economy is canada

helping you choose a career,

improving your career,

better-informed consumer and investor,

more influential community member

The benefits of studying business include

material

human

financial

informational

four types of resources available to businesses

information

resource that tells the manager how effectively the other three resources are being combined and used.

• Increased quality

• increased choice

• increased convenience

• increased health and safety

• increased value for money

Ways Companies Offer Variety

quality of life

the general well-being and happiness of people, communities, and societies; includes measuring such things as access to healthcare, education, and food

Standard of living

the amount of products available, the wealth of the nation, and lifestyle opportunities

environmental scan

the process of gathering information about the external environment to determine how it may potentially impact the business’s operations

business risk

any factor that will lower profits, prevent a business from meeting its goals, or even cause business failure

good

a ….is tangible, can be mass-produced, and can be stored

profit

What does a business realize when sales revenue exceeds expenses?

community impacts

Which of the following is a potential societal concern of business?

Which of the following is NOT one of the ways businesses drive innovation and creativity?

• by adding jobs to the community

• by introducing new technologies into the market

• by introducing new goods and services into the market

• by finding new ways of operating

• by adding jobs to the community

community impacts

If a once-successful business experiences hard times, or fails, it can cause a sudden spike in unemployment and bring hardship to the community. Which term refers to this situation?

• health and safety risks

Land, water, and air pollution, and increased traffic is a combination of environmental damage and which of the following?

implement training programs

How can companies proactively mitigate health and safety risks?

Political

Economic and competitive

Social

Technological

International

The five factors of the business environment are:

developing new products

high level of competition forces a company to focus on which of the following strategies?

environmental scan

the process of gathering information about the external environment to determine how it may potentially impact the business’s operations

Consumer spending decreases for discretionary items in a downturn and increases during an upturn.

Economic downturns or upturns affect everything from unemployment to consumer spending. Which statement best exemplifies this fact?

• international-minded

What must you be to be successful working in any country of the world today?

• the significantly increasing cost of technology

Innovations in technology have transformed the way businesses operate. What is NOT an effect of technology advancements on business?

• increased efficiencies in the supply chain

• more opportunities for customers to share experiences with businesses and other customers

• customers choosing to purchase products from a variety of online sellers

• the significantly increasing cost of technology

risk control and reduction

Many companies have a risk management team that monitors all actions of the company. The team is also tasked with identifying risks and developing strategies to remove or at least mitigate the risks. What is this an example of?

job-specific knowledge

ability to perform your responsibilities

analytical thinking and complex decision making

ability to articulate past and current company issues or opportunities, identify the source of any problem, retrieve or create credible research, and develop suitable solutions?

health and safety risks, environmental damage, and social disruption

Most managers today look for ways to balance their drive to generate profits with the need to harmonize their operations with social and environmental concerns. What are the social concerns discussed?

federal

In Canada, the three levels of government are tax agents, regulators, providers of essential services, purchasers (customers), and competitors. Which level of government is responsible for overseeing the well-being of Canada?

• operational

Business risk, or simply risk, refers to factors that can result in lower profits, prevent the business from achieving its goals, or even cause the business to fail. Which risk can be caused by poor maintenance of production facilities, loss of resources due to fire, or lack of employee training?

microeconomics

analyzes the decision making and behaviour of individuals, households, and companies regarding the allocation of scarce resources. The analysis provides an outlook about how and why the stakeholders value products differently and make certain financial decisions.

macroeconomics

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

market, socialism, command and mixed

The four economic systems are

private ownership and government involvement

Typically, we classify economies by their level of

perfect (pure), monopolistic competition, oligopoly, and monopoly.

There are four types of market structures

Market

consists of many sellers and buyers and no one group is large enough to influence prices

monopolistic competition

competition is a market situation where there are many buyers and a relatively large number of sellers the sellers attempt to differentiate their products.

oligopoly

a market there are few sellers and a sizable investment is necessary to compete

monopoly

a market with only one seller and barriers to prevent others from entering the market.

monopoly

there is no close substitute for the product.

peak, contraction, trough, recovery, expansion

If you were to graph the economic growth rate for a country such as Canada, it would resemble a roller-coaster ride. These fluctuations are generally referred to as the business cycle, which includes which five phases?

trough

• Economic activity hits its lowest point

it will increase

In general, if the price of a product increases what will happen to the quantity supplied?

the total dollar value of all products produced in Canada over a period of time

We determine whether Canada’s economy has grown or contracted by using a measure called the gross domestic product (GDP). What is GDP

a mismatch between the skills needed and the skills labour has

One of the many types of unemployment is structural unemployment, which is a result of which of the following?

to understand how prices are determines

primary objective of microeconomics

recession

two or more consecutive quarters (three-month periods) of contraction in a country's GDP which typically involve people losing their jobs and an overall drop in household incomes

cyclical

caused by changes in the business cycles (recessions and inflationary periods) ex) people who were laid off during a recession

structural

a mismatch between the skills needed and the skills labour has

structural

a cashier being replaced by a self-checkout stand

frictional

unemployed between jobs

frictional

you quit your job and are now looking for a new one

around 2 percent

what is a stable rate of inflation

jumps to more than 12 percent a year your dollars lose purchasing power, and it can be a sign of economic trouble

if prices increase too fast

consumer price index (CPI)

changes in the prices of a fixed basket of goods and services purchased by a typical consumer in an urban area;

producer price index

measures the changes in price canadian producers receive or pay for goods and services;

bank of canada act of 1934

the central banking system that prints money and controls how much of it will be in circulation to "promote the economic and financial well-being of canada"

socialism

Which of the following is the economic system where major infrastructure is owned and controlled by the government while smaller businesses are controlled by individuals?

conflict of interest

occurs when an individual takes advantage of a situation for their own benefit (personal gain) while ignoring the interests of the organization and its stakeholders

transparency

the free flow of information inside and outside the company

preconventional ethics

a stage in the ethical development of individuals in which people behave in a childlike manner and make ethical decisions in a calculating, self-centred, selfish way based on the possibility of immediate punishment or reward

conventional ethics

the second stage in the ethical development of individuals in which people move from an egocentric viewpoint to consider the expectations of an organization or society

postconventional ethics

the third stage in the ethical development of individuals in which people adhere to the ethical standards of a mature adult and are less concerned about how others view their behaviour than about how they will judge themselves in the long run

code of ethics

a written guide to acceptable and ethical behaviour as defined by an organization

ethical dillemas

decisions where every alternative impacts various stakeholders in unpleasant ways

corporate social responsibility

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

nvestors, employees, customers, suppliers, and society

The primary stakeholders of a business include

absolute advantage

the ability to produce a specific product more efficiently than any other competing business or country

absolute advantage

ability to produce wheat more efficiently than countries in other parts of the world. Canada also has advantages in softwood and mining activities, among other industries, as well as in the financial and technology industries.

comparative advantage

the ability to produce a specific product more efficiently than another product

comparative advantage

canada is very successful in the production of certain agricultural products and in the energy sector, mining, and financial services, but is restricted in industries that require a steady warm climate or in labour-intense industries (e.g., tropical fruit production and textile industries).

exporting

the selling and shipping of raw materials or products to other countries

bigger markets + more jobs + economic growth + higher quality of life.

Exporting benefits

foreign exchange control

a restriction on the amount of a particular foreign currency that can be purchased or sold

currency devaluation

a drop in the value of one country’s currency relative to other currencies

currency exchange rate

the value of one currency in relation to another

balance of trade

the value of exports minus the value of imports for a country for a specific time period

trade surplus

the value of exports is greater than the value of imports

trade deficits

the value of exports is less than the value of imports

balance of payments

the total flow of money into a country minus the total flow of money out of that country over some period of time, usually every quarter or calendar year

tariffs

tax on a particular foreign product being imported into a country; often used interchangeably with customs or import duty

quotas

limit on the number or value of products a country can import or export during a given period of time

revenue tariffs and protective tariffs

The two types of tariffs are

revenue tarrifs

imposed solely to generate income for the government.

protective tarrifs

imposed to protect a domestic industry from competition by keeping the price of competing imports level with or higher than the price of similar domestic products.

embargo

a complete halt to trading with a particular country or in a particular product

World Trade Organization

which aims to open markets and reduce trade barriers with the objectives of raising the standard of living and creating job opportunities, especially in developing countries.

wto

“The goal is to ensure that trade flows as smoothly, predictably and freely as possible

IMF

which org is concerned with economic stability.

IMF

supporting economic policies that promote financial stability and monetary cooperation, which are essential to increase productivity, job creation, and economic well-being

world bank

helps countries that lack basic resources needed to build a viable economy and reduce poverty. It provides low-interest loans and grants, and supports investments in developing countries in areas such as education, health, infrastructure, and agriculture.

economic community

organization of countries formed to promote the free movement of resources and products among its members

Lower Control, Lower Risk

risk level Exporting and Importing

More Control, More Risk

Contractual Agreements risk level

Most Control, Most Risk

International Direct Investment risk level

strategic alliance

a partnership formed to cooperate in manufacturing, development, sales, or other business activities while each party maintains its independence

joint venture

the creation of a separate company that will be operated jointly by partnering companies

acquisition

purchase of an existing company

increase jobs and incomes, lower prices, and encourage innovation

What are commonly cited benefits of international trade?