Business Midterm PDF

Chapter 1: Understanding the Canadian Business System 1. Definition of Business: a. A business is an organization that produces or sells goods and services to earn a profit. b. Profit is the difference between a business’s revenues and its expenses. 2. Economic Syste...

Chapter 1: Understanding the Canadian Business System 1. Definition of Business: a. A business is an organization that produces or sells goods and services to earn a profit. b. Profit is the difference between a business’s revenues and its expenses. 2. Economic Systems: a. Capitalism (free-market economy): Individuals own and operate most businesses. b. Planned Economies (like communism and socialism): The government controls most factors of production. c. Mixed Economies: Combine elements of both market and planned economies. 3. Factors of Production: a. Natural Resources: Raw materials supplied by nature. b. Labour: Human input (workers). c. Capital: Machinery, buildings, tools. d. Entrepreneurship: Innovation and risk-taking in creating new products or services. e. Knowledge: Information that aids in decision-making. 4. Business Environment: a. Economic Environment: The current state of the economy (e.g., inflation, unemployment). b. Technological Environment: Innovation and technology affecting business. c. Political-Legal Environment: Regulations, policies, and laws. d. Sociocultural Environment: Social values, demographics, customs, and lifestyles. e. Global Environment: International forces that affect business. Chapter 2: The Environment of Business 1. Economic Indicators: a. Gross Domestic Product (GDP): The total value of goods and services produced within a country. b. Inflation: General rise in prices over time.  c. Unemployment Rate: Percentage of the labour force that is unemployed but actively seeking work. 2. The Business Cycle: a. Phases include expansion, peak, contraction, and trough. 3. Types of Competition: a. Perfect Competition: Many sellers offer identical products. b. Monopolistic Competition: Many sellers offer differentiated products. c. Oligopoly: Few large firms dominate the market. d. Monopoly: One firm controls the entire market. 4. Supply and Demand: a. Supply: The quantity of a product or service businesses are willing to sell at different prices. b. Demand: The quantity that consumers are willing to purchase at various prices. c. Equilibrium Price: The price at which the quantity supplied equals the quantity demanded. Chapter 3: Conducting Business Ethically and Responsibly 1. Ethics in Business: a. Ethics refer to standards or moral values that guide behavior in business. b. Businesses should follow ethical behavior to maintain trust with customers, employees, and the community. 2. Corporate Social Responsibility (CSR): a. CSR is the idea that a business should balance profit-making with activities that benefit society. b. Stakeholders: Any group affected by a company’s actions (e.g., employees, customers, investors, communities). 3. Areas of Social Responsibility: a. Customers: Providing safe, reliable products. b. Employees: Fair wages, safe working conditions. c. Investors: Financial performance and transparency. d. The Environment: Sustainable business practices. 4. Approaches to Social Responsibility: a. Obstructionist Stance: Avoiding social responsibility. b. Defensive Stance: Meeting only minimum legal requirements.  c. Accommodative Stance: Going beyond legal requirements when requested. d. Proactive Stance: Actively seeking opportunities to contribute to society. Chapter 4: Entrepreneurship, Small Business, and New Venture Creation 1. Entrepreneurship: a. The process of identifying an opportunity in the marketplace and accessing the resources needed to capitalize on it. b. Entrepreneurs take risks to start new businesses. 2. Small Business: a. Defined as an independently owned business with fewer than 100 employees in Canada. b. Small businesses are vital to the economy, contributing innovation and employment. 3. Types of Ownership: a. Sole Proprietorship: Owned and operated by one person. b. Partnership: Two or more people share ownership. c. Corporation: A legal entity that is separate from its owners. 4. Advantages of Small Businesses: a. Flexibility, personalized service, and ability to innovate. 5. Challenges of Small Businesses: a. Lack of resources, financial risks, and regulatory burdens. Chapter 5: Forms of Business Ownership 1. Sole Proprietorship: a. Simple structure with complete control by the owner. b. Unlimited personal liability for the business’s debts. 2. Partnership: a. General Partnership: All partners share equal liability. b. Limited Partnership: Some partners have limited liability. c. Advantages: More resources and shared decision-making. d. Disadvantages: Potential conflicts and joint liability. 3. Corporation: a. Separate legal entity from its owners (shareholders).  b. Limited liability, meaning shareholders are only liable for their investment. c. Private Corporation: Shares are not available to the public. d. Public Corporation: Shares are sold on stock exchanges. 4. Co-operatives: a. Organizations owned and controlled by members, who share profits. Chapter 6: Managing the Business Enterprise 1. Management Functions: a. Planning: Setting goals and determining how to achieve them. b. Organizing: Arranging resources and tasks. c. Leading: Directing and motivating employees. d. Controlling: Monitoring performance and making adjustments. 2. Types of Managers: a. Top Managers: Responsible for overall performance (e.g., CEOs). b. Middle Managers: Implement policies and strategies. c. First-Line Managers: Oversee day-to-day operations. 3. Skills of Effective Managers: a. Technical Skills: Knowledge and expertise in specific areas. b. Human Relations Skills: Ability to work with others. c. Conceptual Skills: Ability to think abstractly and see the big picture. 4. Leadership Styles: a. Autocratic Leadership: Centralized decision-making. b. Democratic Leadership: Involves employees in decision-making. c. Laissez-Faire Leadership: Minimal supervision, employees make decisions. Chapter 7: Organizing the Business Enterprise 1. Organizational Structure: a. The framework that outlines how tasks are divided and coordinated. b. Specialization: Dividing work into distinct tasks. c. Departmentalization: Grouping jobs into departments (e.g., functional, divisional, geographic). 2. Chain of Command: a. The line of authority in an organization, from top to bottom. 3. Centralization vs. Decentralization:  a. Centralized Organizations: Decision-making is concentrated at the top. b. Decentralized Organizations: Decision-making is distributed throughout the organization. 4. Types of Organizational Structures: a. Functional Structure: Organized by departments like marketing, finance, etc. b. Divisional Structure: Organized by product, customer, or geography. c. Matrix Structure: Combines functional and divisional approaches. 5. Delegation of Authority: a. Process by which managers assign tasks to employees.