Defines: 1. business and profit, 2. outlines the world's major economic systems,3. describes the basic aspects of Canada's market economy, including markets, demand, supply, the business cycle, private enterprise, and degrees of competition. 4. concludes with a brief discussion about the history of business in Canada.
A business is an organization that seeks to earn profits by providing goods and services to customers. Profit is what remains after the expenses incurred by a business are subtracted from its sales and revenues. The opportunity to earn profits is what encourages people to open and expand businesses. Profits are required in order for the organization to be “a going concern” and continue to operate into the future. There are also many not-for-profit organizations in Canada (charities, government organizations, educational institutions, unions, etc.).
An economic system is the way in which a nation allocates its resources among its citizens. Various systems differ in who owns or controls these resources, or "factors of production."
A. Factors of Production, 1. Labour, 2. Capital, 3. Entrepreneurs, Natural resources, Information resources
B. Types of Economic Systems, 1. In command economies, 2. In market economies, a. Input and output markets, b. Capitalism, 3. Mixed economies
Discusses how the government influences business in terms of government being a customer, competitor, regulator, taxation agent, provider of incentives, and a provider of essential services.
A. How Government Influences Business, 1. Government as a customer, 2. Government as a competitor, 3. Government as a regulator, a. Promoting competition, b. Protecting consumers, c. Achieving social goals, d. Protecting the environment, 4. Government as a taxation agent, 5. Government as a provider of incentives, 6. Government as a provider of essential services
B. How Business Influences Government
A. Demand and Supply In A Market Economy, 1. The laws of demand and supply, 2. Demand and supply schedule, 3. Demand and supply curves, 4. Surpluses and shortages
B. Private Enterprise and Competition in a Market Economy, 1. Degrees of competition, a. Perfect competition, b. Monopolistic competition, c. Oligopoly, d. Monopoly
Table 1.4 highlights some important events in Canadian business history.
A. The Early Years
B. The Factory System and The Industrial Revolution
C. The Entrepreneurial Era
D. The Production Era
E. The Sales and Marketing Eras
F. The Finance Era
G. The Global Era
H. The Internet Era
All businesses, regardless of their size, location, or mission, operate within a larger external environment. This external environment consists of everything outside an organization’s boundaries that might affect it. The external environment plays a major role in determining the success or failure of any organization. The external environment is made up of several identifiable sub-environments. These include: the economic environment (the conditions of the economic system in which an organization operates), the technological environment (which includes all the ways by which firms create value for their constituents), the political-legal environment (which reflects the relationship between business and government), the socio-cultural environment (the customs, values, and demographic characteristics of the society in which an organization functions), and the business environment (which includes the competitive situation in which each business finds itself).Successful companies respond to challenges in the external environment with a variety of tactics, including mergers and acquisitions, divestitures and spin-offs, setting up employee-owned corporations, getting involved in strategic alliances, and forming subsidiary and parent corporations.
Managers must have an accurate understanding of the external environment in which their company operates, as the environment has a significant impact on its success or failure. The external environment consists of everything outside an organization’s boundaries that might affect it.
A. Organizational Boundaries
B. Multiple Organizational Environments
The Economic environment refers to the conditions of the economic system in which an organization operates. The three components of most concern are: the rate of economic growth, level of unemployment and rate of inflation.
A. Economic Growth, 1. The business cycle, 2. Aggregate output and the standard of living, 3. Gross Domestic Product and GNP, a. Real growth rates, b. GDP per Capita, c. Real GDP, d. Purchasing Power Parity, 4. Productivity, a. Balance of trade, b. National debt
B. Economic Stability, 1. Inflation, a. Measuring inflation: The CPI, 2. Deflation, 3. Unemployment
C. Managing the Canadian Economy
Technology has a variety of meanings, but as applied to the environment of business, it generally includes all the ways in which firms create value for their constituents.
A. Research and Development (R&D)
B. Product and Service Technologies
C. Process Technologies
The relationship between business and government is important in Canada, as businesses are subject to government regulations. Pro- or anti-business sentiment in government can further influence business activity, whether on a federal, provincial or local level. Political stability is an important consideration for firms interested in expanding internationally. Import and export opportunities may be affected by the relations between the Canadian government and the government of a potential trading partner.
This includes the customs, mores, values, and demographic characteristics of the society in which an organization functions A. Customer Preferences and Tastes
A. Customer Preferences and Tastes
B. Ethical Compliance and Responsible Business Behaviour
The business environment includes expectations of customers, suppliers, shareholders, and employees. Current trends such as a more global economy are also an important element of the business environment.
A. The Industry Environment, 1. Rivalry among existing competitors, 2. Threat of potential entrants, 3. Suppliers, 4. Buyers, 5. Substitutes
B. Emerging Challenges and Opportunities in the Environment of Business, 1. Outsourcing, 2. Social Media and Viral marketing, 3. Business Process Management
Companies are joining together in a variety of ways in order to take advantage of opportunities more effectively than is possible alone. Various methods have been used in recent years.
A. Acquisitions and Mergers
B. Divestitures and Spinoffs
C. Employee Owned Corporations
D. Strategic Alliances
E. Subsidiary and Parent Corporations
The chapter explains: how individuals develop their personal codes of ethics, why ethics are important in the workplace, and how management can promote ethical behaviour. The chapter also includes a discussion of social responsibility in terms of the company’s relationship with customers, employees and investors. The four general approaches to social responsibility are discussed and a description of the four steps a firm must take to implement a social responsibility program are presented.
Ethics are individual standards or moral values regarding what is right and wrong. Business ethics refers to ethical or unethical behaviour of managers or employees.
A. Individual Ethics, 1. Individual values and codes
B. Managerial Ethics, 1. Behaviour toward employees, 2. Behaviour toward the organization, 3. Behaviour toward other economic entities
C. Assessing Ethical Behaviour
D. Company Practices and Business Ethics, 1. Adopting written codes, 2. Instituting ethics programs
Whereas ethics guide an individual's behaviour, social responsibility refers to the way in which a business tries to balance its commitments to certain groups and individual in its social environment.
A. Responsibility Toward the Environment, 1. Air pollution, 2. Water pollution, 3. Land pollution, a. Recycling
B. Responsibility Toward Customers, 1. Rights of consumers, 2. Unfair pricing, 3. Ethics in advertising, a. Truth in advertising, b. Advertising of counterfeit brands, c. Stealth (undercover) advertising, d. Morally objectionable advertising
C. Responsibility Towards Employees, 1. Legal and social commitments, 2. Whistle-blowers
D. Responsibility Towards Investors, 1. Improper financial management, 2. Misrepresentation of finances, 3. Cheque kiting, 4. Insider trading
Opinions on the appropriateness of social responsibility as a business goal differ widely, and the motivation behind beliefs differ widely as well.
A. Approaches to Social Responsibility, 1. Obstructionist stance, 2. Defensive stance, 3. Accommodative stance, 4. Proactive stance, a. Corporate charitable donations
B. Managing Social Responsibility Programs
C. Social Responsibility and the Small Business
The chapter identifies: Identifies the link between small businesses, new ventures and entrepreneurship Describes the role small and new businesses play in the Canadian economy. The entrepreneurial process is then explored and examples are provided. The various ways in which a person can start up a small business are outlined, with the advantages and disadvantages of each discussed. The four forms of business ownership are described, including their advantages and disadvantages. The chapter concludes with a discussion of the reasons for success and failure of small businesses.
New businesses create the most jobs, are noted for their entrepreneurship, and are typically small, but this does not mean that most small businesses are entrepreneurial.
A. Small Business
B. The New Venture/Firm
Small and new businesses play a key role in the Canadian economy.
A. Small Businesses
B. New Ventures
The entrepreneurial process involves the identification of a business opportunity and accessing the needed resources, but must also consider the social, economic, political, and technological factors in the environment which influence the success in bringing the opportunity to a successful implementation.
A. The Entrepreneur
B. Identifying Opportunities, 1. Idea generation, 2. Screening, 3. Developing the opportunity
C. Accessing Resources, 1. Financial resources, 2. Other resources, a. The Business Development Bank of Canada, b. Incubators, c. The internet
D. Assessing the “Fit” Between Elements in the Entrepreneurial Process, 1. The entrepreneur-opportunity fit, 2. The opportunity-resources fit, 3. The entrepreneur-resources fit
An entrepreneur must consider not only the start up of the business, but how the business will be run beyond the start-up phase.
A. Starting Up a Small Business, 1. Buying an already-existing business, a. Taking over a family business, 2. Buying a franchise, a. The advantages of franchising, b. The disadvantages of franchising, c. Is franchising for you?
Business Legal Structures ==> Business Formation. Entrepreneurs must decide on the legal form of ownership of the business they are starting. See Table 4.7 for a comparison of the characteristics of the four types of business ownership.
A. The Sole Proprietorship, 1. Advantages of a sole proprietorship, 2. Disadvantages of a sole proprietorship
B. The Partnership, 1. Advantages of a partnership, 2. Disadvantages of a partnership
C. The Corporation, 1. Types of corporations, 2. Formation of the corporation, 3. Advantages of incorporation, 4. Disadvantages of incorporation
D. The Co-operative, 1. Types of co-operatives, 2. Advantages of a co-operative, 3. Disadvantages of a co-operative
Interpreting available data is difficult because it excludes businesses with no employees, and includes all businesses that ceased operations, which will include business that stopped operating for reasons other than failure, such as retirement of the owner.
A. Reasons for success
B. Reasons for failure
Identifies the major world markets. Forms of competitive advantage are described in the context of imports and exports, and factors affecting the balance of trade and balance of payments are considered. The importance of fluctuating exchange rates in international business is discussed. Examines relevant issues for a business considering moving into international markets. Once a firm has decided to go international, the various levels at which a firm may participate in international business activities and the organizational structures that are available to conduct business in foreign countries are described. Identifies barriers to international trade, and describes the organizations and agreements that are designed to overcome barriers to international trade.
Globalization means that more and more firms are engaging in international business. Factors motivating the increase in globalization include: greater awareness of the benefits of globalization, new technologies making international travel and communications much faster and cheaper than before, and competitive pressures. As the world becomes more globalized, the number of imports—goods that are produced and grown abroad and shipped into Canada and exports—goods that are produced or grown in Canada but shipped abroad will continue to increase. International trade is not a new concept, yet it is increasingly becoming central to the fortunes of most nations and their businesses.
A. The Major World Marketplaces, 1. Geographic clusters, a. North America, b. Europe, c. Asia-Pacific
B. The Rising Power of Emerging Markets
C. Forms of Competitive Advantage, 1. Absolute advantage, 2. Comparative advantage, 3. National competitive advantage
D. Import-Export Balances, 1. Balance of trade, 2. Balance of Payments
E. Exchange Rates, 1. Exchange rates and competition
The success of a business depends largely on how well it is managed. The basic functions of management (planning, organizing, directing and controlling) are much more difficult to carry out when the business operates in many different countries around the globe. The three most basic issues a company’s management must resolve when faced with the prospect of globalization are discussed.
A. Going International, 1. Gauging international demand, 2. Adapting to customer needs
B. Levels of Involvement in International Business, 1. Exporters and importers, 2. International firms, 3. Multinational firms
C. International Organizational Structures, 1. Independent agents, 2. Licensing arrangements, 3. Branch offices, 4. Strategic alliances, 5. Foreign direct investment
A number of difference between countries affect the success of international operations.
A. Social and Cultural Differences
B. Economic Differences
C. Legal and Political Differences, 1. Quotas, tariffs and subsidies, 2. Local-content laws, 3. Business-practice laws, a. Cartels and dumping
D. Overcoming Barriers to Trade, 1. General Agreement on Tariffs and Trade (GATT), 2. World Trade Organization (WTO), 3. The European Union (EU), 4. The North American Free Trade Agreement (NAFTA), 5. Other free trade agreements in the Americas, 6. Free trade agreements elsewhere
This chapter presents an introduction to the foundations of effective management. It describes the nature of management and identifies the four basic functions that constitute the management process and the different types of managers likely to be found in an organization. It discusses the basic skills required of managers, the importance of strategic management and effective goal setting in organizational success, as well as contingency planning and crisis management and the importance of corporate culture. What makes a good manager? How do you measure management effectiveness? Think back to a favorite manager with whom you have worked. What made that manager effective? Perhaps the manager assigned special roles in setting organizational goals. Or perhaps he or she was an exceptional communicator, expressed empathy, or was an effective motivator. Now think back to a bad manager you’ve worked with. What made that manager ineffective? Maybe he or she was too controlling, lacked communication skills, or showed favoritism toward subordinates. Whatever the reason, many people’s future managerial roles will be affected by their past experiences.
Managers work in all kinds of organizations, including businesses, and are responsible for planning, organizing, directing and controlling day-to-day operating activities.
Management is the process of planning, organizing, leading, and controlling an organization's resources (i.e., financial, physical, human and informational) in order to achieve the organization's goals.
A. Planning, 1. A hierarchy of plans
E. Management Roles vs. Management Functions
All managers perform the four functions of management, but they differ in the emphasis they put on the four functions.
A. Levels of Management, 1. Top managers, 2. Middle managers, 3. First-line managers
B. Areas of Management, 1. Human resource managers, 2. Operations managers, 3. Information managers, 4. Marketing managers, 5. Financial Managers
The success that people enjoy in managerial positions is often limited by their skills and abilities. Effective managers must possess several skills: technical, human relations, conceptual, decision-making, and time management skills. Figure 6.3 shows how the different levels in an organization require different combination of managerial skills.
A. Technical Skills
B. Human Relations Skills
C. Conceptual Skills
D. Time Management Skills
E. Decision-Making Skills, 1. The rational decision making process, a. Recognizing and defining the decision situation, b. Identifying alternatives, c. Evaluating alternatives, d. Selecting the best alternative, e. Implementing the chosen course alternative, f. Following up and evaluating the results, 2. Behavioural aspects of decision making, a. Organizational politics, b. Intuition, c. Escalation of commitment, d. Risk propensity
The starting point in effective management is setting goals—objectives that a business hopes (and plans) to achieve. Every business needs goals.
A. Setting Goals, 1. The purposes of goal setting, 2. Kinds of goals
B. Formulating Strategy, 1. Setting strategic goals, 2. Analyzing the organization and its environment, 3. Matching the organization and its environment
C. Levels of Strategies, 1. Corporate-level strategies, a. Concentration, b. Growth, c. Integration, d. Diversification, e. Investment reduction, 2. Business-level (competitive) strategy, 3. Functional strategies
Due to the dynamic nature of the business environment, managers must recognize that even the best plans sometimes become impractical. Therefore, managers often develop alternative plans in case things go awry. Two common methods are contingency planning and crisis management.
A. Contingency Planning
B. Crisis Management
When recruiting new managers, organizations must make sure that these managers will fit into the organization's culture. Corporate culture is the shared experiences, stories, beliefs and norms that characterize a firm (i.e. its style). It is important to establish and maintain a strong, clear culture. The advantages of a strong corporate culture are noted.
A. Forces Shaping Culture
B. Communicating the Culture and Managing Change, 1. Communicating the culture, 2. Managing change
This chapter examines the management of the production (operations) process and the utility it provides. Topics include: The operations process, Characteristics that distinguish service operations from goods production, An explanation of the main differences in the services focus, A description of the factors involved in operations planning, An explanation of some of the activities in operations control.
While the term “production” has traditionally referred to the manufacture of a physical product, today it refers to both the manufacture of goods and the delivery of services. The growth of electronic communications has had a profound impact on business today, increasing customer involvement in production and increasing the pace of order and delivery times and production scheduling.
A. Changes in Production Operations
Production of goods and services provides businesses with economic and non-economic benefits. Production also provides customers with four types of utility: time, place, ownership, and form utility. The term operations management has replaced production management to be inclusive of the production of goods and the delivery of services.
A. Operations Processes, 1. Goods-producing processes, a. Types of transformation technology, b. Analytic versus synthetic processes, 2. Service-producing processes, a. High-contact processes, b. Low-contact processes
B. Business Strategy as the Driver of Operations, 1. Business strategy determines operations capabilities, 2. Expanding into additional capabilities
C. Differences Between Service and Manufacturing Operations, 1. Focus on performance, 2. Focus on process and outcome, 3. Focus on service characteristics, a. Intangibility, b. Customization, c. Unstorability, 4. Focus on the customer-service link, 5. Ecommerce: The “virtual presence” of the customer, 6. Focus on service quality considerations
Figure 11.2 shows the steps in an operations planning and control system. These concepts apply to both production of goods and delivery of services. Managers develop the firm's long-range production plan by forecasting future demand. The long-range production plan details plants, technology, labour, machinery, and transportation and storage facilities that will be needed in the upcoming two to five years.
A. Capacity Planning, 1. Capacity planning for producing goods, 2. Capacity planning for producing services
B. Location Planning, 1. Location planning for producing goods, 2. Location planning for producing services
C. Layout Planning, 1. Layout planning for producing goods, a. Process layouts, b. Cellular layouts, c. Product layouts, d. Other developments in layout flexibility, 2. Layout planning for producing services
D. Quality Planning
E. Methods Planning, 1. Methods improvement in goods, 2. Methods improvements in services, a. Service flow analysis, b. Designing to control employee discretion in services, c. Design for customer contact in services
This involves the development of timetables for acquiring resources for production.
A. Scheduling Goods Operations
B. Scheduling of Service Operations, 1. Tools for scheduling, a. Gantt charts, b. PERT charts
This involves the monitoring of production activities, and taking corrective action when actual performance doesn't correspond with planned performance.
A. Materials Management, 1. Purchasing Processes, a. Supplier selection
B. Tools for Operations Process Control, 1. Worker training, 2. Just-in-time production systems, 3. Material requirements planning
C. Quality Control