ADMS 1000: Introduction to Business PDF

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External Context of Business● Internal context of organizations, focusing on four fundamental concepts: the employment relationship, leadership, organizational structure, and strategy. ● The ability to attract qualified workers and to extract maximum effort from them can be crucial to business succe...

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External Context of Business ● ●

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Internal context of organizations, focusing on four fundamental concepts: the employment relationship, leadership, organizational structure, and strategy. The ability to attract qualified workers and to extract maximum effort from them can be crucial to business success. Workers often want to maximize their income from selling their labour whereas firms desire to maximize profits. Specific Environment and General Environment The specific environment refers to the environmental domain of the organization. Any organization is surrounded by external stakeholders. These are parties or groups that have direct influence on the organization’s ability to obtain resources and generate outputs. Stakeholders have some sort of stake or interest in the organization ○ Ie. customers, suppliers, labour within the organization Each of these types of stakeholders hold some influence over the organization to produce and obtain resources.

Seven Factors: General Environment ● Economic Forces: Whether the Canadian economy is experiencing a recession or strong economic health, economic forces act as a strong influence on the present and future prospects of any organization. We can also consider the international economic environment due to Canada’s strong economy. ● For any organization, whether the economy is strong or weak, whether the economy has a strong demand or supply consistency, etc. ● Unemployment rates and the willingness to work at a firm for limited periods may change over time, seasons, years, and the state of the economy. ●

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Competitive Forces: Competitive forces operate at two levels for any organization. an organization will have its own set of competitors, yet the force of competition can be viewed from a more general level as well. ○ Ie. Globalization will lead to an increase in competition due to the accessibility of various markets all over the world. Firms must develop new ways of providing goods and services to consumers so that they may be viable competitive in the market against competition with other similar firms. The assumption is that with more competition between firms, the better off the consumer will from the goods and services they will receive. Technological Forces: Technology plays a central role in how an organization functions, how it obtains resources, and, ultimately, how effectively it competes. Different types of innovation and explore the relationship between technological evolution and industry evolution. The technological environment can exert massive influence over firm production and internal systems. It may lower production costs causing prices to fall, or it may make production more efficient.

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Technology may also change the landscape of workplaces as well from physician office workspaces to employees that can work from home.

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Global Forces: forces that are part of economic, political, technological, competitive, or societal forces but are international in nature. ○ Ie. September 11 2001, or a global pandemic caused by covid19 Globalization can be referred to as a process to integrate world economies. It can also be referred to as the integration of markets, where consumer and producer preferences are converging. (production is increasingly a global affair) In the constraints of trade and global agreements, how can firms maneuver the distribution and production of their goods and services so their profits be maximized.

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Political Forces: Political forces can exert influence at both the specific and general levels. The government’s push toward deregulating many industries was designed to welcome more competitors into the Canadian business sector and facilitate freer trade Are government regulations facilitating or restricting certain business strategies? The political environment can dictate changes in how a business competes or what services it offers and how they can be offered. Rent-seeking behaviour from firms can also be an act of political force in the energy sector especially. Societal Forces: The nature of a society certainly is an entrenched part of any organization’s general environment. Individual welfare in the workplace is becoming increasingly important as the need for labour right and human rights are becoming necessary in the societal landscape people live in. Changes in demographics such as Canada’s aging population may signal to an entrepreneur that a firm in the healthcare industry may be become increasingly profitable Ethics may change over time as well as more types of people are increasingly participating in the labour force. Changes in law concerning social policy in a country may change the ethics of a workplace, bill c-51. Sustainability: worries of the sustainability on the affairs of firms on their production of goods and services and changes in global policy to support sustainability efforts has impacted firms and will continue to around the world. Overconsumption and ongoing release of greenhouse gas emissions. Traditionally, growing the economy and protecting the environment were viewed as two separate goals, often conflicting with one another. However, it seems as though a firm that will be able to achieve both will likely outcompete firms that do not comply. Society, economy, and the environment are interrelated systems. sustainable development can be viewed as a long-term approach to balancing the needs of people while growing the economy and preserving the environment. triple bottom line: (People, profit, planet)

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How can firms implement more sustainable practices or how are they going to be impacted sustainability policy. Achieving and successfully implementing these policies can help firms in reducing costs, consumer relations. Environmental degradation cannot be fixed immediately, but the impact is everlasting for the future and present.

Challenge of Change ● Organizational learning, in this sense, involves a three-stage evo- lution in which the highest stage incorporates three aspects of learning: adapting to the environment, learning from employees, and contributing to the learning of the wider community or context. ● Change in tangent to the firm’s environment is key to maintaining long-term business. Business in Canada ● Future economic growth and present economic growth and size is measured by GDP, depending on the growth rate of real GDP per year. We can conclude with one method that our economy is growing. (3.2 growth) ● Unemployment rates are another indicator on the productivity of the economy. Of the labour force, how many people are working and how many are not. Canada’s unemployment rate pre-covid is the lowest its ever been in over 40 years. ● Canadian banks and the central banking system in regards to monetary policy is very well-regulated, the soundest in the world according to the World Economic forum. ● Office of the Superintendent of Financial Institutions (OSFI) for prudential regulation, and the Financial Consumer Agency of Canada (FCAC) for consumer issues. The Canadian Bank Act is updated every 5 years to reflect changes in industry. ● Canada did not look to any government assistance or bailouts in the 08 financial crisis because our mortgage requirements are more strict and require sizeable dow payments. ● Canada has sufficient capital in our banks to pay of unexpected defaults, and losses. ● Stringent lending amongst the big six banks in Canada prevents losses. However, for playing it safe, Canadian banks are less competitive as they lend less and take fewer risks. ● They cant compete globally as the banks are too small in the global market. ● Due to so much regulation, lending is more stringent and thus investment in business for expansion is also more difficult. THere is more slow, stable growth and lesst of high risk high reward growth. ● However, due to its stability, the Canadian economy can be competitively advantageous for businesses looking for a stable economy to operate in.

Competitive Forces in Canada ● Markets generally operate the economic concepts of supply and demand of goods, services, and labour. ● Competition exists in order to drive firms to provide the most effective goods and services that consumers are willing to pay for.

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A competitive advantage is achieved when an organization excels in one or more attributes that allow it to outperform its competitors. ○ I.e, the international trading of raw material in its unprocessed form is a competitive advantage in Canada. A number of challenges such as depleting resources, foreign competition, and pressure from environment policy has negatively impacted businesses. The price for these natural resources is very much dictated by the world market. We are price takers. Shift from manufacturing and resources extraction to a service economy by the 80s and 90s Knowledge worker: our workforce must be better educated and capable of higher skills to receive well-paying service jobs. Our political Forces in Canada operate under a mixed system in which our government is very intertwined with our businesses and economy in the form of direct subsidies, tax incentive, and protection of certain industries, patent laws, etc. The OECD study concluded that corporate income tax was the most harmful tax out of personal income taxes, sales taxes, and property taxes because of the impact it has on long-term economic growth. One finding, for example, was that corporate income taxes had a negative impact on GDP per capita. Improved competitiveness: Another benefit of low corporate taxes is improved competitiveness. Lower corporate tax rates generally mean lower costs for businesses. In turn, lower costs turn into lower prices for consumers. “Business taxes are borne directly or indirectly by people—workers through lower wages, consumers in the form of higher prices for goods and services, and shareholders through lower returns.” CCC 2011 paper. Societal forces in Canada is largely positive as we have one of the highest educated population in the world. More education is generally correlated with a more prosperous economy. More education leads to more income spent on goods and services as more educated people have higher incomes.

Chapter 2: Managing the Workforce ● ●

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The process of administering and coordinating resources effectively and efficiently in an effort to achieve the organization’s goals. Includes planning, organizing, leading, and controlling organizational resources in the effort to achieve organizational goals ○ PLANNING: Formulating strategy to achieve organizational goals ○ ORGANIZING: designing work activities, assignment of tasks & authority ○ LEADING: guiding & motivating employees, communicating ideas ○ CONTROLLING: conflict & problem resolution, assessing progress & maintaining standards Mintzberg presented the modern ideas of managers with 3 key areas: developing and managing interpersonal relationships; dealing with the transfer of information; and making decisions.

Interpersonal Roles ● Interpersonal roles include those managerial tasks that arise from the manager’s formal authority base and involve relationships with either other organizational members or external parties. ● Managers may serve as a figurehead in a symbolic nature. Or they may act as a leader to motivate workers. ● Liaison: Creating bonds/links/relationships with other groups, divisions, teams and organizations to reach goals Informational Roles ● They must be communication sources for the organization. Gathering and distributing information within and outside the information ● Managers must constantly monitor the internal and external environments of their firm ● As disseminator, managers must share or distribute the information that they gain in their role as monitors. Must transmit the information as spokespersons. Decisional Roles ● Managers must process and act as competent decision-makers ● Managers monitor the internal and external environment ● Managers may be seen in some instances as entrepreneurs, as entrepreneurs they must make decisions that will benefit their firm. ○ I.e, new projects that will turn potential profit ● Managers are disturbance handlers as they attempt to resolve conflicts ● Managers are resource allocators where decisions are made on how capital, labour, land, and entrepreneurial decisions will be allocated efficiently and effective for the firm ● Mintzberg also argues that managers must be able to negotiate with workers within the firm, outside, clients, suppliers, etc. Managerial Philosophy ● Scientific Management: Frederick Taylor’s philosophy that the fundamental objective of management is “securing the maximum prosperity for the employer coupled with the maximum prosperity for each employee” by standardizing and compartmentalizing work practices. This is one of the three central classical approaches to management, the others being the administrative and the bureaucratic. ○ Division of labour and efficiency of labour, specialization ● Administrative Management: focuses on division of work, unity of command, the subordination of employee’ individual interests to the common good. ○ Unity of command Avoiding confusion and conflicting instructions by having each employee report to one boss. ○ Esprit de corps: Being able to encourage unity, cohesiveness, and harmony among workers ● Bureaucratic Management: focuses on the organization as a whole and incorporates ideas of rules and procedures, a hierarchy of authority, division of labour, selection and promotion. ○ A uniform firm would be best consisten, dependable, and reliable according to Weber. Decisions must be made based on consistency in the firms itself and its

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outputs. These three views tells us that 1) workers must be efficient and specialized in set tasks, 2) there must be some fundamental tasks and principles that managers must also follow, and 3) a bureaucracy reflects the view that organizations must be run according to a strict set of rules.

Behavioural Approaches to Management ● From treating labour as another piece of capital for an organization to social change through government, union action, and social pressure. ● What behavioural approaches maximize the effort of employees. Behavioural approaches the challenges of managing the human factor of production and how we can take more human and socially acceptable treatment to them. Labour is not of purely financial interest, but making sure labour is treated with dignity for their work efforts. ● Organizations are social systems through which individuals attempt to satisfy their personal and social needs, as well as their economic needs. Human Relations ● A study by Mayo reveals when workers are paid special attention to, then they end up being more productive. ● Formal to social structures in the workplace. ● Follett argued that managers need to be closely involved with subordinates in their daily work, rather than simply making rules. Also argued self-management such that workers made their own decisions on tasks they had more knowledge on than managers ● Barnard felt that organizations, as social systems, required continual communication and cooperation among all members to be effective. 2. To clearly establish the organizational objectives and ensure that all employees are motivated to help attain these objectives. ● Barnard also felt that managers must earn the title of authority over their subordinates. Contingency Approach ● Different conditions and situations require the applications of different approaches and techniques. ○ I.e, how to manage Microsoft will be different on how to manage UPS ● Various factors that influence management type: ○ Organization size: a larger firm may need more needs for rules and regulations and hierarchy for control ○ Task technology: some workers may work in an assembly-line, while others make work with no technology ans simply expertise. ○ Environmental uncertainty: a firm depending on its environment must be able adapt to market forces and thus would require different management approaches depending on the changes of its environment. ○ Individuals/strategy: certain management approaches may be effective on some individuals more than others ● Organizations must value and implement trust in order to ensure employee loyalty. As employees are becoming more and more disposable and firms are seeing higher turnover rates.

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Trust must exist in order to have maximum effectiveness in the workplace. Trust is the integrity and openness of others, being comfort with others ,and faith in how others will react, and becoming vulnerable in front of others. Research supports the idea that firm trust has an impact on the firm's effectiveness in production. Effective teams include shared vision, empowerment, and trust among members. ○ Military doctrine being effective at creating teams, establishing values, and producing results because of shared values. Employees who go above and beyond can have profound effects in the workplace. Thus creating an environment where this occurs more is crucial for production.

Chapter 3: Managing and Governance Sole Proprietorship ● Most popular and least expensive way to establish a business ● The owner has complete control over the business, freedom to operate from interference by shareholders and partners, and is entitled to all profits and losses ● Ideal if business is small and risk are minimal Partnership ● General Partnerships - Two or more owners of a business. Benefit from additional skillset and knowledge ● Unlimited liability for partners. Some liability may weighted on one over the other depending on the contract. ● Limited Partnerships - Limited in liability to the investment in the business. ● Limited partners in the operations of the business ● Creates opportunity for investment from external sources than general partnerships Corporation ● Separate legal entity. As independent legal entity, the corporation can sue and be sued, enter into contracts, buy, sell and hold property, and not involve the owner at all ● Owners face limited liability– cannot lose more than they have invested and they are not personally liable ● Can be private or public (shares may be publicly traded) ● Benefits include: limited liability, permanency, transfer of ownership, access to capital ● Require extra costs due government requirement like financial statements Co-operative ● Associations formed and managed by people who come together to attain common economic, social or cultural needs. Cooperatives are owned, controlled and operated for the benefit of their members ○ I.e, food co-op, credit unions ● Based on participatory governance. Governed by those who use the service. Characterized by a democratic structure, not owned by outside investors as participants have equal say in the operations of the firm. ● Generate mutual benefit to workers of the firm.

Corporate Governance ● Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. It involves balancing the interests of the many different stakeholders pertinent to the business. ● The aim of corporate governance is to create a balance of power among shareholders (owners), directors, and management in order to protect and enhance shareholder value and the interests of other pertinent stakeholders. ● Challenges of Corporate governance: ● Separation of ownership from management ● Principal-agent problem: the management group was intended to serve as the agent for the owner/shareholder (the principal). However, incentives are not completely aligned (management wants high compensation although it impacts organization. Rather than making decisions for the interests of the company, workers, managers, etc make decisions for economic self-interests. What is...