What is a Business? An organization that produces or sells goods or services to satisfy the needs, wants and demands of consumers.

Profit = Revenue - Expenses and Costs

Obsolete Products: No longer a want or need for that product. When customers stop buying, producers stop making them.
Expenses: expenditures involved in running a business Costs: the amount of money required for each stage of production (raw materials)
The Role of the Consumers
- Producer: Makes goods/Provides services that consumers need or want
- Consumers: Purchase goods/services from producers, can have purchasing power when they influence price, quality, supply (Purchasing power)
- Marketplace: A place where producers and consumers come together to buy or sell
- Competition: 2+ businesses try to sell the same product/service to the same customer, which affects demand and price of goods/services
- (Competition gives the power to customer) Need: Something needed for survival, e.g. food (objective) or self-esteem (subjective)
- Want: Something not needed for survival but that adds pleasure/comfort to life. (Some Items can be both need and want)
- Maslow’s Hierarchy: A theory of the motivations behind human needs
Stages (Cannot move onto next stage without satisfying the previous): Physiological, Safety, Social/Love/Belonging, Esteem, Self-actualization
Forms of Business Ownership
- Sole Proprietorship: 1 owner, unlimited liability Partnership: 2+ partners, Need a partnership agreement (Verbal or written)
- General Partners: Unlimited liability, Combined has 100% ownership (could be unequal %), Mutual agency
- Limited/Silent Partner: Not involved in daily activities, Limited liability (Only certain business may have limited partners)
- Corporation/Limited Company: 1+ owners, Limited liability, Highly regulated, Provincial and Federal, Shares/Stocks owned by
shareholders and sold through a stock exchange, Separate legal entity and taxation, Double taxation (Corporation and shareholders), Name
must include: Incorporated, Inc., Corporation, Corp., Limited, Ltd.
- Private: Up to 50 shareholders with shares not offered to the public
- Public: Unlimited shareholders with shares traded publicly in stock exchange (Fee charged to be listed)
- Crown Corporations: an Entity owned and regulated by national or local governments but structured and operated as a legal corporation.
(Owned by the government and usually provides services). Business Sizes: Local, Regional, Global, Small, Medium, Large
- Non-Profit: Provides services and does research or lobby for a cause. For-profit: Goal is to make a profit by supplying goods or services
- Cooperative: Owned and operated by people with similar interests, Equal share, and one vote by each person
- Franchise: Has franchisor/seller and franchisee/buyer under a franchise agreement, Can be sole proprietorship, partnership, or corporation
ownership Change Demand: (Income - Consumer Taste - Population)
Demand & Supply
- Law of Demand: The higher the price of a product, the less the consumer will demand
- Law of Supply: The higher the price of the product, the more the producer will supply
- Equilibrium: A situation in which the price has reached the level where quantity supplied equals quantity demanded (Demand balances Supply)
- Equilibrium Price: The price that balances the quantity supplied and quantity demanded
- Equilibrium Quantity: The quantity supplied and quantity demanded at the equilibrium price
- Surplus: When the quantity supplied exceeds the quantity demanded. Shortage: When the quantity demanded exceeds quantity supplied
- Factors Affecting Demand: Income, Consumer Tastes, Population Size, Complementary and Substitute Goods
- Factors Affecting Supply: Price of Resources, Number of Suppliers, Expected Future Prices, Advances in Technology
Corporate Ethics (Complementary good: goods that are used together - Substitute goods: that can take place or be replaced by another good)
- Ethics: The principles of morality and proper conduct that people or businesses use to guide their behavior
- Morals: Rules used to decide what is good or bad Ethical Dilemma: happens when a business has a decision that weighs againstprofit
- Values: A personal or corporate belief about what is important
- Code of Ethics: A document that describes specifically how a company's employees should respond to different situations
- Whistle-blowing: Exposing a company to public/officials for legal/ethical violations
- Fraud: The crime of lying/pretending e.g. Bank fraud, Consumer fraud, Insurance fraud
- CSR Criteria: Economic responsibility (be profitable), Legal responsibility (obey the law), Ethical responsibility (do what is right),
Discretionary responsibility (contribute to community)
CSR, glass ceiling, workplace safety, employment standards act
- CSR/Corporate Social Responsibility: Conducting business in a way that follows the values of society
- Glass Ceiling: Invisible barrier to promotions
- Workplace Safety: Workers have the right to refuse unsafe work, to participate in H&S activities, and to know about the hazards of their
workplace (Occupational Health and Safety Act)
- Employment Standards Act: Establishes conditions for employment: hours of work, overtime pay, minimum wage, holidays, benefits,
leaves, termination Change Supply: (Prices of resources - number of suppliers - expected future prices - technology)
International Business
- Trade Barriers: Tariffs, Standards for the quality of imported goods, Cost of importing/exporting, Currency fluctuations
- Social Barriers: Offshore outsourcing, Human rights issues/labor abuses, Environmental degradation
- Trade Agreements: Agreements signed by countries to bypass trade barriers e.g. NAFTA, WTO
- Trade Deficit: More imports than exports, Trade Surplus: More exports than imports
Graphing
- Surplus - Above equilibrium, Shortage - Below equilibrium
- Supply - Diagonal line going up, Demand - Diagonal line going down
- Price - Y axis, Quantity - X axis