Business Organization and Consumer Behavior

Business Organization

• A business is an entity producing and/or selling goods/services.
• The goal of a for-profit business is profit (after costs & expenses).
• Solvent businesses pay off all debts.
• Profit = Total Revenues - Total Expenses.
• Four types of businesses:
  • For-profit (manufacturing, retail, service).
  • Not-for-profit (improve services for members using surplus funds).

Maslow's Hierarchy of Needs

• A theory describing human needs in a hierarchical structure:
  • Physiological Needs: Basic survival (water, air, food, sleep).
  • Security Needs: Safety and security (employment, healthcare, shelter).
  • Social Needs: Belonging, love, acceptance (friendships, relationships).
  • Esteem Needs: Personal worth, recognition, accomplishment.
  • Self-actualizing Needs: Self-awareness, personal growth, less concern for others' opinions.

Consumer Behavior

• Consumers purchase goods/services from producers.
• Marketplace is where producers and consumers meet.
• Key consumer behavior factors:
  • When they want goods/services.
  • Where they want goods/services.
  • How much they want.
  • Price they'll pay.
• Consumer Influence: Power consumers exert on businesses (products, pricing, services).

Competition

• Competition: Rivalry among businesses to attract consumers.
• Pros: Greater variety, lower prices for consumers, improved efficiency & innovation for businesses.
• Cons: Confusion (too many choices) for consumers; pressure on prices & quality for businesses.

Introduction to Economics

• Economics: Study of human decisions using scarce resources to satisfy unlimited wants.
• Economic resources (factors of production): Natural, human, and capital resources.
• Opportunity cost: Benefit lost from choosing one thing over another.
• Types of Economic Systems:
  • Command Economy: Government controlled.
  • Market Economy: Determined by producers and consumers.
  • Mixed Economy: Combination of command & market economies.

Supply and Demand

• Demand: Quantity buyers are willing/able to buy at various prices.
• Supply: Quantity producers are willing/able to offer at various prices.
• Law of Demand: Higher prices lead to lower demand.
• Law of Supply: Higher prices lead to higher supply.
• Equilibrium (market clearing price): Quantity supplied equals quantity demanded at a certain price.

Forms of Business Ownership

• Sole Proprietorship: Business owned by one person.
• Partnership: Business operated by two or more partners.
• Corporation: Highly regulated business with limited liability.
• Cooperative: Owned/operated by members who buy/use the services.
• Franchise: Allows franchisees to use a business's name, procedures, design, and expertise.

Decision-Making Model

• Steps in a decision-making process:
  • Define the problem.
  • Identify alternative solutions.
  • Evaluate advantages & disadvantages.
  • Make a decision & implement.
  • Evaluate the decision.

Corporate Ethics

• Corporate ethics: Moral principles guiding a company's behavior.
• Reasons for ethical corporations:
  • Better reputation.
  • Attracts customers.
  • Loyal customers.
  • Attracts talented employees.
  • Attracts investors.
  • Improves people's lives.
• Labor practices promoting ethical behavior: Employment standards (minimum wages, overtime), pay equity.

Ethics and Corporate Social Responsibility

• Ethics: Principles of morality and proper conduct.
• Morals: Rules deciding good/bad.
• Values: Personal/corporate beliefs about importance.
• Code of Ethics: Document outlining how employees should respond to situations, detailing organizational values & principles.
• Corporate Social Responsibility (CSR): Way companies integrate social, environmental, and economic concerns into values & operations.
• Drivers of CSR: Compliance (avoid negative consequences), Conviction (positive consequences).
• 6 CSR principles: Safe/healthy workplace, fair labor practices, environmental protection, truth in advertising, fair pricing, donations to charity.

Laws Governing Corporate Ethics

• Laws governing corporate ethics:
  • Workplace safety (Occupational Health & Safety Act in Ontario).
  • Anti-discrimination (Canadian Human Rights Act).
  • Environmental responsibility (Canadian Environmental Protection Act).
  • Labour practices (Employment Standards Act in Ontario).

Trade Relations

• Trade Relations: Exchange of goods/services between countries.
• Trade restrictions:
  • Tariffs: Taxes on imported goods/services.
  • Trade quotas: Limits on imported goods.
  • Trade embargo: Complete ban on trade with a specific country.
  • Trade sanctions: Limiting trade of specific products/with specific companies.

International Business

• International Business: Conducting business across national borders.
• Activities include selling goods/services, shipping, creating goods/services.
• Benefits: Access to larger markets, resources, cheaper labor, improved product quality.

Types of Market Competition

• Pure/Perfect competition: Many buyers/sellers, identical products.
• Monopolistic competition: Many buyers/sellers, differentiated products.
• Oligopolies: Few sellers, similar products, significant market power.
• Monopolies: One seller, unique good, tremendous market control.