Chapter 1 – The Dynamic Business Environment PDF

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Chapter 1 – The Dynamic Business Environment Using this Course to Prepare for Your Career (3) - Holder of post-secondary education make a cumulated average of about $1m vs. $670k for high school grads after 20 years o Those with higher education are more likely to have higher earnings - Value of post-secondary education is more than a larger paycheque, other benefits include increased ability to think critically and communicate your ideas, preparing you to live in a diverse and competitive world and more. - Today’s studies say that post-secondary grads will hold 7-8 different jobs (often in several different careers) in their lifetime - Many of the jobs of the future do not exist today (ex. many jobs today didn’t exist 10 years ago) Business Fundamentals (7) - Success in business is often based on the strategy of finding a need and filling it - Good are tangible products such as computers, food, clothing, cars, and appliances - Services are intangible products such as education, health care, insurance, and travel and tourism - Business – any activity that seeks to provide goods and services to others while operating at a profit - Entrepreneur – a person who risks time and money to start and manage a business Revenue, Profits, and Losses (8) - Revenue – total amount of money received during a given period for goods sold and services rendered and from other financial sources - Profit – amount of money a business earns above and beyond what is spent for salaries and other expenses - Loss – when a business’s expenses are more than its revenues - Only a small proportion of firms that exit the market place end up filing for bankruptcy – liquidation of the business debtor’s assets and the end of the commercial entity’s operations Matching Risk with Profit (8) - Starting a business involves risk – the chance of loss, the degree of probability of loss, and the amount of possible loss - As a business owner, you need to do research to find the right balance between risk and profit for you Standard of Living and Quality of Life (9) - The wealth businesses generate and the taxes they pay help everyone in the community - Standard of living – amount of goods and service people can buy with the money have - Goods may cost more in one country than another b/c of higher taxes and stricter government regulations

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Quality of lifez – general well-being of a 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 Responding to the Various Business Stakeholders (10) - Stakeholders – the people who stand to gain or lose by the policies and activities of a business and whose concerns the business needs to address (primary vs. secondary) - Offshoring – sourcing part of the purchased inputs outside of the country - Outsourcing – contracting with other companies to do some or all of the functions of a firm, such as production or accounting - Studies show that outsourcing will continue to grow at 12-26% across functions such as IT, legal

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services, and HR management Insourcing – initiatives to return jobs to companies exist in various industries, such as automotive sector

Using Business Principles in Non-Profit Organizations (13) - NGOs (ex. schools, hospitals, and charities) also make a contribution to the welfare of a society as well as economic activity and jobs (not only businesses) - Non-profit organization – organization whose goals do not include making a personal profit for its owners or organizers. They strive for gains but it is for social or educational goals, not personal or shareholder profit - 2mill people work for Canada’s ~170,000 charities and NGOs Entrepreneurship vs. Working for Others (15) - Two ways to succeed in business: o Rise up through the ranks of large companies (ex. RBC) – benefit is that someone else takes the risk and provides you with benefits o Start your own business and become an entrepreneur – riskier path The Importance of Entrepreneurs to the Creation of Wealth (16) - Five factors that contribute to wealth – factors of production (why some countries are rich and some are poor):

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o Land (or natural resources) – used to make homes, cars, or other products o Labour (workers) o Capital Goods – includes machines, tools, building, or whatever else is used in the production of goods) o Entrepreneurship o Knowledge – mgmt. experts and bus. Consultants say this is the most important What makes countries rich today is a combination of entrepreneurship and the effective use of knowledge Business environment either encourages or discourages entrepreneurship

The Business Environment (18) - Business environment – surrounding factors that either help or hinder the development of businesses. Six elements of business environment: o Legal Environment o Economic Environment o Technological Environment o Competitive Environment o Social Environment o Global Environment - Businesses usually cannot control their environment, but they need to monitor it carefully and do what they can to adapt as it changes The Legal Environment (19) - Regulations consist of restrictions that provincial and federal laws place on businesses with respect to the conduct of their activities. Laws affect business The Economic Environment (21) - Economic environment affects both businesses and consumers - Economic environment looks at income, expenditures, and resources that affect the cost of running a business. Businesses review the results of major indicators such as consumer spending, employment levels, and productivity. This analysis will give them a sense of what is happening in the marketplace and what actions they may need to take - A lower CAD dollar value relative to USD makes our exports cheaper and more attract to the US market, as consumers can buy more products with their higher-value currency – reason why in 2007 when CAD>USD, our economy went down - Another aspect of economic environment is degree of entrepreneurship that is present The Technological Environment (22) - The way tech has changed our lives (ex. smartphones, twitter, facebook, internet, etc.) - Technology means everything from phones and copiers to computers, mobile devices, medical imaging machines and other apps that make business processes more effective, efficient, and productive. Effectiveness > Efficiency

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Productivity – amount of output you generate given the amount of input, such as the number of hours you work Growth of E-commerce – buying and selling of goods and services online – two major types: B2C (Business-to-Consumer) and B2B (Business-to-Business) E-commerce differs from E-business – any information system or application that empowers business processes. E-commerce covers an aspect of e-business Database – electronic storage file in which information is kept Identity Theft - the act of obtaining personal information about a person, such as SIN and/or CC#, and using that information for illegal purposes, such as making purchases It is important for businesses to adapt to social media and social media marketing Social media is also used for crowdsurfing – helps a business find solution to challenges

The Competitive Environment (26) - Components of Competition: o Entry – firm must assess the likelihood of new entrants o Power of Buyers and Suppliers – supplier gains power when product is critical to the buyer and when it has built up switching costs (look for buyer’s edge p.26) o Existing Competitors and Substitutes - Businesses can compete by: o Exceeding customer expectations (customer-first, mgmt. second) – ex. Disney o Restructuring and empowerment – allowing workers to make other decisions essential to producing high-quality goods and services The Social Environment (27) - Demography – statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income - The population is aging. More people are living longer due to better medical knowledge and better health habits, more exercise & a reduction in number of people who smoke - Generation Y (Millennials – those born from 1977-1994) represents the children of the large number of Baby Boomers – those born from 1946-1964). - Generation Z – those born from 1995 onward - Because of the increasing # of elders, workforce losses have to be balanced but the rate of births and immigration is not projected to cover it. Also, industries catering to the older populations will begin to boom - Canada also has an increasing immigrant population – very diverse population The Global Environment (30) - Global environment surrounds all other environmental influences - World trade, or globalization, has grown thanks to the development of efficient distribution systems and communication advances such as the Internet - As businesses expand to serve global markets, new jobs will be created in both manufacturing and service industries. Global trade means global competition - Climate change – movement of the temperature of the planet up or down over time

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Greening – saving energy and producing products that cause less harm to the environment. Greening has become such a pervasive issue that impacts every type of business decision Sustainability – different meanings based on the context

The Evolution of Canadian Business (32) Progress in the Agricultural and Manufacturing Industries (32) - Many farms have become large farms or one large and many smaller because of competition and shows that Canadian agricultural workers are more productive - There has been a shift from these industries to the service sector - Manufacturing employs...