+ Understanding Canadian Business

Chapter 1Managing Within the Dynamic Business Environment

+Learning ObjectivesAfter you have read and studied this chapter, you should be able to:

1. Describe the relationship of businesses’ profit to risk assumption.

2. Discuss the importance of stakeholders and non-profit organizations to business activities.

3. Explain how entrepreneurship is critical to the wealth of an economy, and list the five factors of production that contribute to wealth.

+Learning ObjectivesAfter you have read and studied this chapter, you should be able to:

4. Review the six elements that make up the business environment and explain why the business environment is important to organizations.

5. Understand how the service sector has replaced manufacturing as the principal provider of jobs, but why manufacturing remains vital for Canada.

+ Business and Entrepreneurship:Revenues, Profits and LossesOne of the best ways to become successful is to have a career in business.

A business is any activity that seeks to provide goods and services to others while operating at a profit.

Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses.

+ Matching Risk with Profit

Revenue > Expenses = Profit

Revenue < Expenses = Loss

+RiskRisk is the chance an entrepreneur takes of losing time and money on a business that many not become profitable.

What is your tolerance for risk?

+ Responding to the Various Business Stakeholders

Stakeholders are all the people who stand to gain or lose by the policies and activities of a business.

+

With annual sales of more than $700 million US and nearly 10 million visitors, Cirque du Soleil is a success story!

Guy Laliberté is the founder and CEO of Cirque du Soleil. The company’s mission is to invoke the imagination, provoke the senses, and evoke the emotions of people around the world.

With almost 4,000 employees from over 40 different countries you can see why the company’s great strength is its ability to develop material that is loved worldwide.

• Michael Jackson’s Immortal Tour

• Watch Cirque Du Soleil Worlds Away (available at the NB Public Library)

• Check out www.cirquedusoleil.com for more information

+The Business EnvironmentThe business environment consists of the surrounding factors that either help or hinder the development of businesses.

+The Business EnvironmentBusinesses grow and prosper in a

healthy environment.

+The Business EnvironmentCreating the right business environment is the foundation for social progress of all kinds, including:

GoodSchools

Clean Air& Water

GoodHealth Care

Low Ratesof Crime

+The Business EnvironmentCompanies should continuously assess the business environment for changes in trends.

Trends could affect the organization’s ability to: Achieve its objectives,

Steer clear of threats, or

Take advantage of newopportunities.

+The Legal and Regulatory EnvironmentGovernments can lessen the risk of starting

and running a business through the laws (also known as Acts) that are passed by elected officials.

Competition Act is to maintain and encourage competition in Canada.

To ensure that small- and medium-sized enterprises have an equitable opportunity to provide consumers with competitive prices and product choices.

+ The Legal and Regulatory EnvironmentOther examples of laws include the:

Canada Small Business Financing Act

Consumer Packaging and Labelling Act and

Trade Unions Act

Each legislation authorizes an agency (such as Industry Canada) to write regulations that interpret the law in more detail and indicate how it will be implemented and enforced.

Regulations serve to carry out the purposes of or expand on the general laws passed by elected officials.

+The Economic EnvironmentThe economic environment looks at income,

expenditures, and resources that affect the cost of running a business.

Businesses review the results of major economic indicators such as consumer spending, employment levels, and productivity.

The movement of a country’s currency relative to other currencies also pertains to this environment. Currency movements are especially critical for countries, such as Canada, that generate a great deal of business activity from exports.

+The Technological EnvironmentInformation Technology (IT) has had a lasting impact on businesses including:Computers

Modems

Cellular phones

Internet etc.

+The Technological Environment

Term DefinitionTechnology Everything from phones and copiers to

computers, medical imaging devices, personal digital assistants, and the various software programs that make business processes more efficient and productive.

Productivity The amount of output that is generated given the amount of input.

E-Commerce The buying and selling of goods and services over the Internet.

+ How Technology Benefits Workers & YouEfficiency means producing good and

services using the least amount of resources.

The more you can produce in any given period of time, the more money you are worth to companies.

Companies look to technology to allow them to be more efficient, effective, and productive.

+The Growth of E-CommerceOne of the most important changes of recent

years is the growth of e-commerce, the buying and selling of goods and services over the Internet.

There are two major types of e-commerce:

1. Business-to-consumer (B2C)Covered Bridge sells directly to the customer

2. Business-to-business (B2B)Covered Bridge sells directly to Sobey’s

Traditional businesses will have to learn how to deal with the new competition from B2B and B2C firms.

+ Using Technology to Be Responsive to CustomersThe businesses that are most responsive to

customer wants and needs will succeed.

Bar codes can be used to tell retailers what product you bought, in what size and colour, and at what price.

The information is stored in a database.

Unfortunately, the gathering ofpersonal information about peoplehas led to identity theft.

Identity theft is obtaining personal information about a person and using that information for illegal purposes.

+The Competitive EnvironmentWhen developing their strategies,

companies must consider the factors that drive competition.

+ Competing by Exceeding Customer Expectations Companies have to offer both high-quality products

and outstanding service at competitive prices (value).

A customer-driven organizationis Disney amusement parks.

Adventures by Disney - Norway

Successful organizations must now listenmore closely to customers to determinetheir wants and needs, then adjust the firm’s products, policies and practices to meet those demands.

+Competing by Restructuring and EmpowermentEmpowerment is giving front-line workers the

responsibility, authority, and freedom to respond quickly to customer requests.

To implement a policy of empowerment, managers must train front-line people to make decisions within certain limits, without the need to consult managers.

Empowering employees leads to developing entirely new organizational structures to meet the changing needs of customers and employees.

+ Research Questions1. What is the Competition Act and how does it

benefit small to medium sized businesses?

2. How does technology benefit workers and customers?

3. When developing business strategies, companies must consider the factors that drive competition. What are the three factors a business owner should consider.

4. What is empowerment? Name a local company that encourages employee empowerment.

+The Social Environment

The Canadian population is going through major changes that are dramatically affecting:

How people live

Where the live

What they buy and

How they spend their time.

+The Social Environment

Term Definition

Demography The statistical study of the human population with regard to its size, density, and other characteristics such as age, race, gender, and income.

Baby-boom echo

A demographic group of Canadians that were born in the period from 1980 to 1995; the children of the baby boomers.

Baby boomers

A demographic group of Canadians that were born in the period from 1947 to 1966.

+Population Distribution By Age Group

+MillenniumBusiness Moguls

Age 16 to 33

+Managing DiversityCanada has a strong multicultural population.

From 1996 to 2001 more than 1.2 million immigrants entered Canada.

Companies have responded to this diverse customer base by hiring a more diversified workforce to serve them.

Today, more than 75% of Fortune 1000 companies have some sort of diversity initiative.

+Families

Approximately 54% of all families in Canada are made up of dual-income earners.

The high costs maintaining a comfortable lifestyle and the cultural emphasis on “having it all” have made it difficult if not impossible for households to live on just one income.

The growth of single-parent households has increase to almost 16% in 2001.

It is a tremendous task to work full-time and raise a family.

Single parents have encouraged businesses to implement programs such as family leave and flextime.

Two-Income Families Single Parents

+ The Global Environment Important environmental changes in transportation

and communication have been the growth of international competition and the increase of free trade among nations.

Better technology, machinery, tools, education, and training enable each worker to be more productive.

In 2002, the federal government launched a ten-year innovation strategy which “aims to move Canada to the front ranks of the world’s most innovative countries.”

Companies such as Bombardier are as good as or better than competing organizations anywhere in the world.