Copyright © 2009 Pearson Education Canada1-1 Chapter 1 Understanding the Fundamentals of Business and Economics
Copyright © 2009 Pearson Education Canada1-2 Why Study Business? Learn what it takes to run a businessLearn what it takes to run a business Build business vocabularyBuild business vocabulary Develop workplace skillsDevelop workplace skills Learn about a variety of jobsLearn about a variety of jobs Appreciate today’s business careerAppreciate today’s business career
Copyright © 2009 Pearson Education Canada1-3 What Is a Business? For-ProfitNon-Profit Money Motive Social Service Ethical Conduct Social Responsibility EfficiencyEffectiveness
Copyright © 2009 Pearson Education Canada1-4 Business Categories Providing Services Producing Goods Capital intensiveLabour intensive
Copyright © 2009 Pearson Education Canada1-5 Growth in the Service Sector
Copyright © 2009 Pearson Education Canada1-6 Why Is the Service Sector Growing? More disposable income Changing demographics and lifestyles Complex goods and new technologies Need for professional advice Low barriers to entry
Copyright © 2009 Pearson Education Canada1-7 What Is an Economic System? GoodsServices Human Resources Natural Resources CapitalKnowledgeEntrepreneurs Factors of Production Scarce Resources
Copyright © 2009 Pearson Education Canada1-8 The New Economy General Characteristics Physical assets Cost control Intellectual assets Adding value Technology MechanicalInformation Workforce Job-specific skills Transferable skills Lifelong learning Geography Close to resources Near to collaborators Near to competitors Capital Debt financingVenture capital New EconomyOld Economy
Copyright © 2009 Pearson Education Canada1-9 Types of Economic Systems Capitalism Mixed Capitalism SocialismCommunism Privatization Free-Market System Planned System
Copyright © 2009 Pearson Education Canada1-10 How Does a Free-Market Economic System Work? GovernmentInterventionGovernmentInterventionSupply and Demand Supply CompetitionCompetition
Copyright © 2009 Pearson Education Canada1-11 Supply and Demand Relationship Quantity of Hats Price $35 $30 $25 $20 $15 Not enough demand D Right price makes supply & demand equal E Not enough supply S
Copyright © 2009 Pearson Education Canada1-12
Copyright © 2009 Pearson Education Canada1-13 Purecompetition MonopolisticcompetitionOligopoly Monopoly Free-Market Competition
Copyright © 2009 Pearson Education Canada1-14 Competitive Advantage Price Speed Quality Service Innovation
Copyright © 2009 Pearson Education Canada1-15 The Role of Government Fosters competitionFosters competition Regulates industriesRegulates industries Deregulates industriesDeregulates industries Protects stakeholder’s rightsProtects stakeholder’s rights Contributes to economic stabilityContributes to economic stability
Copyright © 2009 Pearson Education Canada1-16 Fostering Competition Competition Act Mergers and acquisitions
Copyright © 2009 Pearson Education Canada1-17 Regulating and Deregulating Industries GovernmentRegulationFreeCompetition Fair Competition Business Ethics Working Conditions Public Safety
Copyright © 2009 Pearson Education Canada1-18 Protecting Stakeholders Competition BureauCompetition Bureau Health CanadaHealth Canada Transport CanadaTransport Canada National Energy BoardNational Energy Board Canadian Food Inspection Agency (CFIA)Canadian Food Inspection Agency (CFIA) Canadian Radio-Television and CommunicationsCanadian Radio-Television and Communications Commission (CRTC) Commission (CRTC) Competition BureauCompetition Bureau Health CanadaHealth Canada Transport CanadaTransport Canada National Energy BoardNational Energy Board Canadian Food Inspection Agency (CFIA)Canadian Food Inspection Agency (CFIA) Canadian Radio-Television and CommunicationsCanadian Radio-Television and Communications Commission (CRTC) Commission (CRTC) ColleaguesEmployeesSupervisors EnvironmentCustomersSuppliers Society Investors
Copyright © 2009 Pearson Education Canada1-19 Contributing to Economic Stability EconomicExpansion EconomicContraction Recovery Recession BusinessCycleBusinessCycleMonetaryPolicyFiscalPolicy InterestRates Revenue and Spending
Copyright © 2009 Pearson Education Canada1-20 Monitoring Major Economic Indicators Interest rates Unemploymentstatistics Housing starts Durable-goodsorders
Copyright © 2009 Pearson Education Canada1-21 Measuring Price Changes InflationDeflation Consumer Price Index (CPI) Purchasing Power
Copyright © 2009 Pearson Education Canada1-22 Measuring National Output Gross National Product (GNP) Gross Domestic Product (GDP) Dollar Value YesYes Final goods and services YesYes Domestic businesses NoYesForeign-ownedbusinesses YesNo Overseas operations
Copyright © 2009 Pearson Education Canada1-23
Copyright © 2009 Pearson Education Canada1-24 Monetary and Fiscal Policy Monetary Policy –Actions taken by the Bank of Canada to regulate the nation’s money supply adjusting interest rates conducting open market operations Fiscal Policy –Use of government revenue and spending to influence the business cycle adjusting tax rates changing government spending patterns
Copyright © 2009 Pearson Education Canada1-25
Copyright © 2009 Pearson Education Canada1-26 Challenges of Globalization Products and servicesProducts and services Managing a small businessManaging a small business Globalization and workforce diversityGlobalization and workforce diversity Ethics and social responsibilityEthics and social responsibility Technology and electronic commerceTechnology and electronic commerce