02+-+Chapter+01+%28part+2%29

02+-+Chapter+01+%28part+2%29 - MGTA03 – Intro to...

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Unformatted text preview: MGTA03 – Intro to Management – Week 1 MGTA03 Please read Chapter 1: Please Understanding the Canadian Business System Business MGTA03 – Intro to Management – Chap 1 MGTA03 Purpose of this Chapter/Lecture: To set the scene To provide some basic definitions To explain a few key theories MGTA03 – Intro to Management – Key Points MGTA03 Main points of last week’s lecture: Definition of “business” Profit and Loss Factors of production MGTA03 – Intro to Management – Key Points MGTA03 Main points of today’s lecture: Economic Systems Command Economies Market Economies Supply and Demand Four Degrees of Competition MGTA03 – Economic Systems MGTA03 The way different countries try to answer basic economic questions: who should own or control the factors who of production? of what should be produced, with the what available factors? available Economic Systems - 2 Types Economic Command or Planned Economies Governments own/control factors of prod’n Governments make all / most of decisions Market Economies Individuals own/control factors of production Individuals make all / most of decisions Command or Planned Economies Command Q. Who should make those decisions? Command or Planned Economies Command economic systems (i.e. countries) where the government owns/controls most of the factors of production and makes most economic decisions. economic Command/Planned Economies - 2 Types Communist Economies: Communist Government owns/controls all the factors of Government all production makes 100% of economic decisions. Examples: very few, probably North Korea Socialist Economies: Government owns/controls majority of the factors majority of production, including principal industries, makes most of economic decisions. Example: Cuba Market Economies - 2 Types Capitalist Economies: Capitalist Individuals owns/control all factors of production Individuals all Individuals make 100% of economic decisions Individuals 100% Examples: none Mixed Market Economies: Individuals own/controls majority of factors majority Individuals make most of economic decisions Individuals most Governments regulate and tax, run some business Example: Canada, USA, UK, France Canada is a "mixed" Economy Canada Majority of factors (farmland, forests, mines) owned by private individuals. Most of decisions about factors (how many workers to hire, how much to pay them, how much technology to buy) made by individuals. But, government does intervene and is involved in the economy (through taxation, and regulation, provides some services). Mixed Economy – Simple Example Mixed I decide where I work, I negotiate my salary with the University. But, the Government taxes me. Walmart (owned by the Walton Family) sits in the shopping mall next to the LCBO (owned by the Ontario Government). How Market Economies Work How Market: Not a place - a bunch of activities. e.g. housing market, labour market Market: Market: Exchanges between buyers & sellers Exchanges How Markets Work: Supply & Demand How The Law of Supply Producers will offer more of a product as Producers its price increases, less as it drops. its The Law of Demand Consumers will purchase more of a Consumers product as its price drops, less as it rises product Supply & Demand Supply Degrees of Competition Degrees Not all markets are the same: Ability of buyers to negotiate "good" prices, depends on number of sellers in the market Some markets have lots of sellers Some markets have few sellers Some markets have only one seller Perfect Competition Perfect Lots and lots of suppliers All are small More or less the same Must sell at the same price Example: carton of milk Example: carton Monopolistic Competition Monopolistic Lots and lots of suppliers Most are small Most more or less the same Some are big, can differentiate themselves Most sell at the same price Big suppliers can charge extra Example: coffee shops vs. Starbucks Oligopoly Oligopoly Small number of suppliers (e.g. 4 or 5) All are "large" Each tries to differentiate themselves Industry hard to enter, hard to exit They watch each other, follow each other Example: Canadian banking industry Monopoly Monopoly Only one supplier (By definition) 100% market share Can set whatever price it likes Example: LCBO MGTA03 – Intro to Management – Chap 1 MGTA03 MGTA03 – Intro to Management – Chap 1 MGTA03 ...
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