Uploaded by guitar_rocker_kid


BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
Unit 1: The Role and Impact of Business
What businesses satisfy and factors of production
- Business; an organization that produces goods and/or services to satisfy the needs, wants and demands
of a consumers for the purpose of making a profit (in some cases)
- Need; the desire for a good or service which is necessary to live
- Want; the desire for a good or service, which is not necessary to live
- Factors of production; the process taken to provide goods and services to the consumers. Include;
 Natural resources; Raw materials which come from the Earth
 Human resources; labour: people who work to create the goods and services a business provides
 Capital resources; formation of business: takes all three resources to create goods and services
businesses provide
Main Types of Businesses
- all businesses are interdependent (a businesses or consumer which relies on the other)
- businesses rely on manufacturers for products
- consumers rely on business for the availability of products
- service businesses are dedicated to answering the needs and wants of consumers by selling services
- manufacturing businesses are dedicated to the production and processing of raw material
- retail businesses sell the products the manufacturing business has made
Factors affecting purchase decisions, decision making, and how consumers buy
- social status; hefty expenditures on luxury items may gain a person social status
- trends; statements made by the media which influence a consumer’s decision to purchase a good or
service/ the peer pressure and new styles associated which purchase decisions
- customs, habits, routine purchases; many products serve as necessities or need to be updated
regularly (e.g. shoes, groceries, etc.)
- safety; the standards of which the products have met
- advertising influence
- CSA- Canadian Standards Association; a non profit organization reputed for its standards for safety in
many products. Supported by society and producers, widely used and are government appointed
- decision making process- involves:
 defining the decision to be made
 identify alternatives
 list advantages and disadvantages
 make decision
 reflect upon/evaluate decision
- above model useful for daily dilemmas
- three factors affecting HOW consumers buy:
 amount of time spent in a store
 contact time
 waiting time; waiting in line to make a purchase
Types of Ownership of a Business
- types affect how a business is governed, managed and funded
- Share; a partial ownership of a corporation
- Limited liability; a characteristic of corporations in which the owners of the business will not lose any
personal assets when the business is blamed
- Unlimited liability; a characteristic of a business in which the owner(s) of a business will lose
personal assets if a business faces a blame
- Cooperative:
 a business owned by the public, in which everyone has one vote regarding the business, no matter
how many shares each person holds; a board of directors is component of cooperative
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
 less expensive goods and services are provided and a cooperative can be set up with low
commencement costs
 since the public has one vote, decision making processes are difficult and rigorous
- Corporation
 owned by the shareholders of the business; there is a hierarchy in which the people with more
stocks have more control over the business, and there is one vote per share
 have limited liability and fast/easy transfer of ownership
 however, costly and timely to start up, with holders with little stock have no influence on the
 Private Corporation: a business in which shares are not sold to anyone but the owners
 Public Corporation; a business in which shares are sold to the public
- Sole Proprietorship
 business owned by only one person, being responsible for all business’ assets
 offer freedom of choice, business is easy to start and all profits are directed towards owner
 however, unlimited liability, investments and financing is difficult
- Partnership
 a business owned by two or more partners, who are responsible for business’ assets
 more financing available to start business, owners have shared responsibility
 unlimited liability and partner disagreements are downsides
- Franchiser; a business which authorizes another business (the franchisee) to its design, business
expertise and name; the franchisee pays a fee to the franchiser in lump sum to operate the business, on
top of a monthly payment of a smaller franchise and advertising fee
The Laws of Demand and Supply
- Supply; the amount of goods/services that will be produced during a given amount of time
- Law of Supply; as price of good/service increases, the supply will increase
- Demand; the quantity of goods/service that will be purchased during a given amount of time
- Law of Demand; as the price of a good service increase, the demand will decrease
- An increase in supply means that producers must lower their prices in order to convince consumers to
purchase the extra supply, which causes a raise in demand. a decrease in price results in an increase of
demand, due to extra supply
- An increase in demand means that consumers will compete against each other to purchase the limited
supply in doing so, the price of the goods will increase and the demand will increase
Demand and Supply
- four conditions which generate demand:
 Trends or changes in consumer Tastes: the consumer must show some level of attraction to the
product or service being sold.
 Income: as peoples’ incomes increase, more is spent on luxury items to meet the consumer’s wants
and therefore demand increases. As incomes decrease, consumers tend to spend more on essential
items and cannot afford luxury goods or services.
 Change in expectations or future conditions: when an emergency is predicted to rise (e.g. natural
disaster) demand for the product will rise because more consumers will purchase the product to
avoid mishaps in the expected emergency.
 Change in population: when population increases, more consumers will cause the demand of a
product to rise.
- four conditions affect supply
 The change in the number of producers: If one business makes attractive profits off a new
product, other businesses will start to produce a product similar to the original one. (E.g. Vanilla
Coke- Pepsi Vanilla). Soon, the quantity of the new product will increase exponentially. If demand
remains the same, prices will be lowered out of competition.
 Price of related goods: To increase supply, product costs will be lowered because of alternative
materials used in production of it.
 Change in technology: when new, convenient, technological and low-cost products are introduced,
demand for them will increase, as the supply will.
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
 Change of expectations/Predicting Demand: A great level of planning and sales forecasting is
undertaken before a new product is sold. If predictions are unfortunate, the supply of a product will
stay low.
 Various production costs: More products can be produced if the costs for production are low. If
the cost of production is high, supply will decrease.
The Business Cycle
- the cyclical flow of economic growth and decline
- phases of a business cycle
 Trough; in many cases called depression: economic growth at its lowest level. Economy cannot be
declined any further. Results in no consumer demand, therefore no consumer spending, which stops
production, depleting money for employment. Prices of goods/services are lowest
 Recovery; when still at the phase of the trough, a price will be lowered to its full extent, causing
some demand and spending. Production will start to rise, and so will employment and further
spending, starting the recovery process
 Peak; when production and demands are at lowest level, spending will increase, causing more
employment and further spending level. Level remains the least constant and prosperity does not
last. Soon businesses will inflate prices in an attempt to gain more profit from the consumer
demand. Consequently, consumer demand will lower, causing the declining process to start
 Decline; prices will increase to the point where consumer demand and spending will decrease, thus
production will decrease, causing a drop in employment
- standard of living; the way a person lives measured by the kinds and quality of goods that person can
afford, which can be justified by only the person
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
Unit 2: Information Technology Groundwork
General Terminology
- Information Technology; the use of technology to gather, process and transmit information (e.g. the
- Technology; the application of science particularly for industrial and commercial uses
Necessary Notes
- components of a computer
 motherboard; circuit board containing the processor, connected to the computer’s components
 system bus; connection to all components of computer
 hard disk; memory space of a computer, in which files can be modified, accessed, or deleted
 ROM; read only memory, in which memory cannot be deleted or modified
 BIOS; basic input operating system, used at start up to configure entire system
 RAM; temporary processing memory, lost at start up
 PCI: peripheral component interconnect slots, in which hardware can be added to a computer
- Computers have an OS system which connects a user to a computer, controlling hardware, etc.
- First computers were developed in the 1800s, though electric operation was adapted in 1945
- ASCII; American Standard Code of Information Interchange; code is composed of numbers, which
translate into byte (composed of 8 bits) that processor understands as character
- BPS; bits per second
- Hz – cycles per second
- Modem: modulator/demodulator: takes raw data from internet source and converts it into information
readable by a computer, shown to the user as text/graphics
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
Unit 5: Marketing and Accounting
- marketing; all activities involved in transferring a business’ product/service to a consumer
- main marketing activities
 package design; to be unique, appealing informative, protective, and useful
 storage; security, accessible, adequate supply
 transportation; trucks, mail, cargo, etc
 marketing research
 promotion
 advertising; paid use of media to inform public of product
 publicity; non-paid methods of generating interest or awareness (i.e. sponsoring)
 sales promotions; special offers and incentives to encourage sales
- types of sales promotions;
 buy one get one free
 discounts
 contests
 membership system
 financing/deferred payment
Markets and Target Markets
- market; the act of selling a product, the group of people who we intend to sell to, the place where
buyers and sellers meet
- market segment; a segment in the target market with certain characteristics
- target market; refers to the specific group of individuals which a company wishes to sell a product to;
businesses want a target market to:
 make efficient use of their marketing resources
 make a strategic entry into larger markets
 tailor product to specific needs
 eliminate competition
- identifying a target market
 brainstorm end user application
 brainstorm consumer profiles
 eliminate various consumer profiles based on logistical difficulty (cost of transportation, etc)
 select consumer profile which has the greatest possibility of success
Marketing Strategies
- explains how businesses get consumers/other businesses to purchase their goods/services
- Pull Strategy; allows manufacturing companies to generate demand among consumers, advertising
products and promoting publicity- once demand is generated among consumers, other businesses will
see potential and will purchase the product from the manufacturing business
- Push Strategy; requires less capital to be spent, for business spends money promoting product;
business purchases goods from manufacturing company before promoting product
Market Research
- seven types of marketing research
 Consumer Research- determines what goods consumers need or want by means of focus groups
and Primary and Secondary Data
 Market Research- determines the target market for a good or service, selected by grouping
potential customers based on psychographic and demographic studies
 Pricing Research- determines appropriate price of goods using interrelating demand and sales
 Competitive Research- research in which businesses examine other competitors to prevent
mistakes, or to seek an absence in competition
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
 Product Research- determines the impact details of a product will have on the market (e.g. design,
texture, appeal, etc.)
 Motivation Research- determines the appropriate kind of advertising and promotions through a
consumer’s (of the target market) rational and emotional behaviour
 Advertising Research- provides information on the most effective method of sending a message
re: good or service to the target market, through means of finding effective ways of reaching the
- primary data; information collected independently, apart from any source of other means of
- secondary data; information that others have collected which is to be used by other businesses
Channels of distribution
- the paths of ownership that the goods follow from producers  consumers
- direct channels of distribution
 simplest form of distribution
 sells goods directly to the consumer
 often use intermediaries which take the possession of the product and then sell them to consumer
 mainly connect buyers to the business providing the goods or services, known as a maker-user
- indirect channels of distribution
 definitely use one or more intermediaries to distribute goods
 importer; searches for foreign manufacturing businesses, negotiates distribution deals with
manufacturer, selling goods domestically
 wholesalers; purchase goods from domestic producers or importers and resell goods to retailers
 retailers; purchase the goods from the wholesalers and establish a link between the consumers and
the product
- specialty distribution channels
 vending machines
 telemarketing
 catalogue sales
 e-commerce
 door-to-door sales
- paid use of media to inform public of product
- four main types of advertising:
 lifestyle; associates product with a desired lifestyle
 repetitive; repeats key point with the ad to promote memorization
 informative; provides persuasive facts about the product/service
 testimonials; presents average consumers speaking well of the product/service
- advertising techniques include components of humour, fear, and endorsement to further persuade the
consumer into purchasing the product
- three main goals of advertising:
 attract consumers’ attention; ensures the reader is focused on advertisement, with colour and
graphic elements
 effectively communicate; presents the product or service’s value and benefits, with text and
 call to action; inform consumers about how they can learn more or purchase the product/service
Business Image
- the way the consumer sees the business or thinks about the products or services that the business
makes or sells
- three main components of a competitive image
 brand name; one of more words that a business uses to distinguish its products from competitors
 logo/trademark; a symbol which is associates with a product
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
 slogan; a short catchy phrase which is always attached to the company’s name and logo
- three types of logos (also jingles)
 monogram
 visual symbols
 abstract logo
- brand extension; the transfer of a product’s image to another product of that company
- the process of recording, analyzing, and interpreting the economic activites as a business; all activities
involving money are noted as transactions
- needed for a business to know all the economic activities completed, by analyzing and interpreting
financial trends in their businesses by examining all they past transactions
- businesses keep financial records because;
 accountability; knowing where business’ money goes towards
 budgeting; the allocation/re-allocation of money to different aspects of a business
 taxation; shows government activities of a business, with accurate accounting records and income
 financial statements; reports that summarize the financial position and performance of a business,
open to shareholders of a corporation and at many times the public; promotes the business
 annual reports; a form in which financial statements are presented
The Fundamental Accounting Equation
- assets; money/things that a business owns
 liquid assets; assets that are easily convertible into cash
 current assets; assets that will be consumed within one year
 fixed assets; assets which will be used for more than one year
 cash is the greatest asset a business can have
- liabilities; things that a business owes
 incurred by buying on credit and borrowing money by means informal loan,
 maturity of liabilities; refers to how quickly a liability can be repaid
 long term liability; a debt which will be fully repaid more than one year later
 current liability; a debt which will be fully repaid within one year
- owner’s equity;
 the owner’s share of the assets of a business, including:
 expenses (-)
 revenue (+)
 capital (+); the amount of money the owner has put into the business
 drawings (-); money taken from a business for personal use
- the accounting equation:
 A = L + OE
 Assets = liabilities + owner’s equity
 Assets = liabilities – revenue + expenses –drawings + capital
 Both sides must balance
Financial Statements
- Income statement;
 A movie or video of the results of operations of the business over a period of time
 Measurement of the net flow of income into the business in a period of time
 Prepared by management on a periodic basis, weekly monthly, etc.
 Required by law at least annually
 format of income statement
 Title: [centered, three lines] business name [next line] what [next line] then (written in the form
of “For the (period) ended (date)”
 Expenses; grouped by common activity, in order from greatest to smallest or alphebetically
 Revenues; grouped in order from greatest to smallest (sales revenue, service revenue, etc.)
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
C. Bates Company
Income Statement
For the month ended June 30, 2002
Fees Earned
Total Revenue
Maintenance Expense
Total Expenses
Net Income
 follow above format for formatting
 once section is done on first $$ column, underline value (use $$ sign for every section)
 once section is done on second $$ column, double underline value (use $ sign for whole column,
for net income use $ sign)
- balance sheet
 a statement of financial position
 a freeze frame or snapshot of what the business owns, owes and the equity
 financial picture of a business of a point in time
 format of balance sheet
 Title: [centered, three lines] business name [next line] what [next line] then (written in the form
of “as at (date)”
 Section 1; current assets, listed in order of liquidity (closest to farthest)|| fixed assets; listed in
order of liquidity (farthest to closest)
 Section 2: liabilities; in order of maturity (first to be paid  last to be paid
 Section 3
 Owner’s Capital
 -/+ net income (depends on figure)
 - drawings
= total owner’s equity
C. Bates Company
Balance Sheet
As at June 30, 2002
Current Assets
Account Receivable/McDonald
Total Current Assets
Fixed Assets
Office Equipment
Total Fixed Assets
Account Payable/Robertson
Bank Loan
BTT1O Exam Notes
All Fields: 25% First Term, 75% 2nd Semester
Ankit Rastogi
Exam Date: Wednesday, June 9, 2004
Capital (+)
Net Income (+)
Total Owner's Equity (+)