business final

External Environment

Factors outside organizations boundaries that can't be controlled ex: competitors, covid.

Organizational boundaries

Separates the organization from its environment ex: services, products, moral

Multiple organizational boundaries

Organizations have multiple environments (ex: economic conditions affect performance of a business-- ex: grocery store influenced by increase in unemployment, pricing, and competitors)

Economic goals

Economic growth, stability, full employment,

Business Cycle (Economic Growth)

short-term ups and downs in economy

Depression (bust) (Economic Growth)

economic growth decreses after 2+ years

Recovery, Peak, Recession, Trough (Economic Growth)

recover, boom, inflation = lower unemployment, prices bottom before rise

aggregate output (Economic Growth)

the total quantity of goods and services produced in an economy in a given period (measures economic growth)

standard of living (Economic Growth)

How much a country can buy of goods and services with their currency

Productivity (Economic Growth)

Measures growth that compares output of economic system with resources to produce output

If standard of living improves... (Economic Growth)

Productivity improves (ex: solar powered radios = 2 usage)

GNP (Gross National Product) (Economic Growth)

the total value of all goods and services produced in a time period regardless of location

GDP (Gross Domestic Product) (Economic Growth)

the total value of goods produced and services produced within a period with domestic factors of production

Real Growth Rates (Economic Growth)

income + output

GDP per capita (Economic Growth)

total GDP divided by total population

Real GDP (Economic Growth)

adjusted GDP = PIB reel

GNI (Gross National Income) (Economic Growth)

The total amount of money earned by organizations

Balance of Trade (Economic Growth)

Exports - Imports (aim to export more, value chain = people pay for brand recognition)

National Debt (Economic Growth)

The amount of money a government owes its lenders (increases or decreases based on budget deficit or surplus)

Economic Stability

when amount of money available and quantity of goods and services produced grow at the same rate

Threats to Stability

1. Inflation (Prices increase, measured by Consumer Price Index (CPI))
2. Deflation (period of falling prices)
3. Unemployment (joblessness among those seeking work)
Types:
a) Frictional (between jobs)
b) Seasonal (can only work a certain part of the year i.e. construction)
c) Cyclical (some groups are being laid-off some are hiring)
d) Structural (don't have the skills for the job)

Managing the Economy

1. Fiscal Policies (taxes + spending)
2. Monetary policies (money supply (interest rate), done by central bank)

Technological Environment

Technology:
1. Value creation for customers
2. Knowledge, work methods, and physical equipment.

Research and Development: Provides ideas for product services and processes
Types: a) Basic (improving knowledge in area) b) Applied (how to replace innovation on market)
Ex: canola oil

Political-Legal Environment

Relationship between business and government
- Regulations, UN, pro-anti business sentiment, political stability, international relations.

Socio-Cultural Environment

Reflects values, beliefs and ideas of organizations (customer preference and taste varies out and in boundaries) (Ethical compliance and responsible business behaviour)

Porter's 5 forces (business environment)

1. industry rivalry
2. threat of new entrants
3. bargaining power of consumers
4. bargaining power of suppliers
5. Threat of substitutes

Successful firms (Emerging Challenges and Opportunities in the Business Environment)

Firms focus on core competencies (skills and resources used to create most value for owners)

Outsoucing (Emerging Challenges and Opportunities in the Business Environment)

using suppliers outside the company to provide goods and services (ex: call centers)

Growing Social Media (Emerging Challenges and Opportunities in the Business Environment)

important daily communication (TikTok)

Business Process Management (Emerging Challenges and Opportunities in the Business Environment)

Moving away from department organization toward process teams

Acquisitions

one firm buys another

Mergers

2 firms consolidate
Types: 1) Horizontal = 2 firms from same industry
2) Vertical = supplier or customer to another firm merge
3) Conglomerate = merged companies in unrelated business

Friendly Takeover

the acquired company welcomes the acquisition, (needs cash or other benefits)

Hostile Takeover

the acquiring company buys enough of the other company's stock to take control

Poison Pill

a defense tactic that management can adopt to make a firm less attractive (ex: lawsuits)

Employee-Owned Corporations

Employee stock ownership programs (ESOP)

Strategic Alliance

2 or more companies join forces (joint venture)

Subsidiary and Parent Corporations

Subsidiary corporation owned by another corporation, parent corporations own subsidiary corporations.

Small business

Owner manager business that has less than 100 employees

New venture

A recently formed (within last 12 months) business that sells goods and services

Entrepreneurship

Identifying and capitalizing marketplace opportunity

Entrepreneur

A person who recognizes and seizes opportunities

Intrapreneurs

create something new within an existing large organization

Role of small businesses

1) 98% of all employer businesses in Canada are small
2) main source of job creation
3) leaders in innovation and new technology
4) Increasing role of female entrepreneurs
5) Women account for half of new business
6) Rise of mompreneurs

1. Identifying Opportunities (Entrepreneurial Process)

Generating and screening ideas

2. The idea (Entrepreneurial Process)

Adds or create value, provides competitive advantage, marketable and financially viable, low exit costs.

3. Developing the Opportunity (Entrepreneurial Process)

Business plan (roadmap) = how to produce, market, manage it, the finance, cover page, table of contents

Bootstrapping (Accessing Resources)

Doing more with less, with external resources (using others money)

Financial Resources (Accessing Resources)

Debt, Equity

Other resources (Accessing Resources)

1. Business Development Bank of Canada
2. Incubators (provide small businesses support)
3. Internet (gather research)
4. Crowdfunding (gofundme)

Debt financing

Financial institutions, suppliers

Equity financing

Personal savings, love money, venture capitalist, private investors (angel)

Assessing The Fit

1. entrepreneur - opportunity fit = is it possible?
2. opportunity - resources fit = can required resources be acquired?
3. entrepreneur - resources fit = capacity to meet requirements?

Alternative Approaches to starting a small business

1. Buying Existing Business (Pros: less risky, more clientele, track record. Cons: uncertainty about finances, poor reputation?, poor location?)
2. Taking over Family Business (Pros: unobtainable financial and management resources, employee loyalty. Cons: choosing successor, high expectations)
3. Buying a Franchise (Benefits for Franchiser: rapid growth, more revenue, motivated sales team. Benefits for Franchisee: expert advice and training, low failure rate, keep most of the profits)

Success and Failure in a small business

Reasons for success = hard work, drive, dedication, market demand for product, management competence, luck
Reasons for Failure = incompetent management, neglect, weak control systems, insufficient capital

Sole Proprietorship (Forms of business ownership)

A business owned by one person
Pros: can do what you want, simple, tax benefits
Cons: unlimited liability, no one wants to fund it, lack of continuity

Partnership (Forms of business ownership)

A business in which two or more persons combine their assets and skills
Pros: more talent, easy formation, tax benefits
Cons: unlimited liability, lack of continuity, possible conflicts

Types of partnership (2)

1. General Partnership (actively involved and have unlimited liability)
2. Limited Partnership (don't participate actively and have limited liability)

Corporations (Forms of business ownership)

Business that is a separate legal entity, property rights, and obligations, indefinite lifespan.
Pros: limited liability, continuity, easy to raise money
Cons: start-up costs, double taxed, regulations

Types of Corporations (2)

1. Public Corporations = shares sold to the public, access to IPO
2. Private Corporations = shares are held by few shareholders

board of directors (Corporations)

governing body responsible for shareholders interests (oversee firm's actions)

Shareholders (Corporations)

Investors buy shares of ownership in a company, may share profits through dividends

Chief Executive Officer (CEO)

Person in charge of firms overall performance

Co-operative

An organization that is formed to benefit its owners in the form of reduced prices and/or the distribution of surpluses at year-end. (does not offer stocks = you get shares when you join)
Pros: limited liability, continuity, equal voices (1 vote per member)
Cons: no incentive to invest, voting arrangement

Globalization

Intégration of markets globally

Imports

stuff made elsewhere that comes into Canada

Exports

goods made in Canada and sold abroad

Major World Marketplaces

-North America (Canada's largest trading partner is the United States, trade with Mexico is increasing (major manufacturing centre)
-Europe (traditional view (West vs. East), emerging view (North vs. South))
-Pacific/Asia (Japan, China, India)

Emerging Markets

South Korea, Thailand, indonesia, ukraine

BRICS

Brazil, Russia, India, China, South Africa
- Economic powerhouses

Forms of Competitive Advantage

Absolute Advantage: the ability to produce more of a given product using a given amount of resources
Comparative Advantage: The ability of a country to produce a good at a lower cost than another country can.

National Competitive Advantage (focuses on 4 conditions):

- factor conditions: (factors of production: labour, capital)
- demand conditions (is there a market for your goods)
- related and supporting industries (need little stores that specialize in something)
- strategies, structures, and rivalries (good to extract innovations)

Balance of Trade

exports - imports

Trade surplus

exports exceed imports

Trade deficit

imports exceed exports

balance of payments

a measure of the total flow of money into or out of a country

Cash flow in

- Exports , foreign tourists spending in canada

Cash flow out

- Imports
- Canadian tourist spending overseas
- foreign aid grants
- military spending abroad
- Canadian investment abroad
- earnings from foreign investment in Canada

Foreign exchange rate

the ratio of one currency to another;
- canadian $ depreciates = imports costs more
- canadian $ appreciates = imports costs less

Exporter

Makes product in 1 country and sells to others

Importer

Buys products in foreign markets for resale at home

International firms

engages in trade and marketing in different countries as an extension of the marketing strategy in its home country

Multinational Firm

firm that designs, produces, and markets products in many nations

International organizational structure

- Importing or Exporting via Independent Agent (represent exporters' interest)
- Licensing or franchising arrangements (patent) (exporter gives exclusive right to manufacture)
- Establish a Branch office (in a foreign country to increase sales)
- Choosing a strategic alliance (expertise with a foreign partner)
- Foreign Direct and Investments (location benefits and provide local investments)

Barriers to International Trade

- sociocultural differences: language, population, religion
- economic differences: role of government in economy vs market economics (capitalist, socialist, communist)
- political and legal differences

Quotas (Political and Legal Differences)

Limits on number of importations

Tariffs (Political and Legal Differences)

Taxes on imported goods

Subsidy (Political and Legal Differences)

A government payment that supports a business or market

Protectionism (Political and Legal Differences)

the practice of shielding one or more industries within a country's economy from foreign competition through the use of tariffs or quotas

Local-Content Laws (Political and Legal Differences)

requirements that products sold in a country be at least partly made there

Business Practices (Political and Legal Differences)

-Bribes: seen as "gratuities" to officials in some nations
-Dumping: selling goods abroad for less than a firm charges at home; illegal in most nations
-Cartels: associations of producers created to control supply and demand (e.g., OPEC)

General Agreement on Tariffs and Trade (GATT)

a trade agreement that contained loopholes enabling countries to avoid trade-barrier reduction agreements

World Trade Organization (WTO)

Replaced (GATT), participates in trade agreements and disputes

European Union (EU)

the world's largest common market, eliminated most quotas and set uniform tariffs

North America Free Trade Agreement (NAFTA)

Agreement that created an essentially free trade zone among Mexico, Canada, and the United States.

US-Mexico-Canada agreement (USMA)

replaces NAFTA

Functions of Management

1. planning = determine what business needs to do and best way to achieve it
2. organizing = how to use existing resources and create efficient task system
3. leading = guiding and motivating subordinates
4. controlling = managers monitor firms performance

Types of Managers (3)

1) Top Management (responsible for overall performance of firm)
2) Middle Management (responsible for implementing decisions)
3) First-Line Management (responsible for supervising employees)

Basic Management Skills

1. Time Management Skills: productive use of time
2. Decision-Making Skills: define the problem and identify alternative
3. Technical Skills: performing specialized tasks
4. Human Relations Skills: help managers lead, motivate, communicate with, and get along with their subordinates
5. Conceptual Skills: a person's ability to think in the abstract, to diagnose and analyze various situations, and to see beyond the present situation

Mission Statement

a statement of the organization's purpose - who it wants to serve, offers