1. BUSINESS AND MANAGEMENT
MODULE 1
BUSINESS ORGANIZATIONS & ENVIRONMENT

2. Political Opportunities & Threats
Governments can choose to intervene in the markets if it wishes
US “bail out” of the financial markets in October is a prime example
Pros
Government intervention can present barriers to growth
Cons
Leaving businesses to their own fates can stimulate healthy competition
Foreign direct investment is attracted if government involvement is minimal

3. Fiscal Policy
Refers to the use of taxation and government spending policies
Direct taxation
Paid straight from income or profit
Indirect taxation
Paid on trade in goods and services
Progressive taxation
Proportion of tax paid increases with income

4. Fiscal Policy (continued)
Deflationary
Used when the economy is experiencing high rates of economic growth (needs to be slowed down)
Higher taxes; lower spending
Expansionary
Used to boost the economy
Tax cuts and increased public sector spending

5. Common Taxes Income tax Corporate tax Sales tax Capital gains tax
Levy on personal income from wages, interest and dividends
Corporate tax
Levy on profits of a business
Sales tax
Taxes on individual expenditures
Capital gains tax
Tax on surplus made from investments
Excise tax
Taxes levied on “sin” goods such as tobacco and alcohol
Custom duties
Taxes paid on foreign imports

6. Monetary Policy
Designed to control the amount of spending and investment in an economy, by altering interest rates
Interest rates are the price of borrowed money
Higher interest rates makes borrowing money less attractive (higher costs of repayment)
Discretionary income is reduced

7. Impact of Interest Rates
Risk
Time
Administration
Expectations

8. Social & Cultural Opportunities & Threats
The attitudes of a society will greatly affect what goods and services are provided in the economy
For example, the growing knowledge and support for environmental protection has greatly altered business behavior
Demographic changes leading to a more educated public and wider acceptability of visible minorities

9. Technological Opportunities
Technology affects all aspects of business
Recruitment
E-commerce
Published on-line reports
Speed of access to information
Reducing language and cultural barriers
Reducing costs of production

10. Technological Threats
Price transparency
Customers can easily compare prices of rival firms
Online crime
Hackers cost Canadian businesses millions of dollars per year
This may drive away consumers and potential on-line sales
Higher costs of maintenance
Maintenance and training of on-line services; shut down and upgrade costs

11. Other Technological Ideas…
New working practices
Working from home
Video conferencing
Increased productivity
Robotics are a much faster and more reliable production alternative
Increased stock control
Quicker product development
New products and markets
Job creation
Exercise – Nintendo & Apple