CHAPTER 1
Business
– Mission-based actions
– Strive for growth and development
– Creates organizational value for stakeholders
– Requires an effective and efficient operating platform assessed against
fundamental characteristics:
1. the commercial endeavors it undertakes
2. its employee interaction model
3. its organizational culture and decision-making structure
Business models - operational platform or structure
• Two primary parts:
– Company-centric side – “the business system” which reflects the underlying
mechanics as to how the business is structured.
– Market-centric side - how the business is connected to the marketplace.
1. Short-term Profit
• Necessary to pay bills and reinvest in the future
2. Long-term Growth & Profitability
• New products and services need to be developed to ensure the
organization remains healthy and continues to grow
3. Social & Environmental Responsibility
• Customers want businesses to operate and act in a socially
responsible manner
Stakeholders - direct or indirect relationship with an organization
Managers are expected to place society, the organization, and its stakeholders ahead of
personal gain when making decisions and interacting with the marketplace.
Overemphasis on short-term profits may result in decisions that are detrimental to long-term
market opportunities and fall short of social responsibility expectations.
• Profit – The “bottom line” result an organization has realized over a period of time
• Total Revenue – Total Expenses = Profit
• Profitability – measures how well an organization is using its resources over a period of
time to generate earnings relative to its competitors.
CHPATER 2
Foreign Direct investment (FDI)- occurs when a company or individual from one country makes
an investment into a business within another country. this investment can reflect the physical
ownership or productive assets or the purchase of a significant interest in the operations of a
business.
3 Fundamental Market Composition Principles:
1. The Law of Supply and Demand
2. Allowance for private ownership, entrepreneurship, and wealth creation
3. Extent of government in influencing economic activity and direction
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private Enterprise includes:
– Personal Ownership
– Entrepreneurship
– Wealth Creation
Supply and demand significantly influence the market.
The principles of private ownership, entrepreneurship, wealth creation opportunities
exist.
The Canadian government is an active participant in the economy but attempts to
manage economic activity
Gross Domestic Product (GDP) - market value of all goods and services a nation produces
domestically over a year.
GDP includes all the economic activity including:
– Goods and services produced and purchased domestically for
consumption
– Business investments within the economy
– Goods produced for export purposes
– Government spending
Recession – two or more consecutive quarters of decline in GDP
CHAPTER 3
fundamentals of global economic stability
WTO (World Trade Organization)
• Original mail role: establish the parameters for multilateral trading
International Monetary Fund (IMF)
• Monitoring global economic and financial developments
• The issuance of temporary or short-term loans
• The lending of credit facilities and technical support
World Bank
• Mission: to work with developing countries to eliminate poverty, enhance
growth via sustainable practices, and create individual opportunity and hope.
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Currency exchange rate - value of one currency to another at a point in time (Think of
supply/demand)
Moving value of a currency is called appreciation or depreciation
Floating Exchange Rate
Pegging a Currency
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CHAPTER 4
 Mid to late 1700s - Shift from agricultural-based society to a production-based model
• This new societal shift was the start of dramatic intensification of destructive pressures
on the environment.
• Little regulation on businesses - risk for long-term legacy and environmental
stewardship
• Enormous waste generated was simply buried with little concern for future generations
or other biological species
Environmental Stewardship_ the integration of sustainability values into managing of the
environmental recourses
• The United Nations (UN) currently estimates the planet’s population to be 7.55 billion;
by 2030, the estimated population will be 8.5 billion
• Given the anticipated population growth, significant stress is going to be placed on the
planet with respect to resource depletion, climate management, and population health
and safety
• The challenges going forward
• Climate change
• Pollution and health
• The energy crunch
• Resource depletion
• The capital squeeze
CHAPTER 5 ETHICS AND CORPARTE SOCIAL RESPONSIBILITY
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Ethics reflects moral principles or beliefs about what is right or wrong.
Need to assess ethics within an organization at two levels:
• The individuals themselves
• The culture of the organization within which individuals work
Can be thought of as an invisible hand that guides each of us as we make decisions
• Influenced by norms or social expectations
• Other influencers: Individual motivations, cultural and environmental upbringing,
personal pressures, imperfect information, or ignorance
BOARD OF DIRECTORS
• CSR - treating the public interest as a key stakeholder in an organization’s operational
success and shifting attitudes from “winning for me” to one of participating in activities
that enable the organization to win while serving the public good.
CHAPTER 6 DEVELOPING A BUSINESS STRATEGY
• The long-term success of an organization is based on two fundamental principles:
– Ability to create a strategic direction and market position
– Ability to execute the core tactical initiatives within the plan
• Business strategy understanding what opportunities exist in the marketplace and
which ones should be pursued.
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Core elements of assessing business strategy
1. Purpose
2. Markets
3. Products and Services
4. Resources
5. Business System
6. Responsibility and Accountability
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Mission- defines an organizations purpose or reason of existence
Vision- Is a forward-thinking statement that defines what a company want to become and
where its going
Harvesting is a strategy that reflects a reduced commitment to a particular market given
its perceived weal future growth or profitability potential
I/E Analysis is all about assessing business risk and change in 4 key areas:
1. Macroeconomic: Use PESTEL Analysis
2. Industry: Use Porter’s Five Forces
3. Competitor: Use SWOT (Strengths, Weaknesses, Opportunities, Threats)
Analysis
4. Company: Use SWOT and 3C Analyses
Competitive advantage- is an advantage in which an organization has over its rivels
which enable it to generate greater sales, and/or margins and creates preference for its
products and services in the mind of its costumers
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CHAPTER 7 Entrepreneurship and forms of business owner ship
Entrepreneur refers to a person who starts a business and is willing to accept the risk
associated with investing money in order to make money.
MERFS
M=Motivation
E-Expertise
R- risk management
S self-belief
Sole Proprietorship
Business commencement generally takes place by registering the business and paying
the required registration fee.
The debts of the business are deemed to be the debts of the owner.
Any income earned by the business is treated as personal income of the owner.
Partnership Agreement
Joint And Several Liability
Buy-Sell Agreement
Limited Liability Partnership (LLP)
Corporation - A business entity that, legally, is separate and distinct from its owners.
Incorporation
Board of Directors
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Limited liability
Ownership rights are based on stock owned.
The ability to issue shares
There are tax incentives and deductions
Separate tax return.
Private Corporations - Ownership is private
• The shares of stock are not publicly traded
• The articles of incorporation may restrict how shares are purchased/offered for
sale.
Public Corporations – Ownership is public
• Shares are originally offered through an “initial public offering” and once issued
they are then considered to be publicly held.
• Share price is set by daily trading.
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