BUS 100

WELCOME!
Session 1
PLAN FOR THE CLASS
INTRODUCTION
COURSE OUTLINE
TERM PROJECT GUIDELINES
CHAPTER 1 – TAKING RISKS AND MAKING PROFITS WITHIN THE DYNAMIC BUSINESS
ENVIRONMENT
CHAPTER 2- HOW ECONOMICS AFFECTS BUSINESS
STUDENT SURVEY
Course Outline
Let us go through it thoroughly…
Group Project Guidelines
Let us read them together..
Chapter 1
Learning Objectives:

1. Illustrate the importance of key business fundamentals to wealth generation.

2. Identify business stakeholders and their importance to non-profit organizations and business
activities.
3. Explain how entrepreneurship is critical to the wealth of an economy, and list the five factors of
production that contribute to wealth.
4. State the six elements that make up the business environment and explain why the business
environment is important to organizations.
5. Give examples of how the service sector has replaced manufacturing as the principal provider of
jobs.
Success In Business
 Finding a NEED for a GOOD or SERVICE

Good
• Tangible

Service
• Intangible
Purpose?
 To earn profit
 Thus,

A business is any activity that seeks to provide goods and services to others while operating
at a profit.

What is profit?
Profit is the amount of money a business earns above and beyond what it spends for salaries and
other expenses
Who Does It?
AN ENTREPRENEUR
An entrepreneur is a person who risks time and money to start and manage a business.
Starting a business involves risk.
RISK is the chance an entrepreneur takes of losing time and money on a business that may not
prove profitable.
WEALTH
Money that you can make money for yourself
Standard of Living
Amount of goods and services people can buy with the money they have

QUALITY OF LIFE
 General well being of the society in terms of its political freedom, natural environment,
education, health care, safety, amount of leisure, and rewards that add to the satisfaction and
joy that other goods and services provide
Stakeholders: Those Who Stand To Lose
Or Gain
Offshoring and Outsourcing
A Statistics Canada report highlights the distinction. As stated, “Outsourcing decisions affect the
boundaries of the firm what production takes place within the firm and what is purchased from
outside the firm.
Non-Profit Organizations
•A non-profit organization is an organization whose goals do not include making
a personal profit for its owners or organizers.
•Non-profit organizations—such as schools, hospitals, and charities—also make a
major contribution to the welfare of society.
•Examples include
– Heart and Stroke Foundation
– Cancer Society
– Canada Blood Services
• (for organizing blood donors)
Entrepreneurship vs. Working for Others
THERE ARE TWO WAYS TO SUCCEED IN BUSINESS:

1. Work within a company and rise to the top.

2. Start your own business
Creating economic wealth
Five Factors of Production:
1. Land (natural resources)
2. Labour (workers)
3. Capital (physical assets not money)
4. Entrepreneurship
5. Knowledge
Business Environment
• The business environment consists of the surrounding factors that either help
or hinder the development of businesses.
Benefits of Technology
•Technology -- Everything from phones to copiers and the various
software programs that make businesses more effective, efficient and
productive.

•Effectiveness -- Producing the desired result.

•Efficiency -- Producing goods and services using the least amount of

resources.

•Productivity -- The amount of output you generate given the amount

of input (example: hours you work).
The EVOLUTION of BUSINESS
◦ Agriculture Era

◦ Manufacturing Era

◦ Service Era

◦ Information-Based Era
 *Chapter Two

Understanding How Economics Affects Business

 *
The Major Branches of What Is
Economics?

Economics *
•Economics -- The study of how society employs resources to
produce goods and services for consumption among various
groups and individuals.

•Macroeconomics -- Concentrates on the operation of a

nation’s economy as a whole.

•Microeconomics -- Concentrates on the behavior of people

and organizations in markets for particular products or
services.
 *
What Is
Economics?

Resource development LG1

*
• Resource Development -- The study of how to
increase resources and create conditions that will
make better use of them.

2-20
 *The Secret to
Creating a
Wealthy Eco

Thomas Malthus and the Dismal Science

• Malthus believed that if the rich had most of the
wealth and the poor had most of the population,
resources would run out.
• This belief led the writer Thomas Carlyle to call
economics “The Dismal Science.”
• Neo-Malthusians believe there are too many
people in the world and believe the answer is
radical birth control.
 *
Adam Smith : Adam Smith &
the Creation of

The Father of Economics Wealth

LG1
*
Smith believed that:
• Freedom was vital to any
economy’s survival.
• Freedom to own land or
property and the right to
keep the profits of a
business is essential.
• People will work hard if they
believe they will be
rewarded.
Adam Smith How Businesses Benefit the Community

• Smith believed that people work for their own self-

interest, but in so doing, actually benefit the economy
as a whole.

• The invisible hand: turns self-directed gain into social

and economic benefit for all.

• Smith assumed that as people became wealthier, they

would help others in the community who were less
fortunate, by providing jobs or goods and services for
sale.
 *Understanding
Free-Market

Capitalism
Capitalism
LG2
*
• Capitalism -- All or most of the land, factories and
stores are owned by individuals, not the
government, and operated for profit.

• Countries with capitalist foundations:

- United States
- England
- Australia
- Canada
Capitalism and
Free Markets
Capitalism: an economic system in which all or most of the factors of
production and distribution are privately owned and operated for profit.

Free market: one in which decisions about what to produce and in what
quantities are made by the market.
How Prices Are Determined

In a free market, prices are determined by negotiations between buyers

and sellers.
Supply: the quantity of products that manufacturers or owners are
willing to sell at different prices at a specific time.
Demand: the quantity of products that people are willing to buy at
different prices at a specific time.
Market Price: the price determined by supply and demand
The Equilibrium Point: the quantity demanded and the quantity
supplied are equal.
Supply Curve at Various Prices
Demand Curve at Various Prices
The Equilibrium Point
Competition Within Free Markets

Perfect Competition: the market situation in which there are

many sellers in a market and no seller is large enough to dictate
the price of a product.
Monopolistic Competition: the market situation in which a large
number of sellers produce very similar products that buyers
nevertheless perceived as different.
Oligopoly: a form of competition in which just a few sellers
dominate the market.
Monopoly: a market in which there is only one seller for a product
or service.
 *
Understanding
Socialism

Socialism LG3
*
• Socialism -- An economic system based on the
premise that some basic businesses, like utilities,
should be owned by the government in order to more
evenly distribute profits among the people.
• Entrepreneurs run smaller businesses
• Citizens are highly taxed
• Government is more involved in protecting the
environment and the poor
 *
Understanding
Communism

Communism LG3
*
• Communism -- An economic and political system in
which the government makes almost all economic
decisions and owns almost all the major factors of
production.
• Prices don’t reflect demand which may lead to
shortages of items, including food and clothing.

• Most communist countries today suffer severe

economic depression and citizens fear the
government.
 *The Trend
Toward Mixed

Mixed Economies
Economies
LG4
*
• Mixed Economies -- Some allocation of resources
is made by the market and some by the government.

• Neither free-market nor command economies

have created sound economic conditions so
countries use a mix of the two economic systems.
 *
Gross Domestic
Product

Gross Domestic Product LG5

*
• Gross Domestic Product (GDP) -- Total value of
final goods and services produced in a country in a
given year. As long as a company is within a
country’s border, their numbers go into the country’s
GDP (even if they are foreign-owned).

• When the GDP changes, businesses feel the

effect.
• The high U.S. GDP (about $14 trillion) is what
enables us to enjoy a high standard of living.
 *
Gross Domestic
Product

Key Economic Indicators LG5

*
• Gross Domestic Product (GDP): the total value of goods and
services produced in a country in a given year.

• Productivity: workers can produce more goods and services than

before in the same time period-leading to decreased production
costs and therefore lower prices.

• The Unemployment Rate: the percentage of the labour force that

actively seeks work but is unable to find work at a given time.

• The four types of unemployment include: frictional, structural,

cyclical and seasonal.
The Price Indexes
Inflation: A general rise in the prices of goods and services.
Disinflation: A situation in which price increases are slowing (the
inflation rate is declining).
Deflation: A situation in which prices are declining.
Stagflation: A situation in which the economy is slowing but prices are
going up regardless.
Consumer Price Index (CPI): A monthly statistic that measures the
pace of inflation or deflation.
Human Development Index: A measure of a country’s progress that
includes wealth, health, and education.
 *
Productivity in
the United States

Productivity LG5
*
• Productivity in the service sector grows slowly
because of less new technology.
• Productivity in the U.S. has risen due to the
technological advances that have made
production faster and easier.
 *
The Business
Cycle

Business Cycles LG5

*
• Business Cycles -- Periodic rises and falls that
occur in economies over time.
• Four Phases of Long-Term Business Cycles:
1. Economic Boom
2. Recession – Two or more consecutive quarters
of decline in the GDP.
3. Depression – A severe recession.
4. Recovery – When the economy stabilizes and
starts to grow. This leads to an Economic Boom.
 *Stabilizing the
Economy Through
Fiscal Policy

Fiscal Policy LG6

*
• Inspired from Keynesian Economic Theory
• Fiscal Policy -- The federal government’s efforts to
keep the economy stable by increasing or decreasing
taxes or government spending.

• Tools of Fiscal Policy:

- Taxation
- Government Spending
 *Using Monetary
Policy to Keep the
Economy Growing

Monetary Policy LG6

*
• Monetary Policy -- The management of the
money supply and interest rates by the Federal
Reserve Bank (the Fed).

• The Fed’s most visible role is increasing and

lowering interest rates.
- When the economy is booming, the Fed tends to
increase interest rates.
- When the economy is in a recession, the Fed
tends to decrease the interest rates.