MGM 04 - 18 SEP - Today Key questions for today: How do...

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Analyzing the External Environment Thursday, September 18, 2008 MGM 101 - Introduction to Management Functions Key questions for today: How do government finances operate in connection with “business cycles”? How do governments attempt to balance inflation and employment levels? Why does government debt matter? What is Monetary Policy, and how does it work to achieve similar objectives as Keynesian/ Fiscal Policy? What are the key environmental factors in which businesses operate - and which they have a role in changing? How do political events, or the threat of their occurrence, impact businesses? How can changing customer tastes transform industries? Today… The External Environments of business ALL businesses operate simultaneously within: ¾ Economic environment ¾ Technological environment ¾ Political-Legal environment ¾ Socio-cultural environment + Market/ industry environments In our previous lecture, we looked at the Economic Environment – today, we complete our examination of the economy, and begin our work understanding the others… next class we will look at the market / industry environment in detail. The Economic Environment: Key economic policy goals – Even in a healthy economy, some people are unemployed (“frictional unemployment” – a ‘pause’ while people switch to more suitable jobs for them; “seasonal” unemployment) Cyclical unemployment – during downturns in business cycle, some employers fire workers because of declining demand for their goods & services - What is the effect on the economic downturn? The Economic Environment: Key economic policy goals – control inflation Inflation: increases in prices of goods & services throughout an economic system – Why does inflation happen? •A s i m p l e (and imaginary!) example: In Sockholm , there are enough resources to make 1,000 pairs of identical socks each year (and nothing else in made or sold there, so people don’t bother to save or go into debt – they just spend everything they earn on more socks) Conveniently, demand equals supply exactly, so the people of Sockholm want to buy all the socks that are made The government printed $5,000 of currency in 2007, and ensures that all
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This note was uploaded on 04/25/2010 for the course MANAGEMENT MGM 100 taught by Professor Appleyard during the Fall '10 term at University of Toronto- Toronto.

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MGM 04 - 18 SEP - Today Key questions for today: How do...

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